Nikom Chandravithun Foundation & Human Resources Institute, Thammasat University
July 2008 Seminar: Nikom Chandravithun Foundation
& Human Resources Institute, Thammasat University
(Employment relations strategies in airline industry:
Lessons from foreign countries and the application for Thailand)
On July 23, 2008, Prof. Dr. Chira Hongladarom, Secretary-General of Foundation for International Human Resource Development was invited to be a commentator at Nikom Chandravithun Foundation & Human Resources Institute, Thammasat University's seminar on (Employment relations strategies in airline industry: Lessons from foreign countries and the application for Thailand).
At the beginning, Prof. Greg Bamber, Professor, Monash University, Melbourne, Australia presented the research on "Up in the Air: How Airlines Can improve Performance by Engaging their Employees?" He cooperated with Jody Hoffer Gittel, Thomas Kochan and Andrew von Nordenflycht to conduct this research. According to his presentation, there has been increasingly volatile industry since deregulation especially in USA. Low cost new entrant airlines successfully grew. More than $30 billion losses in USA 5 years post the attack on NY's Twin Towers-World Trade Center. There were more than 10 bankruptcies in 4 large airlines. 100,000 jobs and $15 billion wage and benefit have lost in airline industry. Employees' morale fell. Service quality/system infrastructure problems increased.
This research was analyzed based on Two Dimensional Analytic Framework. The one is Competitive Strategy position which comprises of low cost or full service and labor cost or productivity focus. The other is employee relations which comprise of relationship with employees: command or control and relationship with unions: Avoid, Accommodate or Partner.
The research findings are as follows.
§ Airlines increasingly focus on cost competition even before recent fuel price increase.
§ Gap between total costs for U.S. legacy and low cost airlines have been growing. Similar story occurred in Europe.
§ In Asia, the gap grew more but Asian Legacy Airlines have not yet competing on cost.
§ US legacy airlines have reduced labor cost gap dramatically.
§ Aircraft productivity also grows but faster for Low-cost Airlines.
§ There was lesser merger activity internationally in many other industries since there remains much more national protection.
§ Mergers have been less of a homogenizing force internationally than in the U.S.
§ International homogenization in the industry has occurred by imitation, competitive pressures and marketing alliances.
§ There were multiple ways to compete within and across legacies and low-cost segments.
§ Airline , government, and union should put effort to build sustainable industry.
Prof. Dr. Chira Hongladarom, Secretary-General of Foundation for International Human Resource
Development commented this research as follows.
§ Airlines should manage balance between labor union and human resource.
§ There should be more research on airline and human resource.
§ There should be database of new entrants of Thai Airlines.
§ Low-cost airline is more important. Thais are also worried about its safety.
§ Nokair is subsidiary of Thai Airways International and has 39% of share. It has flight on some route especially Nakhonsithammarat and does not compete with Thai Airways International's policy.
§ To make airline low cost results in low morale and treats people as non-people.
§ Prof. Bamber should study more about low-cost airline.
§ Prof. Bamber should study Bangkok Airways. It is a nice business to make money and take care of customers.
§ We should compare legacy airlines to legacy airlines like between Thai Airways International, Singapore Airline and Cathay Pacific.
§ The finding of this research can be applied to universities and state-owned enterprises.
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