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As the worldwide aviation industry faces a profound economic crisis, trade unions are having to challenge complacency and vested interests in the industry. ITF Civil Aviation Secretary SHANE ENRIGHT reports on union efforts to encourage governments and employers into rebuilding air transport on foundations of security and stability.

The hijacking of aircraft as weapons of terrorist attack, followed by a series of tragic crashes and air disasters – and a new and ongoing war – have been the catalyst for an unparalleled crisis in civil aviation. With job losses of 200,000 and counting, aviation trade unions are pressing for changes in the very way that the industry is run.

The high profile failures of Swissair, Belgium’s Sabena, Transbrazil, Canada 3000, and Ansett in Australia have headed a list of vulnerable carriers stretching across five continents. Air New Zealand, Aerolíneas Argentinas, Air Afrique, Aer Lingus, Alitalia, TAP Air Portugal and Olympic are all on the critical list. Elsewhere, privatisation or capitalisation plans are postponed at Turkish Airlines, Air India and Thai Airways, amongst others.

System-wide declines in passenger numbers of 10 to 20 per cent are feeding through into equivalent cuts amongst maintenance, handling and catering suppliers. Calls for cuts in air traffic charges, landing fees and passenger taxes – and renegotiated contracts with suppliers – risk transferring the pain rather than correcting the fundamentals. The result is magnifying the catastrophe manyfold.

LSG-Skychefs, for example, is to cut its US operations by 30 per cent, with more kitchen closures to follow. London’s Heathrow airport has shed 10 per cent of its workforce so far. Similar misery is being experienced worldwide as outstation staff are jettisoned when routes are abandoned, maintenance personnel are laid off as aircraft are mothballed, and air traffic services are squeezed by falling revenues. Other industries from aircraft manufacturers to tourism and airport retail have been hit hard as a direct result of the slump in air travel.

Economic devastation on such a scale is bound to have political consequences and ought to lead to fresh thinking about how the sector can be managed. The notion that aviation has an economically strategic role and might be a part of a nation’s infrastructure has had a welcome airing since 11 September. The United States set the tone with a compensation package for the US carriers worth up to US$15 billion, though the government later back-pedalled. New Zealand’s last-minute bail-out of its flag carrier underlined the strategic importance which that government attaches to air services, while in Canada there has been a debate on re-nationalisation as a condition for support. Unions and the many hundreds of thousands of people directly affected by the aviation crisis are echoing these opinions.

Policy-makers
Some policy-makers, however, see the events of 11 September as an opportunity to accelerate the process of deregulation or to camouflage their own strategic failings. The European Commission is apparently seizing the moment to oversee the rapid consolidation of European carriers into a handful of airlines able to match the big three in the United States.

Critics of state aid point out that the sector was in trouble before 11 September, and argue that weak airlines should not be bailed out. Yet the 20 per cent immediate fall in revenues affecting particularly the core transatlantic market of many carriers (Aer Lingus, for example, gets over 60 per cent of its revenue from these routes) cannot be considered a normal or predictable business risk, and has placed even well managed and solvent companies at risk. In such circumstances, intervention is surely justified.

Moreover, forcing weak airlines to merge will not in itself create strong airlines. The continuing problems of the Air Canada and Canadian Airlines merger offers just one example of the significant costs of integrating services and workforces. How do governments propose that airlines are to find the financial resources required to create healthy mergers? Some airlines don’t even have enough cash to meet their minimum statutory redundancy pay obligations to laid-off staff.

Those trying to hold the line on liberalisation fail to take responsibility for having created the economic framework which has led to decades of turmoil in the sector, with unprecedented numbers of bankruptcies. Competition has hardly made the domestic market in Canada strong, nor has it led to healthy carriers in Australia. Both countries now have only a single dominant domestic player. The picture is repeated across the world as airline failures leave monopoly providers on many routes, and no providers at all on some.

Behind the mantra of “market forces” is an inattention to other factors inhibiting the orderly evolution of air services. Capacity constraints in the form of landing slot, runway or gate limitations and air traffic restrictions make for an imperfect market. “Open Skies” agreements can hardly bring fair competition if the national carriers affected do not have equal access to capital for fleet renewal and expansion. Nor have governments seriously acted to prevent capacity dumping and predatory pricing under such agreements.

