Few industries have faced the assaults that have battered the airlines over the last fifteen years or so. 9/11 delivered a the literal smash to the face sending the very heart of this industry into fibrillation’s. Following this, the erosive grind of intensifying customer demands for cheap services and relentless cost cutting has left established workforces reeling as companies struggle to satisfy both customer and shareholder alike.
Major carriers are finding themselves at a disadvantage going against the emergent nimble upstarts. Small airlines early in their life contract out maintenance and other capital and labour intensive functions writing employment contracts that the established giants can only crave. It isn’t that the new starts necessarily pay badly, it’s their relative youth that delivers benefit in that they don’t have the burden of experienced and established employees to carry with their accrued service benefits. Advantages originating from more genteel times during relatively placid market conditions. They are cheaper to run and difficult to compete with on cost. So what on earth can the ‘legacy’ carriers do?
Enter the phenomena of the ‘Parasitic Airline’. That delightfully named corporate gem that has crept onto the scene to change the landscape and enabled ‘old clothing’ to be shed and dumped. Old clothing in the form of employees with agreed terms and conditions of service that have been earned with loyalty and service. They have become ‘outdated and outpaced by the force of change’.
It started with American Airlines introducing American Eagle as a small turbo-prop subsidiary serving thin routes and feeding the mother company. Now it has jets, is the eighth largest carrier in the USA and it is eating its mother. Qantas rubbed its hands and fired up a new company called Jetstar and has not looked back – even for a minute. Jetstar has exploded across the Far East operating out of Qantas bases competing directly with its mother company.
Perhaps, (and I need to say perhaps because we don’t know) in an attempt to replicate the model, British Airways has started Open Skies, a new start airline.
Strangely, industry watchers just don’t seem to understand what this new venture is about as it appears to be poorly positioned and ill equipped to make a significant impact. In one recent podcast analysts being interviewed by Addison Schonland of IAG ran over the factors and were unable to make any sense of the strategy and concluded that BA had made an error in a half hearted attempt to respond to competition. I believe they missed the point, at least they almost did. In the closing moments of the podcast, Tim the final speaker may have hit the nail on the head when he decided that there was a deeper agenda in the formation of Open Skies; he just couldn’t identify it. Supposition of course, we don’t know yet, do we?
British Airways pilots look as though they may well clash horns with their Leadership Team over the issue of crewing the new carrier. BA insists that ‘OS’ is a different company and wants autonomy for the managers and the pilots in the ‘new start’ airline. BALPA, the pilots association, insists that the airline is wholly owned, funded, maintained and will be managed by the parent company and as such IS BA.
A common seniority list is being insisted upon by the pilots as they say to do any less would allow ‘parasitic action’ (as witnessed elsewhere) to drive down terms and condition of service within the parent company. At least that is the concern, there has been nothing of any substance produced by British Airways managers to allay that fear beyond vague assurances. This is not seen as boding well by a savvy and astute BALPA.
BA pilots have some sympathy with the thrust to lower costs, we have been living and working with it for decades as the government owned leviathan has been trimmed down to form the relatively lean profit maker the new BA is now. Pilot productivity has risen to the point where it has no peer within Europe and probably the US as well. The drives in this direction have taken our rolling flying hours toward the 900 per annum mark with some pilots requiring compulsory roster breaks to return to legal limits. We love hard work, enjoy the flying and work hard collectively towards making the airline safe and a great success.
Willie Walsh has a considerable job on his hands, he has kept a back seat for now but will undoubtedly come to the fore later. I can tell you that he retains the respect and admiration of his workforce at the moment, I hope that it will survive the coming months. We all hope ardently that common sense will prevail and that an agreement that will allay fears and safeguard pilots interests will be reached. In the end, the negotiating table is where the future lies, not the mortuary slab. A point, that without doubt is not lost on all parties.
These will necessarily be my last words on the subject. I love my job and want to keep it.
Feb 03, 2008
Disclosure – I was one of the participant analysts on the podcast mentioned here.
While I fully empathize with the BA pilots on the issues raised in both our podcast and a subsequent IAG podcast on the New LCY-JFK service, I feel the logic of the post is flawed here.
I personally cannot see how a small airline of 2-6 aircraft is going to bring down BA’s pilot agreements. Especially when the concept(s) are flawed commercially. BA already has had interests in other airlines in the past who could have provided a better launching pad for alternative pilot sources than either the LCY service or OpenSkies. Yet it did not use them for this purpose. So why would they now?
