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Airline jobs descend
But low-cost carriers lead hiring rebound - at wages' expense
By Chris Walsh, Rocky Mountain News
March 15, 2005
The nation's major airlines slashed 30 percent of their work force - or about 136,000 jobs - in the past four years as they grappled with an economic downturn, the Sept. 11, 2001, terrorist attacks and, more recently, rising fuel costs.
But airline employment trends since 2000 reveal a bright spot amid the turmoil: Many smaller carriers managed to pierce the gloom hovering over the industry.
Data released this month by the U.S. Bureau of Transportation Statistics highlight a shift in airline industry employment since 2000 and provide a snapshot of the troubles facing the nation's top carriers.
Larger, older "spoke and hub" airlines saddled with high costs - think United, Delta and American - have cut jobs en masse or shipped work to regional carriers to help stem steep losses.
At the same time, many of the smaller, newer airlines with lower expenses, cheaper fares and stronger balance sheets have grown, able to add new routes and boost their ranks amid a blustery business environment.
"It reflects the shifting of the work force to carriers that don't have as great of a cost structure as the bigger airlines," said George Hamlin, a director at Virginia-based Merge Global. "It's the invisible hand of economics at work. The (major) airlines can't match the operating economics of either the low-cost carriers or the regional carriers, which are more efficient and can offer lower prices."
In fact, some industry watchers expect that low-cost and regional carriers will continue to take market share well into the future. And airline employment overall - led by the low- cost and regional carriers - has recovered a bit, improving slightly last year as the industry increased its work force by a few thousand jobs.
But the shift has and could continue to lower salaries for many airline employees as the industry adapts to a new set of economics, experts say.
State jobs down 19 percent
Overall, the commercial airline industry - including major, low-cost and regional carriers - shed almost 90,000 jobs from December 2000 to December 2004, according to data from the BTS. The figures reflect full-time equivalent employment, where two part-time positions equal one job.
In Colorado, airline employment peaked in December 2000 at 17,400 but is now at 14,100 - a 19 percent decrease, economists said.
The major carriers accounted for most of the industry's bloodletting both locally and nationally.
United Airlines has taken perhaps the biggest fall in recent years.
The carrier sheared 38,870 jobs - or roughly 40 percent of its work force - from December 2000 to December 2004.
The airline was hit especially hard by the Sept. 11 attacks, in which two of its planes were hijacked. United cut 20 percent of its work force almost immediately after the attacks, but the carrier's financial condition continued to deteriorate as the economy tanked. In 2002, the airline filed for Chapter 11 bankruptcy protection, and it is still trying to emerge after cutting billions of dollars in costs.
United, a unit of Chicago-based UAL Corp. and the largest carrier in Denver, has plenty of company.
All other major airlines slashed jobs as well, according to the BTS:
• US Airways, also in Chapter 11, had the highest percentage of job cuts. The airline trimmed 19,096 positions, or 44 percent of its work force.
• American Airlines - now the largest U.S. carrier - slashed 17,224 jobs, or 18 percent of its employee base. American also had two planes hijacked on Sept. 11.
• Delta Air Lines has pared its work force by 16,891, or 23 percent, and is bleeding red ink and on the verge of filing for bankruptcy protection.
Web partly to blame
The decrease in overall airline employment can be pinned on several factors.
The nation's once-booming economy tripped hard in 2000, and companies across the nation began shedding jobs. Consumers started watching their spending more closely - which meant they were flying less often and looking harder for bargain fares. Then came the Sept. 11 terrorist attacks in 2001, which sent the airline industry reeling, leading to massive job cuts, a public fear of flying and a worsening economic situation.
In response, many airlines scaled back by reducing capacity, lowering wages and furloughing workers.
"The airlines with more employees and more flights had to cut back," said Jeff Green, a United spokesman. "When the need comes to start cutting costs, well, the largest expense is labor, so it's natural that head count will reduce."
Some of the job losses also can be pinned on the industry's success with increasing productivity. Many airlines moved more bookings to the Web, installed electronic check-in kiosks at airports and made employees work longer hours. Those efforts mean fewer workers are needed on a daily basis.
To be sure, every business suffered during the past few years. The telecommunications and high-tech industries, for instance, slashed hundreds of thousands of jobs nationwide.
But businesses in the travel and tourism industries were hit particularly hard and are still feeling the effects.
"We saw significant job losses in many different industries across the board, so it's not surprising that airlines sustained significant losses," said Patty Silverstein, a local economist at Development Research Partners. "But businesses and consumers really started trying to get the best value for their money, and they extended that to business and vacation travel. Then we had the rise of the low-cost carrier."
Low-cost, low expenses
Despite the industry turmoil, low- cost airlines such as JetBlue, Southwest and Denver-based Frontier added nearly 14,000 jobs in the past four years by keeping their balance sheets in check and offering rock- bottom fares.
They've also increased their market share considerably, from less than 20 percent in 2000 to about 30 percent at the end of last year, experts said.
"If you looked at the airline industry 10 years ago, there really wasn't much aside from the (major) carriers," said Dave Smallen, a BTS spokesman. "But with the growth of low-cost and regional airlines, there have been big changes in the airline industry. They're doing surprisingly well, and that's not something that's well-known publicly."