Enforced liberalisation has led to fierce competition in ground handling, catering, security services and maintenance as these functions have been subcontracted out by airlines or airports. Rather than generating more choice, however, the effect has been a slow concentration of these services into the hands of a diminishing number of global multinationals, with workers traded like raw materials and transferred from employer to employer. Weakened through permanent price wars, many subcontractors simply do not have the reserves to sit out a massive loss in business.

Air traffic services too have suffered in the crisis. Required by government policy to operate on a non-profit basis, corporatised air traffic services agencies are obliged to hand back to their users any reserves accumulated through fees. As a result, many have no cash cushion to weather the storm. The fixed cost of radar networks and tower installations cannot selectively be switched off. So agencies are looking to shed labour, freeze wages, and increase fees so as to survive.

Many companies are seizing on the downturn as a “golden opportunity” to restructure and shed labour. But workers are resisting. An immediate priority of aviation trade unions since 11 September has been to seek ways of minimising the social impact of the cuts, and there have been some remarkable successes. Though often battling against both governments and executives, labour unions have used a combination of short-time working, fixed-period furloughs, job sharing, deferral of contractual entitlements, and welfare-salary combinations to limit redundancy numbers. They have been supported by political and community alliances that see aviation as a key public service.

Fundamental questions are being asked. If governments are the underwriters of last resort for the aviation industry, and if aviation has key infrastructure and strategic functions, how can it be considered as a purely commercial activity? The issue is not so much a question of privatisation versus nationalisation – there are many different views amongst aviation unions on how best services can be delivered – but rather how the public interest can be defined and met. Aviation unions believe we need to move away from the extreme “laissez-faire” mentality that has brought our industry to its knees. The answer isn’t more or less regulation, but rather more targeted intelligent regulation, what unions have called “smart” regulation.

Two issues have been at the core of union concerns. The first relates to the treatment of aviation employees. The constant pressures on working conditions and the wage bill arising from savage competition have encouraged a reduction in safety training, competence and motivation of aviation workers. Excessive workloads, long hours, inadequate skills, casualisation, and greater work intensity are contributory or causative factors in a growing number of aviation safety incidents.

Aviation unions are calling for a new relationship between employers, governments and workers, one that recognises aviation workers as safety and security professionals. For far too long security has been seen in terms of technological fixes, where machinery is a substitute for people skills rather than a tool to enhance human performance. Aviation companies need to see safety and security as an investment rather than a cost. The days in which aviation industry leaders argue for “the least cost safe option” must be over.

The need for new thinking
The need for new thinking is starkly illustrated by the example of airport security and screening personnel. In some countries these workers are direct employees of airlines or airports, and subject to government set standards of competence. However, in the US, at all four airports from which the hijackings took place on 11 September, screening services were supplied by subcontracted enterprises that competed fiercely on cost. The case of Argenbright Security demonstrates the lengths to which companies will go in a market where the key price discriminator is labour costs.

This scandal, tolerated by an insufficiently independent or rigorous regulator, highlights the need for a complete change of mentality. As debate raged in the US about the best way of delivering front-line security services, the key question was whether the carriers and private subcontractors could be trusted to do the job, and whether the federal regulator could ensure compliance with its own much-abused rules. The eventual answer to both questions by American legislators, responding to a massive shift in public opinion, was a resounding “no”. All 28,000 US airport security workers will now become directly employed by the federal government.

This brings us to the second key union concern: industry fragmentation. Subcontracting risks breaking the essential safety and security line of communication and command. A priority for regulators must be mechanisms that ensure that commercial and contractual relationships cannot fragment safety management and control systems.

These arguments are being pursued vigorously, with some success, at the national level. Globally, the ITF has raised them at the worldwide International Civil Aviation Organisation conference convened in February 2002 to rewrite international security standards.

The ITF argues that human factors need to be at the heart of the new rules, and that regulators must ensure that fragmentation does not undermine safety and security.

A meeting of governments, employers and workers called by the International Labour Organisation in January 2002 also provided an opportunity to test the willingness of all parties to meet our challenge for a new co-operative approach to manage the social, economic and employment consequences of the current crisis.

It is this approach that best promises to unleash the true potential of aviation – as a builder of bridges between communities and societies, as a contributor to global trade and integration, and as a key part of our social and economic fabric.