It was thought long-held antipathy felt by Latin American executives towards the mastermind of the US carrier that dominates the skies from Miami to Santiago would be vented. Conference organisers were so certain that Crandall's day of reckoning had come that they presented him with a real bullet-proof vest before he spoke.
It was a sick joke, but Crandall quickly showed why anyone would give such a gift. After taking to his custom-made podium, he summarily dismissed years of complaints about capacity dumping, unfair pricing, extreme market dominance, and First World marketing power crushing lesser developed countries' attempts to compete. By the end of a 20-minute presentation Crandall had taken credit for everything in Latin America in the past four years except the Chiapas rebellion. Airline privatisations, better aircraft, the rehabilitation of the region as a US tourist destination, and last but not least, the economic growth of the region were all the doing of American Airlines when it purchased Eastern Air Lines' Latin American network in 1991.
It was a remarkable performance. But considering the audience, even more remarkable was the fact that no one questioned or complained about his assertions. Though conference organisers tried to inspire tough questions Crandall walked away from a supposed den of lions without a scratch.
It may have been that Crandall actually got his point across. Just how hard is it to believe that such overwhelming competitive muscle would incite Latin American government and airline officials to make changes, includiing partial privatisation and new yield management techniques? A similar threat by Japan's car manufacturers in the 1970s forced US car makers to become more competitive.
Eastern, Crandall said to many nodding heads, was known for 'sloppy service and demoralised employees.' American came in and spent hundreds of millions of dollars over and above the purchase price and improved service levels. Its influence meant Latin American carriers now have a 'better everything' than in 1990.
But such a rising-tide-raises-all-ships scenario simply does not find much favour among Latin American airline executives. Factors impacting privatisation, like overwhelming debt bills, were at work long before American came to the scene. And though it is undeniable that American's presence in the region, which accounts for 10 per cent of the company's system revenues, has had a large effect, such assertions do little to allay fears of complete dominance by one US carrier.
These fears have pushed Latin American airlines into alliances that have been considered the primary way to combat American's influence. The six-airline Taca alliance has now signed a letter of intent with USAir to begin codesharing and other alliance integration activities. And the LatinPass frequent flyer programme continues to grow and now encompasses 18 airlines.
But these cooperative groupings - especially LatinPass - are still in their infancy, and have so far done only a little to diminish the region's traditions. Small and large countries, fractured by geographic and political boundaries but booming economically, have a host of airlines whose animosity towards each other is often equal to the dislike of American.
Into this milieu comes Robert Crandall, who, many speculate, wants to do two things: limit the growth of the new alliances, and assure American's dominance. He expertly plays the region's traditional divisions by proposing American as the glue to stick it together. Conference chairman Robert Papkin put forth a hypothetical question about the strategy of 'Roberto' Crandall, the chief executive of a small Latin American airline who faced competing with his evil twin brother Robert. Crandall did not hesitate: 'I would work to combine my strengths with his.'
This means allying with American to trade passengers and joining Sabre, American's computer reservation system which is being heavily marketed in Latin America. Having been Roberto for a spell, Crandall reverted back to Robert: 'Why don't you make us an attractive offer?' he asked. 'We want to work with partners to lower collective cost, and stand ready to sign contracts.'
Though the details of such an 'attractive offer' were not mentioned by Crandall, conference participants interpreted his remarks to mean that the Latin American carriers become local feeder operations for American's long-haul services. Attractive though it sounds - giving up the lucrative, long-haul routes to the US - few in attendance were biting. The exception is Trinidad and Tobago's BWIA, recently privatised and now under the control of US executives formerly with Pan Am. BWIA's codesharing alliance with American, which includes listings in Sabre, will give American control of an estimated 80 per cent of the US-Caribbean market, one United Airlines official complains.
Crandall came and went on his own terms, unquestioned by the ones most impacted. It is clear he believes his cause is a righteous one, though it is dubious if he convinced the crowd he silenced. 'There is no reason given the economic vigour and benign regulatory environment that everyone should not be profitable. There is opportunity for all.'
Far be it from anyone to disagree with Robert Crandall.
Source: Airline Business