Low-cost carriers have considerably less in expenses than the big guys, particularly in labor.
Among the low-cost airlines that added jobs:
• Upstart discount airline JetBlue increased its employee base sixfold, from 996 at the end of 2000 to 6,678 as of December 2004.
• Frontier nearly doubled its employee base to 4,056, with much of the growth coming in 2002 and 2004.
• AirTran added more than 2,000 positions, employing 5,913 at the end of last year.
Many of the low-cost airlines capitalized on some of the downsizing by their bigger competitors.
Frontier built its capacity by about 40 percent last year and added nearly 700 employees.
"We were actually trying to be somewhat opportunistic," said Jeff Potter, Frontier's chief executive. "We moved our future growth forward. We had been going through a fairly positive year. We saw some opportunities out there, and we had made good strides controlling our costs."
Regional airlines, which typically fly smaller planes to smaller cities, saw their ranks balloon by more than 26,000 positions. Much of that growth came from downsizing among the major airlines, which use regional carriers to fly their less-popular routes.
Wages taking brunt
Last year, downsizing at the big airlines slowed somewhat, although they still cut 10,000 jobs.
Now, some of the larger airlines are starting to rebuild their ranks gradually.
United, for instance, has recalled hundreds of furloughed pilots and flight attendants this year as it increases flight and routes.
"Now we feel we are staffed in accordance with the size of the airline," said Green of United. "And as we see opportunities for increased flying . . . we're recalling workers."
But several large problems still plague the industry. All airlines, including the low-cost carriers, are reeling from a sharp rise in fuel prices. Last year, fuel costs meant the difference between a profit and a loss for several airlines. For others, high fuel costs ultimately could spell the end, which would lead to further job losses.
Even the discount guys are looking for ways to further shave expenses, and one - ATA - is in bankruptcy.
For employees, there's another negative trend that's been developing in the past few years: Industry wages are falling.
Not only do discount carriers typically pay less, but large airlines also have cut worker salaries substantially. United lowered pay through new contract concessions two years ago with its unions. Now, it's trying to trim another $1.3 billion by reducing wages and ending all pensions.
"Of those major-carrier employees who remain, most are working for 25 percent to 30 percent less than what they were working for in 2000," said industry consultant Bob Mann in Port Washington, N.Y. "And the jobs added at low-cost or regional carriers are at wage rates and compensation packages 30 percent below historical averages. So what we've really seen is a huge drop in overall labor costs associated with the entire industry."
But low-cost carriers lead hiring rebound - at wages' expense
By Chris Walsh, Rocky Mountain News
March 15, 2005
The nation's major airlines slashed 30 percent of their work force - or about 136,000 jobs - in the past four years as they grappled with an economic downturn, the Sept. 11, 2001, terrorist attacks and, more recently, rising fuel costs.
But airline employment trends since 2000 reveal a bright spot amid the turmoil: Many smaller carriers managed to pierce the gloom hovering over the industry.
Data released this month by the U.S. Bureau of Transportation Statistics highlight a shift in airline industry employment since 2000 and provide a snapshot of the troubles facing the nation's top carriers.
Larger, older "spoke and hub" airlines saddled with high costs - think United, Delta and American - have cut jobs en masse or shipped work to regional carriers to help stem steep losses.
At the same time, many of the smaller, newer airlines with lower expenses, cheaper fares and stronger balance sheets have grown, able to add new routes and boost their ranks amid a blustery business environment.
"It reflects the shifting of the work force to carriers that don't have as great of a cost structure as the bigger airlines," said George Hamlin, a director at Virginia-based Merge Global. "It's the invisible hand of economics at work. The (major) airlines can't match the operating economics of either the low-cost carriers or the regional carriers, which are more efficient and can offer lower prices."
In fact, some industry watchers expect that low-cost and regional carriers will continue to take market share well into the future. And airline employment overall - led by the low- cost and regional carriers - has recovered a bit, improving slightly last year as the industry increased its work force by a few thousand jobs.
But the shift has and could continue to lower salaries for many airline employees as the industry adapts to a new set of economics, experts say.
State jobs down 19 percent
Overall, the commercial airline industry - including major, low-cost and regional carriers - shed almost 90,000 jobs from December 2000 to December 2004, according to data from the BTS. The figures reflect full-time equivalent employment, where two part-time positions equal one job.
In Colorado, airline employment peaked in December 2000 at 17,400 but is now at 14,100 - a 19 percent decrease, economists said.
The major carriers accounted for most of the industry's bloodletting both locally and nationally.
United Airlines has taken perhaps the biggest fall in recent years.
The carrier sheared 38,870 jobs - or roughly 40 percent of its work force - from December 2000 to December 2004.
The airline was hit especially hard by the Sept. 11 attacks, in which two of its planes were hijacked. United cut 20 percent of its work force almost immediately after the attacks, but the carrier's financial condition continued to deteriorate as the economy tanked. In 2002, the airline filed for Chapter 11 bankruptcy protection, and it is still trying to emerge after cutting billions of dollars in costs.
