The Impact of Airline Layoffs

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With rising fuel costs, airlines have come under increasing pressure and profit margins have dwindled. This has led to substantial job cuts across the industry and in some organizations in particular. The expected loss in airline jobs across the industry in 2008 is 20,000, and airline losses could well exceed $13 billion this year. In a joint letter to Congress, nine major airlines stated that the job losses could be blamed on excessive speculation which has driven up oil prices. Oil companies BP and Shell disagree, claiming that supply has been unable to keep up with demand. Whatever the reason for the increase, the cost of aircraft fuel has doubled in the past year.

This new range of job cuts comes on top of almost a decade of sporadic reductions in airline jobs due to outsourcing of maintenance contracts, sometimes to overseas locations. More than two thirds of maintenance for American airliners is carried out by private contractors. This is an increase of 30% since 1997.

The need to increase profitability has also required increased productivity from employees such as flight stewards and administrative staff. Many airlines have sent their call center operations offshore in a further effort to reduce costs. For example, Delta saved $25 million in 2003 when it transferred 1,000 call center jobs to India.

The combined effect of these job cuts over time has been to increase competition for the fewer airline jobs advertised and in some cases put downward pressure on wages. Specialized airline industry staff who have been laid off can find it extremely difficult to find new employment in the industry, and most have to seek employment elsewhere. They may even need to retrain in order to be able to land another job with comparable salary and conditions.

The massive airline industry layoffs that have occurred across the United States do not necessarily reflect an equal loss in the job market overall. This is because many of the layoffs are due to the decision to outsource work to private contractors who have offered to do the work at a substantially lower price than the company would have to pay to do it itself. Concerns have been raised, however, about the quality of such work, particularly when conducted overseas.

Since September 11, 2001, 100,000 airline jobs have been lost across the country. On top of this, thousands of workers at US Airways have lost most of their pensions, and further pension plans are at risk.

Most of the planned job cuts for 2008 will occur in the following companies:
  • American Airlines
American Airlines plans to shed 900 flight attendant positions by August 31, 2008. However, this is not all. They claim they need to lay off about 8% of their workforce in order to remain viable. American Airlines currently employs about 85,500 workers, which suggests they are about to shed more than 6,800 airline jobs.
  • Delta Airlines
Delta plans to cut 4,000 jobs from its main airline operation as well as its IT subsidiary. They are seeking to downsize their frontline employees, including flight attendants, administration, and management by 2,000 people.
  • Continental Airlines
Continental plans to cut 3,000 airline jobs after their peak summer season. This equates to 6.5% of their total workforce. They are scaling down their business operations to cope with soaring fuel costs, and are retiring 67 of their older aircraft by 2009. This is in addition to the six aircraft taken out of service in 2008.
  • US Airways Group
US Airways Group plans to cut jobs by 1,700, letting go approximately 200 management and administrative staff, 300 pilots, 400 flight attendants, and 800 airport employees. They also plan to reduce domestic capacity by 6-8% in the fourth quarter of 2008.
  • UAL Corp — Parent Company to United Airlines
UAL is planning to shed between 1,400 and 1,600 jobs and eliminate 100 planes from its fleet in order to stay operational. United states that it needs to reduce its domestic capacity by 14% and to redefine itself in the market place.

The loss of airline jobs reverberates throughout the whole economy, impacting the entire travel and tourism sector as well as all sectors that serve the aircraft industry. Furthermore, the loss of money circulating in the economy as a result of job cuts can affect the retail sector, and consequently retail jobs, particularly in regional communities. In regional locations where airlines had employed a large number of people, there has been an immediate and significant impact on the local economy. In larger cities, the impact has been less noticeable but still present.

The elimination of 20,000 airline jobs in 2008 will have a flow on effect on the national job market, but will be most noticeable in smaller markets in which an airline is a prominent employer. The loss of a major employer in a smaller community regularly leads to further job losses in the community. The solution lies in government action to bring new business into such areas in order to create new employment opportunities.
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 costs  organizations  airline industry  operations  oil prices  American Airlines  job market  United States

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