ABSTRACT
Airline executives had for long held the view that labour costs were largely outside their direct control. They thought of labour as an input whose cost they could only influence marginally. Strong unions, especially in government-owned airlines, and union power in the privately-owned US carriers, made managers wary of taking drastic action to reduce labour costs. The threat of strikes hung over them like the sword of Damocles. Their views of labour began to waver in the early 1980s, but it was the crisis years of 1990 to 1993 that really changed attitudes. The pressure to reduce costs intensified as losses mounted. This pushed airline managers, for the first time, to consider labour as a variable cost, which they could and should influence. This could be done by cutting staff numbers, by holding back wage increases or even reducing wages, and by changing working practices. Several European airlines were actually given government funding, the so-called ‘state aid’, to help them implement such measures (see Chapter 8, Section 8.5 below). In the United States some airline executives extracted major wage concessions from their employees by offering them share options in their airline.
