Previous Article Next Article Turbulent timesOn 5 Feb 2002 in Personnel Today Comments are closed. The effects of 11 September hit the airline business harder than most, andwhile the shock waves reverberate around the industry, the challenge for HRprofessionals is to keep their feet firmly on the ground, says Jane LewisIt is just as well the travel industry regards itself as one of the mostresilient in the economy, because it has certainly taken more than its fairshare of knocks in the past year. Old hands insist the current crisis is theworst the industry has faced since it was almost wiped out by the Opec oilshortages in the 1970s. “We’ve had the early-80s recession, the 1987 stockmarket crash, the Gulf War and Black Wednesday,” says British Midlandveteran boss Sir Michael Bishop. “But in terms of seismic shock, this isthe worst”. Within days of the terrorist strikes in September, the travel sector was inturmoil as shock waves began to reverberate across the industry. With bookingsplummeting by as much as 40 per cent, some companies took immediate and drasticaction. It is estimated that 200,000 jobs were axed in the airline industryworldwide during the autumn months – including more than 7,000 at BritishAirways and 1,200 at Virgin Atlantic, both of whose key transatlantic routeswere among the worst hit. The knock-on effect on the aviation supply industrieslooked equally worrying. By November more than 8,000 manufacturing jobs hadbeen cut and Boeing was threatening to slash up to 31,000 from its workforce. The UK holiday industry – parts of which had already been hit by thelong-running foot-and-mouth saga – was equally badly bitten. “We had a blindingly good year until 11 September, way aboveprojection,” says Richard Good, personnel manager at long-haul specialistKuoni Travel. “But then we took a massive hit, and lost about 51 per centof our business almost overnight. We’ve been going 30 years in the UK and havenever had to make redundancies before.” The firm is seeking to cut 10 per cent of its workforce. If everything worksout this year, he says, Kuoni may be able to claw back to the level it was atin 1996. Despite a constant spate of setbacks (the anthrax and shoe-bomber scares;and now warnings from the Government that too much exotic travel is proving badfor the nation’s health), the industry has somehow staggered into the New Yearbolstered by the belief that the worst may be over. The Taliban are defeatedand public confidence is improving: More than a million Britons took to theskies over Christmas – “firm evidence” says airport operator BAA,that “things are picking up”. As everyone in the industry enjoysreminding each other, recovery after the Gulf War kicked in pretty quickly oncehostilities ceased, even though bookings dipped by 60 per cent at the height ofthe crisis. But there is a very real worry that recovery this time around may beconsiderably longer in coming and a good deal more difficult to achieve than itwas 10 years ago. This is mainly because so many of the economic factors now threateningthe travel industry were already in place well before 11 September. With the USteetering on full-blown recession and prospects looking none to happy inEurope, who can say how long consumers in Britain will continue to hold theirnerve. Many economists believe the credit-fuelled spending spree the countryembarked on over Christmas could well prove ‘the last hoorah’. According to one industry source, reservations at the four top touroperators, Thomson, Airtours, First Choice and JMC – though certainly betterthan they were two months ago – are still down by a quarter on what they werethis time last year. All four have responded by slashing capacity this summerby 15 per cent, but the situation for many has been compounded by the risingcosts they face in the wake of 11 September – the charter airlines that many ofthem own are becoming more expensive to run because of higher insurancepremiums and new security measures. So pronounced is this long-term economic trend, it has been argued the eventsof 11 September provided a useful pretext for job cuts that were on the cardsanyway. This may be particularly true of the European airline industry which isstill dominated by a host of loss-making, state-subsidised national carriersthat have been ripe for consolidation for some time. Certainly the upheavalfollowing the terrorist attacks proved the final nail in the coffin for atleast two state monoliths – Belgium’s Sabena and Swissair – and there aregrowing fears about the futures at Aer Lingus, Greece’s Olympic Airways andAlitalia. To some extent “the runes were already cast”, says EasyJet head ofpeople and organisational development Chris Goscomb. Indeed, the continuingsuccess of low-cost carriers like EasyJet and its rival Ryanair throughout theautumn months seems to indicate that if people were nervous about flying, theyhave been able to quickly brush aside those fears as long as the price wasright. As Go CEO Barbara Cassani points out: “People umming and aahingabout whether or not to fly to Italy this weekend see eye-poppingly low faresand say ‘let’s do it’.” Whatever the underlying reasons for the shake-up in the travel industry, onething is clear: The past few months have proved more than usually challengingfor HR – and may well come to be seen as a test-bed for how well new theoriesabout people management in times of economic crisis hold up in real life. Even those who got off lightest claim the process of stemming panic andrefocusing minds in the aftermath of the attacks has been a nerve-wrackingprocess. “From an operations perspective we’ve learned a lot about how wecommunicate with people,” says Goscomb. The company majored oninformation: giving staff constant updates of “what was going on” and”what we were doing”, he says. Above all, he adds, “we focusedon security and the long-term aims of the business. Sticking to the knittingwas the most important thing”. Ryanair, meanwhile, tackled the situation head-on, galvanising staff withthe same gutsy, go-getting attitude it featured in its customer advertising.