All it took was two storms to demonstrate how poorly manned US airlines are today. A winter storm in Denver and another in New York was all it took to virtually grind business to a halt.
Airline managements did not just layoff tens of thousands of people post 9/11, they often eviscerated their teams. The process was overdone. Passengers complained about poor service levels, but kept flying. Fewer planes in the sky meant airlines needed less people. Or so they thought.
The typical ratios airlines used to use, number of employees per aircraft for example, are no longer valid. The ratio could be reduced but nobody knew by how much. Once old planes were parked, fleet maintenance needs were less. Less cabin crew and pilots were needed. Fewer back office people were needed and many back office functions like reservations could be outsourced overseas.
Layoffs were not a panacea. Managers, perhaps in order to stay employed, laid off too many people. Air travel is a service business. Whatever parts of the process that can be automated has been. Airport check-in for example is mostly automated today – often the only task is for the airline to print bag tags and hand the bags to TSA.
With fewer planes, the industry has managed to increase fares sharply over the past year. In 2006 there were 10 price hikes leading to an average 10% increase for the year. Fuel surcharges came on top of that. This increase came after a 3% increase in 2005. Virtually all the airlines made profits last year and 2007 looks to be even better.
However, a service industry does require people to deliver the service. Airlines are starting to hire again and we will likely see thousands of jobs opening up among US airlines. These will not replace the tens of thousands lost, but there is clearly going to be a change of direction. As legacy airlines have started to recover, we have seen a paucity of pilots accepting offers to return – many have found jobs overseas. ATW quotes Qatar's CEO saying "We need up to 800 new flight attendants every year. We also need 220 additional pilots annually." Increased international flights need relatively more cabin crew, so there will be a lot of new jobs in that area. As the storms have shown, airlines need more "people depth" in airport operations – something that cannot be outsourced offshore or automated.
From being a horrible place to be employed, airlines may become attractive again as employers. But now new hires are much more aware of the cyclical nature of the industry. Let us hope the managers have learned not to over do the hiring levels which will inevitably lead to layoffs again.
