Up in the Air

Up in the Air: How Airlines Can Improve Performance by Engaging Their Employees

Greg J. Bamber
Jody Hoffer Gittell
Thomas A. Kochan
Andrew von Nordenflycht
Copyright Date: 2009
Edition: 1
Published by: Cornell University Press,
Pages: 240
https://www.jstor.org/stable/10.7591/j.ctt7v6r5
  • Cite this Item
  • Book Info
    Up in the Air
    Book Description:

    When both an industry's workers and its customers report high and rising frustration with the way they are being treated, something is fundamentally wrong. In response to these conditions, many of the world's airlines have made ever-deeper cuts in services and their workforces. Is it too much to expect airlines, or any other enterprise, to provide a fair return to investors, high-quality reliable service to their customers, and good jobs for their employees?

    Measured against these three expectations, the airline industry is failing. In the first five years of the twenty-first century alone, U.S. airlines lost a total of $30 billion while shedding 100,000 jobs, forcing the remaining workers to give up over $15 billion in wages and benefits. Combined with plummeting employee morale, shortages of air traffic controllers, and increased congestion and flight delays, a total collapse of the industry may be coming. Is this state of affairs inevitable? Or is it possible to design a more sustainable, less volatile industry that better balances the objectives of customers, investors, employees, and the wider society? Does deregulation imply total abrogation of government's responsibility to oversee an industry showing the clear signs of deterioration and increasing risk of a pending crisis?

    Greg J. Bamber, Jody Hoffer Gittell, Thomas A. Kochan, and Andrew von Nordenflycht explore such questions in a well-informed and engaging way, using a mix of quantitative evidence and qualitative studies of airlines from North America, Asia, Australia, and Europe. Up in the Air provides clear and realistic strategies for achieving a better, more equitable balance among the interests of customers, employees, and shareholders. Specifically, the authors recommend that firms learn from the innovations of companies like Southwest and Continental Airlines in order to build a positive workplace culture that fosters coordination and commitment to high-quality service, labor relations policies that avoid long drawn-out conflicts in negotiating new agreements, and business strategies that can sustain investor, employee, and customer support through the ups and downs of business cycles.

    eISBN: 978-0-8014-5833-0
    Subjects: Business

Table of Contents

  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-viii)
  3. Preface
    (pp. ix-xiv)
  4. CHAPTER 1 Low-Cost Competition in the Airline Industry
    (pp. 1-14)

    These words from a front-page story in the December 22, 2007, issue of the New York Times should serve as a wake-up call to all those responsible for America’s air transportation system: “And you thought the passengers were mad. . . . Airline employees are fed up, too—with pay cuts, increased workloads and management’s miserly ways, which leave workers to explain to often-enraged passengers why flying has become such a miserable experience.”¹ The story goes on to report comments from US Airways’ employees in a question-and-answer session with their chief executive officer. The employees’ frustrations came through loud and...

  5. CHAPTER 2 Developments in the U.S. Airline Industry
    (pp. 15-27)

    Labor relations in the U.S. airline industry have often been a high-stakes enterprise. The national interest in airlines was recognized in the 1930s just as the industry was getting off the ground. After lobbying by the Air Line Pilots Association (ALPA), in 1936 the federal government brought airlines under the same labor law, the Railway Labor Act (RLA), that governs railroads, the other large transportation sector deemed worthy of national labor regulation. Thus the basic structure of labor relations in U.S. airlines was born. This structure came to be known as “class and craft” to signify that each occupational group...

  6. CHAPTER 3 Developments in the Airline Industry in Other Countries
    (pp. 28-60)

    To what extent have airline managers, union leaders, and policymakers in other countries tried different approaches to competitive and employment-relations strategies? Are the volatility and innovation in the U.S. airline industry exceptional or are the strategies chosen in other countries’ airlines converging on U.S. patterns? What might policymakers and others in the United States learn from other countries? Do cultural and institutional differences in other countries influence how airlines compete, interact with their employees, and serve their customers? To answer these questions, we will consider selected examples from elsewhere in the world.

    Historically, the United States has had the world’s...

  7. CHAPTER 4 Industry Trends in Costs, Productivity, Quality, and Morale
    (pp. 61-85)

    The growth of low-cost competition initiated by new entrants and the other changes introduced by legacy airlines in the early years of the twenty-first century are transforming the airline industry in fundamental ways. In this chapter we summarize a large body of data to take stock of the results of this transformation. Our focus is on variations and changes in costs, productivity, quality, morale, and labor-relations outcomes in U.S. firms where the data are most readily available. Where possible we compare trends in the United States with those in Europe and Asia.

    What has happened to the cost differential between...

  8. CHAPTER 5 Alternative Strategies for New Entrants: Southwest vs. Ryanair
    (pp. 86-123)

    New-entrant airlines that compete on costs are transforming the global airline industry. Their low-cost competitive strategies are the most visible part of their impact. Although less visible, their employment-relations strategies are also transforming the industry. This chapter considers the variations in the employment-relations strategies we observed among new entrants in the United States and other countries. We first describe the employment-relations strategy of Southwest Airlines, based on employee commitment and union partnership. Southwest is the longest-surviving new entrant and a prototype that many other firms have looked to as they entered the industry. We then contrast the Southwest approach with...

  9. CHAPTER 6 The Legacy Responses: Alternative Approaches
    (pp. 124-166)

    One industry insider referred to legacy airlines as “dinosaurs.” But unlike the dinosaurs, the legacies are certainly not extinct. Many of them are reinventing themselves. Although new entrants have become an increasingly significant segment of the airline industry, most of the industry’s revenue, passengers, and employees are still generated, flown, and employed by large legacy airlines. Thus the impact of the new-entrant airlines on the industry’s employment relations comes not only directly from their own practices but also indirectly, from the reactions of the legacies to the rise of low-cost competition.

    In chapter 2 we discussed the development of the...

  10. CHAPTER 7 Building a More Balanced Airline Industry
    (pp. 167-198)

    The global airline industry is undergoing a transformation driven by increased price competition that has arisen from three interrelated forces: deregulation of product markets, the growth of new lower-cost entrants, and increasing customer price sensitivity. Older legacy carriers have responded by dramatically cutting labor costs in an effort to close the cost and price gap with new entrants. Although these trends emerged first in the United States, they have spread to other countries, albeit in somewhat more varied fashion.

    For the most part these changes have been a boon to customers as air travel is more affordable and accessible than...

  11. Notes
    (pp. 199-214)
  12. Index
    (pp. 215-222)