‘Let’s Fight Back!’ ran the slogan, next to a picture of General Kitchener (aninteresting choice for an Irish company). But the campaign seemed to do thetrick. “Morale at Ryanair,” says one company source “has never beenbetter.” Elsewhere in the industry, this couldn’t be further from the truth. The UKtour operators, in particular, have been hit hard by a bruising period ofuncertainty and retrenchment. “It’s fair to say that morale has beendifficult,” says Peter Constanti, interim HR director at JMC, part ofThomas Cook. “We’ve had to take some tough decisions.” You can saythat again. Things got so bloody at Thomas Cook in recent months (2,000 of thegroup’s 13,000 workforce have already been chopped), that even the company’sSouth African CEO, Alan Stewart, has taken to calling himself the ‘AfricanAxeman’. But in recent weeks, says Constanti, “there’s been a realabout-turn”, sparked by the belief that the consolidation programme”is well on its way to achieving its objectives”, even though thesewon’t be fully realised till the back end of 2002 at the earliest. The group’sremaining workforce have also been asked to take a 3 to 10 per cent pay cut. At least Thomas Cook’s top executives followed suit by taking substantialsalary reductions themselves – more than can be said for board members at rivalAirtours (shortly to be renamed MyTravel), who awarded themselves bonusestotalling £2m last year – in the same period that 2,800 staff, roughly 10 percent of the workforce, lost their jobs. The situation for many employers has been made easier by the long-term trendfor more flexible working contracts in the travel industry, says Richard Cox ofManpower. And there is certainly encouraging evidence to suggest that HRdirectors are also taking a more imaginative, less earth-shattering, approachto the process of retrenchment this time around. For once, it seems, lessonshave been learned. With the memory of the recent skills shortage fresh in theminds of many, the emphasis in some of the more enlightened operations has beenupon measured cutting with an eye to the future. Good employers are looking for solutions like shorter hours and careerbreaks, At BA, staff options put into practice in recent months include part-timeworking, job sharing and unpaid leave. Anything, in fact, that may help reducecosts without undoing the investment already made in the company’s workforce. Indeed, some of the more innovative HR compromises that have been struck inrecent weeks have been hailed by at least one trade association as “theway forward for the whole of British industry”. Typical, perhaps, was thewillingness of pilots at First Choice’s Air 2000 charter airline to save morethan 50 jobs by taking a temporary deferment of pay – in some cases evenagreeing to demotions. A similarly ground-breaking deal at airline manufacturer Airbus helped savethe jobs of 1000 aerospace workers just before Christmas. By voting to cut theworking week, employees will save the company up to £17m in costs as well assafeguarding its skills-base. The agreement, says Sir Ken Jackson, generalsecretary of the Amalgamated Engineering and Electrical Union, “put jobsecurity and protecting the skills base and capacity at the top of the agenda”and showed what could be achieved when unions and management worked inpartnership. Others paid tribute to Airbus for “not panicking in the waysome companies have”. It is clear those companies that do make it through the crisis intact willemerge stronger for it. “It looks bleak at the moment,” says BenHall, spokesman for Virgin Atlantic. “But we will come through and we willbe strong afterwards.” However, as Constanti points out, the real test forthe holiday industry lies ahead. “The critical time for the industry isgoing to be January, February and March,” he says. “If you’re not outof the woods by the end of March, you’ll know you’re not out of thewoods.” Despite warnings from the Association of British Travel Agents that theeffects of the economic downturn on the industry could still be felt in 2005,the long-term prospects for the industry are sanguine, says David Thomas, CEOof the Careers Research and Advice Centre, because it is recognised that”travel and leisure are key elements of the modern economy”. The chief problem for HR in the meantime will be handling uncertainty. Butthat task, argue the experts, will undoubtedly be made easier by the industry’sconsiderable past experience in handling peaks and troughs. The sector istraditionally quick to react to economic cycles: it is often the first tosuffer and the first to recover. As such, many other sectors on the brink ofdownturn, would do well to study its form. “Travel is a permanentlymoveable feast,” says Constanti. “In this industry people are prettyresilient. It’s a fun industry: there’s general feeling of ‘let’s get back tothe enjoyment’.” Telecoms technology cashes inIf one sector’s crisis is another’s opportunity, thebeleaguered high-tech industry has been having a ball at the travel industry’sexpense. The crisis in business confidence that has affected the airlines sobadly has proved a boon to the battered telecoms firms peddling alternativemeans of communication – most notably, broadband video and teleconferencing.According to one expert, it could well prove the catalyst that puts thesetechnologies firmly on the daily business schedule in many companies.More than 33 per cent of major UK corporations have cut down onexecutive travel since 11 September, according to one survey, and most havereported a significant increase in their use of technology. A quarter aremaking more use of telephones and mobiles, a fifth have increased the use ofe-mail and 26 per cent have made further forays into teleconferencing to keepin touch with offices, customers, suppliers and prospects around the world.From the point of view of enlightened human resourcesmanagement, this would certainly be a welcome development if it succeeds inreducing the air-miles that some senior executives have been racking up inrecent years, says Cary Cooper, Bupa professor of organisational psychology atUMIST. Travelling time has seriously affected the work-life balance of manyinternational business travellers, he argues, leading to higher levels ofstress and problems with relationships both at home and at work. While no one is suggesting that business travel could ever beeliminated altogether – face-to-face contact will always play a pivotal rolewhen relationships are being established and deals hammered out – the uptake ofnew technologies offers the promise of change in existing businessrelationships. Eventually the idea of boarding a plane to settle a routinetransaction will seem as futile as it is wasteful. Related posts:No related photos.