United, a unit of Chicago-based UAL Corp. and the largest carrier in Denver, has plenty of company.
All other major airlines slashed jobs as well, according to the BTS:
• US Airways, also in Chapter 11, had the highest percentage of job cuts. The airline trimmed 19,096 positions, or 44 percent of its work force.
• American Airlines - now the largest U.S. carrier - slashed 17,224 jobs, or 18 percent of its employee base. American also had two planes hijacked on Sept. 11.
• Delta Air Lines has pared its work force by 16,891, or 23 percent, and is bleeding red ink and on the verge of filing for bankruptcy protection.
Web partly to blame
The decrease in overall airline employment can be pinned on several factors.
The nation's once-booming economy tripped hard in 2000, and companies across the nation began shedding jobs. Consumers started watching their spending more closely - which meant they were flying less often and looking harder for bargain fares. Then came the Sept. 11 terrorist attacks in 2001, which sent the airline industry reeling, leading to massive job cuts, a public fear of flying and a worsening economic situation.
In response, many airlines scaled back by reducing capacity, lowering wages and furloughing workers.
"The airlines with more employees and more flights had to cut back," said Jeff Green, a United spokesman. "When the need comes to start cutting costs, well, the largest expense is labor, so it's natural that head count will reduce."
Some of the job losses also can be pinned on the industry's success with increasing productivity. Many airlines moved more bookings to the Web, installed electronic check-in kiosks at airports and made employees work longer hours. Those efforts mean fewer workers are needed on a daily basis.
To be sure, every business suffered during the past few years. The telecommunications and high-tech industries, for instance, slashed hundreds of thousands of jobs nationwide.
But businesses in the travel and tourism industries were hit particularly hard and are still feeling the effects.
"We saw significant job losses in many different industries across the board, so it's not surprising that airlines sustained significant losses," said Patty Silverstein, a local economist at Development Research Partners. "But businesses and consumers really started trying to get the best value for their money, and they extended that to business and vacation travel. Then we had the rise of the low-cost carrier."
Low-cost, low expenses
Despite the industry turmoil, low- cost airlines such as JetBlue, Southwest and Denver-based Frontier added nearly 14,000 jobs in the past four years by keeping their balance sheets in check and offering rock- bottom fares.
They've also increased their market share considerably, from less than 20 percent in 2000 to about 30 percent at the end of last year, experts said.
"If you looked at the airline industry 10 years ago, there really wasn't much aside from the (major) carriers," said Dave Smallen, a BTS spokesman. "But with the growth of low-cost and regional airlines, there have been big changes in the airline industry. They're doing surprisingly well, and that's not something that's well-known publicly."
Low-cost carriers have considerably less in expenses than the big guys, particularly in labor.
Among the low-cost airlines that added jobs:
• Upstart discount airline JetBlue increased its employee base sixfold, from 996 at the end of 2000 to 6,678 as of December 2004.
• Frontier nearly doubled its employee base to 4,056, with much of the growth coming in 2002 and 2004.
• AirTran added more than 2,000 positions, employing 5,913 at the end of last year.
Many of the low-cost airlines capitalized on some of the downsizing by their bigger competitors.
Frontier built its capacity by about 40 percent last year and added nearly 700 employees.
"We were actually trying to be somewhat opportunistic," said Jeff Potter, Frontier's chief executive. "We moved our future growth forward. We had been going through a fairly positive year. We saw some opportunities out there, and we had made good strides controlling our costs."
Regional airlines, which typically fly smaller planes to smaller cities, saw their ranks balloon by more than 26,000 positions. Much of that growth came from downsizing among the major airlines, which use regional carriers to fly their less-popular routes.
Wages taking brunt
Last year, downsizing at the big airlines slowed somewhat, although they still cut 10,000 jobs.
Now, some of the larger airlines are starting to rebuild their ranks gradually.
United, for instance, has recalled hundreds of furloughed pilots and flight attendants this year as it increases flight and routes.
"Now we feel we are staffed in accordance with the size of the airline," said Green of United. "And as we see opportunities for increased flying . . . we're recalling workers."
But several large problems still plague the industry. All airlines, including the low-cost carriers, are reeling from a sharp rise in fuel prices. Last year, fuel costs meant the difference between a profit and a loss for several airlines. For others, high fuel costs ultimately could spell the end, which would lead to further job losses.
Even the discount guys are looking for ways to further shave expenses, and one - ATA - is in bankruptcy.
For employees, there's another negative trend that's been developing in the past few years: Industry wages are falling.
Not only do discount carriers typically pay less, but large airlines also have cut worker salaries substantially. United lowered pay through new contract concessions two years ago with its unions. Now, it's trying to trim another $1.3 billion by reducing wages and ending all pensions.
"Of those major-carrier employees who remain, most are working for 25 percent to 30 percent less than what they were working for in 2000," said industry consultant Bob Mann in Port Washington, N.Y. "And the jobs added at low-cost or regional carriers are at wage rates and compensation packages 30 percent below historical averages. So what we've really seen is a huge drop in overall labor costs associated with the entire industry."
