The British Air Line Pilots Association (BALPA) has published a review of Up in the Air: How Airlines Can Improve Performance by Engaging their Employees, the book authored by several members of the Airline Industry Council.

 Below is an extract from The Log, British Air Line Pilot’s Association, April/May, 2009

“Our pick of the best aviation-inspired books this month

Up in the Air: How Airlines can Improve Performance by Engaging their Employees.

By Greg J Bamber, Thomas A Kochan, Jody Hoffer Gittell, Andrew von Nordenflycht, Cornell University Press, New York, ISBN 987-0-8014-4747-1

This refreshingly readable and persuasive book challenges the emerging orthodoxy that low-cost must mean low staff morale and low customer satisfaction. Drawing on examples from across the world, including ‘legacy’ airlines such as British Airways and new entrants such as Ryanair and easyJet, the authors analyse the competitive and employment-relations strategies that airlines have adopted. Outcomes for customers, employees, and other stakeholders are analysed. The authors categorise employment-relations strategies as either controlling employee behaviour, or aiming to foster commitment.  

In terms of relationships with Unions, airlines can seek to avoid or oppose Unions, accommodate them by accepting their legitimacy or partner with Unions seeking to establish a deeper relationship than contractually required. The authors suggest that Ryanair’s employment strategy is to focus on low costs via anti-unionism and employee control. British Airways appears to accommodate Unions and practises more of a control approach. By contrast, Southwest adopts much more of a partnership and commitment approach. One paradox is that the rhetoric of some airlines has emphasised the importance of fostering employee commitment and offering good customer service, while simultaneously seeking to reduce employees’ economic rewards or other benefits. Such airlines are not reaping the potential advantages of developing partner relationships with their workforce and Unions. This highlights, according to the book, that the trinity of sustained profitability for investors, good customer service and positive relations with employees can be achieved with positive industrial-relations strategies. The authors suggest that the genuine partnerships should feature: joint commitment to the success of the enterprise; efforts to build trust; employment security in exchange for flexibility; quality training programmes; information sharing and joint problem solving with managers and employees.

To maintain a more sustainable airline industry, with more economic security, there is a need for bold and open-minded leadership. Regrettably the book could easily be overlooked in the face of gathering economic clouds. But, as Southwest founder Herb Kelleher observed, ‘nothing kills your culture like layoffs’, so how the economic downturn is navigated will be crucial to how companies emerge from the downturn. “

– Jim McAuslan General Secretary of the British Airline Pilots’ Association (BALPA), London

The Global Airline Industry

click here for the book’s page on Amazon

Airline Industry Council members Andrew von Nordenflycht, Jody Hoffer Gittell, Tom Kochan and Greg Bamber are contributors to a soon-to-be-released textbook on the airline industry, published by Wiley.

The Global Airline Industry provides a comprehensive introduction to the airline industry as part of the overall air transportation system.

Includes sections on Air Transportation Economics, Airline Planning and Operations, Industrial Relations and Human Resource Issues, Aviation Safety and Security, Aviation Infrastructure and Environmental Impacts and Airline Marketing and Distribution.

Accompanied by a companion website housing databases with regular updates of airline & air transport related statistics and information as well as updates of the book material.
1. Introduction and Overview (Peter P. Belobaba and
Amedeo Odoni)
2. The International Institutional and Regulatory
Environment (Amedeo Odoni)
3. Overview of Airline Economics, Markets and Demand
(Peter P. Belobaba)
4. Fundamentals of Pricing and Revenue Management
(Peter P. Belobaba)
5. Airline Operating Costs and Measures of Productivity
(Peter P. Belobaba)
6. The Airline Planning Process (Peter P. Belobaba)
7. Airline Schedule Optimization (Cynthia Barnhart)
8. Airline Flight Operations (Alan H. Midkiff, R. John
Hansman and Tom G. Reynolds)
9. Irregular Operations: Schedule Recovery and
Robustness (Cynthia Barnhart)
10. Labor Relations and Human Resource Management
(Jody Hoffer Gittell, Andrew von Nordenflycht,
Thomas A. Kochan, Robert McKersie and Greg J. Bamber)
11. Aviation Safety and Security (Arnold Barnett)
12. Airports (Amedeo Odoni)
13. Air Traffic Control (R. John Hansman and Amedeo
Odoni)
14. Air Transport and the Environment (Karen Marais and
Ian A. Waitz)
15. Information Technology in Airline Operations,
Distribution and Passenger Processing (Peter
Belobaba, William Swelbar and Cynthia Barnhart)
16. Critical Issues and Prospects for the Global Airline
Industry (William Swelbar and Peter Belobaba)

Labor Demands Cloud AMR Outlook

By MIKE ESTERL
FORT WORTH, Texas — American Airlines is mired in increasingly contentious labor negotiations with its pilots, flight attendants and maintenance crews — six years after union concessions allowed the carrier to avoid bankruptcy protection. …

read full article here

(by Andrew von Nordenflycht, Airline Industry Council)

The issue of executive compensation is looming large in the current and impending labor negotiations across airlines, especially of course at American. So I was curious about the relative state of airline executive pay.

Below is a quick analysis of average CEO compensation at airlines vs. across the industry as a whole each year from 1992 to 2006. It shows that on average, airline CEOs always receive lower salaries and bonuses than the economy-wide average — and that this gap widened considerably after 2000.  So while airline CEOs certainly take home higher compensation than airline employees, they certainly take home less than other CEOs — and they have certainly experienced reduced salary and bonuses since the industry’s post-9/11 restructuring began. (a few data details provided below the charts). I will try to post additional analyses over time.