Let me make 2 further points of interest which might assist the debate.
QF has for many years employed contract cabin staff who, at one stage, who made up nearly 10% of the whole cabin crew. This was exposed a few years back with the now famous bathroom episode of ‘How I led Ralph Fiennes astray at 35,000ft’. Use of contract staffers is far more insidious. Extending the model to mainline pilots has been common practice for Asian carriers for a very long time. Bringing that model into European Full Service Carriers should be a bigger concern.
However perhaps the most important factor to remember is that it is a seller’s market for pilots at the moment. Tracking pilot availability to aircraft orders shows a gap occurring in the years ahead. Perhaps more telling will be BA’s training programs and their adequacy to meet the looming shortage of skilled high quality chaps (and chapesses) sitting in the sharp end. Should BA fail to prime this pump adequately then it can easily make the case for employing contractors. Then I as a Gold Card holder will get worried.
Cheers
Timothy
Feb 03, 2008
Hi Timothy,
Thanks for your response. I am afraid there is a limit to the depth that I can get involved to here because of my position; I will try to answer your questions without hanging myself.
Firstly, size of the airline.
If the company had plans that limited the size of the company (OS) then I would agree with you. The pilots representatives have no sight of the business plan and therefore must proceed on the assumption that the model will follow successful models elsewhere. American Eagle and Jetstar as written. To talk of a flawed commercial concept would indicate that you had sight of the business plan Timothy? As that is unlikely to be the case could I suggest that we are both in the dark as to the nature of the company’s plan.
Use of other ‘House’ airlines? I have no idea, ask the company Tim. The percertion among the pilots is that BA/OS wanted a clean sheet to be able to recruit the most suitable applicants. Bear in mind that ETOPS operations will be required from day one and long haul experience is really a pre-requisite for this form of operation. If not in all of its members by number, there does need to be a core competence within the operation to satisfly the CAA.
Please do not be concerned that Open Skies will employ ‘contract staff. The company is carrying out a pilot recruitment program aimed at employing full time staff on permanent contracts, just as any other airline would.
There is no implication anywhere in my post that contract pilots would fly for OS. The concern is simply that they would be employed by British Airways (OS) and be in a position to undermine BA Mainline pilots terms and conditions of service.
There are opportunities in the new carrier that should be available to all of the pilots currently employed by BA. That is the opinion of BALPA and the information is in the public domain.
Last point. The ‘market’ for pilots at the moment is buoyant, as you say the number of hulls coming into service far outstrips the supply of pilots. I agree, yes we are graced with a ‘joker’ from the cyclic pilot supply market. Yes, the pressure will be on all carriers to keep conditions fertile so that they attract the most suitably qualified applicants.
My belief is that the major carriers of the world have done insufficient to recruit and train pilots over the years relying heavily on their ability to attract suitable applicants. This has largely happened and it is only now that the shortage is starting to hit the top end of the food chain.
The lower end is a different story of course. Even the majors are now starting to have in some cases severe pressure placed on their recruiting systems by shortage. Particularly those where local living and social conditions deter people from committing to a long term contract. As you know in the airline world pilots live with a ‘snakes and ladders’ system. However senior you may be with one company, it matters not if you leave and join another. You will join as the most junior new hire unless you are being recruited for a specific managerial position. This factor alone stifles movement and partly nullifies any advantage we may have felt from a general pilot undersupply.
As a long haul Captain who has flown for British Airways for nearly nineteen years and observed some of the most tumultuous events ever experienced by the airline industry, can I assure you that I can foresee NO circumstances where the company would employ ‘contract labour’. British Airways spends a kings ransom on safety related systems and crew training, to see it compromised in any way is outside the realms of possibility. Please be reassured that whatever the state of industrial relations at British Airways, operational standards would never be compromised – it just isn’t in our ethos. That is not a company line you are hearing there, THAT is part of the driving force that gets me out of bed in the morning and keeps me going when the going gets tough.
Thanks for the response Timothy, I hope I have answered your questions adequately. For what it’s worth, I believe your analysis toward the close of your podcast was very near the mark.
Kind regards,
Norman
As dreary as this may sound, I must re-iterate that the opinions that you read above are my personal opinions and not those of my employer.