These statistics are based on the ExecuComp database. They consider cash compensation only, thus excluding any stock-based compensation. The data are from publicly-traded companies only. The airline average is comprised of 18 US airlines, including 7 major legacy carriers, 4 low-cost carriers, and 7 regional and commuter airlines.

Thu, Mar. 26, 2009 Fort Worth Star Telegram
By TREBOR BANSTETTER
tbanstetter@star-telegram.comSouthwest Airlines has signed a tentative contract with its flight attendants that will boost pay and benefits, the third major union deal the airline has reached in recent months.
Officials with the Dallas-based airline and the Transport Workers Union signed off on the deal Thursday. Details of the accord were not yet available, but Southwest has recently negotiated agreements with pilots and mechanics that included wage increases.

 full article

Fort Worth Star Telegram
Posted on Sun, Mar. 22, 2009
By TREBOR BANSTETTER
“… Labor officials are criticizing executives with American Airlines parent AMR Corp., comparing a slate of upcoming executive bonuses to payouts distributed by the bailed-out insurance giant American International Group.

…The comparison to the poster child for corporate gluttony may be a difficult one. Despite its financial troubles, American hasn’t received taxpayer money. And the airline’s executive bonuses will be far less lucrative than the $165 million in retention payments to top AIG managers.

… The airline’s bonuses, based on AMR’s stock performance during the past three years, will be much smaller than previous payouts. AMR’s shares have fallen steeply during the past year and performed worse than those of several rival carriers.”

full article

American Airlines pilots union board censures top two officers

By Trebor Banstetter tbanstetter@star-telegram.com

The board of the American Airlines pilots union has censured the organization’s top two officers, in a rare public display of infighting at the high-profile labor group.

to read more: http://www.star-telegram.com/workandmoney/story/1270044.html

The ILR Press of Cornell University just published

This book stems from research sponsored by the Airline Industry Council and supported by our FMCS grant. The book provides a comprehensive history and survey of employment and labor relations practices among both new entrant and legacy airlines all around the world. Based on this analysis, it identifies lessons for airline managers, union leaders, and governtment policy makers for improving the performance and stability of the airline industry for all stakeholders.

Further description can be found and orders can be placed at Amazon: Up in the Air

Welcome to the Airline Industry Council blog site

PRESS RELEASE:
LERA Airline Industry Council Receives FMCS Grant
One-year Project Underway to Study Low Cost Carriers
For Release: March 4, 2005

View .pdf file of this press release

The LERA Airline Industry Council has announced it is the recipient of a $125,000 grant from the Federal Mediation and Conciliation Service. The grant will fund a project to investigate case studies of firms operating as lower cost airlines in the U.S. and other parts of the world and to identify training needs and opportunities for enhancing the effectiveness of the labor relations system in the industry.

The grant was announced on February 18 by LERA Airline Industry Council co-chairs Thomas A. Kochan of MIT; Jody Hoffer-Gittell of Brandeis University; Patricia Friend, president of the Association of Flight Attendants (AFA); and Rob DeLucia, vice president of the Airline Industrial Relations Conference. The council’s labor-management committee plans to meet at least bimonthly and with larger groups of labor-management participants to discuss the research and its implications. The National Mediation Board will also be a partner in the discussions.

Patricia Friend, pointed out the AFA was supporting the initiative believing that a cooperative labor-management relationship will ensure the long term success of the airline industry. “We hope with this grant, we are able to create a forum that allows for meaningful and productive labor-management dialog that will result in a true partnership in our industry.”

It is expected that this FMCS grant will enable labor and management to jointly achieve several specific results by supporting expanded and on-going Airline Industry Council meetings that engage leaders from business, labor, government, the neutral community, and academia in analysis, discussion, and dissemination of research and innovations in the industry.

The achievement of these objectives will lay the groundwork for improvements in several areas: improved labor-management relationships, improved job security and organizational effectiveness at the airlines involved, more involvement by workers in decisions affecting their working lives, and improved communications between union and industry leaders as well as between unions and their membership. Progress in these areas will contribute to a qualitatively better work environment in the industry and will strengthen both individual air carriers and the overall industry.

Kochan outlined some of the areas of study regarding the lower cost, regional and “point to point” carriers. He explained three questions about this sector are of central interest to all parties in the industry. Is a new model of labor-management relations emerging in this sector that will avoid some or all of the pitfalls experienced in the older hub and spoke segment of the industry? Are some of the same variations in the quality of relationships observed among the older carriers present across the newer firms? What can be learned from studying these newer carriers about the longer term dynamics and prospects for the industry?
Another major objective of the project will be to identify training needs and opportunities for enhancing the effectiveness of the labor relations system in the industry. It is anticipated that training would encompass topics such as interest-based negotiations, development and use of voluntary protocols for negotiations and use of National Mediation Board resources and procedures, employee participation in workplace problem solving, basic training in the economics and financial future of the industry, and other topics of mutual interest the parties choose as priority topics.

“The National Mediation Board is a critical partner in efforts to improve the conduct of collective bargaining and dispute resolution in this industry and has been an active participant in the dialog that preceded formation of the Council,” Kochan commented. Its members are also charter members of the Council and will be active participants in its deliberations and analysis.

The Project is co-sponsored by the MIT Global Airlines Industry Program and LERA, through a grant to support LERA Industry Councils made possible by the Alfred P. Sloan Foundation
The LERA Airlines Industry Council is one of seven chartered or soon-to-be chartered councils in the Labor and Employment Relations Association. Those other councils include Aerospace, Automobile, Construction, Health Care, Public Sector-Federal, and Utilities. For more information on the grant, Airlines Council, or LERA industry Councils, visit the LERA website at www.lera.uiuc.edu.

For more information contact:
Airlines Industry Council
Labor and Employment Relations Association
Email: LERAoffice@illinois.edu