California State University HR Strategies in The Airline Industry Case Paper Please read the following 2 cases and write a case study assignment. (3 pages,

California State University HR Strategies in The Airline Industry Case Paper Please read the following 2 cases and write a case study assignment. (3 pages, double-space) Truss, Mankin, and Kelliher: Strategic Human Resource Management
 
A comparison of HR strategies in the airline industry
Deregulation of the airline industry in the late 1980s enabled new entrants to enter the
market and demonstrate that what customers really wanted was a reliable service at low
prices. Before deregulation, airline companies tended to be asset-intensive; they owned their
own aircraft, reservation systems, baggage staff, maintenance workers, and catering
services. New entrants, such as Southwest Airlines and Ryanair put these services out to
tender. They leased aircraft and contracted out for baggage and maintenance services. This
reduced costs considerably and enabled the two companies to focus on the core of branding
and the overall concept for their airline. Over the next two decades this low cost business
model “destroyed the business models of traditional airlines on short-haul routes, and
precipitated the bankruptcy of many” (Levis, 2009: 283). Today the major airlines have also
moved to more leasing and outsourcing.
Like other sectors, the airline industry has been affected by the impact of the global financial
crisis. Business and international travel have both been affected and fuel costs have been
difficult to manage due to oil prices. The credit markets, which the airlines have turned to in
previous tough times, have been particularly reluctant to lend, giving some carriers little
choice but to pay high interest rates. In order to weather the crisis many airlines have
decided to cut routes and employees, and ground planes. New fees have been introduced to
boost revenues, ranging from a fee for exit row seats to fees for bringing pets on board. In
the US alone baggage fees added $566.3 million to airlines’ revenues in the first quarter of
2009. By April 2009, the total number of employees at American employers across all airline
companies was 583,030, down from 624,372 in 2007 and more than 24 per cent below the
peak in May 2001. The decline in demand for premium seats on international flights has
taken a significant toll. When the economy was booming, airlines could charge thousands for
seats in the front of their planes, and business customers, in particular, paid for both the
comfort and convenience. These high fares subsidized the discounted seats in the back of
the airplane. But, once the economy deteriorated, premium travel dropped off with it. The
number of passengers traveling on business and first-class tickets between North America
and Europe was down 18.4 per cent in April 2009 compared with the same month in 2008.
Competition on trans-Atlantic routes was already fierce, with roughly 50 airlines offering
connections between major European and United States cities. Against this backdrop the
growth of existing and new entrant airlines competing on the basis of low cost strategies has
continued to climb. Not surprisingly, customers and the media focus on the fares charged by
low cost airlines. However, there are some marked differences between low cost airlines
when their HR strategies and policies are placed in the spotlight.
Southwest Airlines employs 46,000 people and has a fleet of 692 Boeing jets (as at
September 2012). In 2011 it carried 104 million passengers and generated a net income of
$178 million on a turnover of $15.7 billion. It has always been viewed as a well-run company
although its business strategies have become less innovative over time. It has also been
rated as one of the most desirable employers in the US. Analysis of the company’s business
model has revealed the following characteristics: limited passenger services, frequent and
reliable departures, lean and highly productive ground crews, high aircraft utilisation, low
ticket prices, and short-haul, direct flights. To be successful this model requires high levels of
employee and aircraft productivity and low unit costs. The company has concentrated on
© Oxford University Press, 2013. All rights reserved.
Truss, Mankin, and Kelliher: Strategic Human Resource Management
 
aircraft turnaround as a way of meeting its goal of offering affordable air travel at frequent
intervals. Put simply, the faster the turnaround time, the fewer aircraft required and the
higher the utilisation. This has involved standardisation of aircraft, and offering a single class
of service and open seating; along. The hundreds of tasks involved in landing and take-off
have also been optimised to lower any delays. In this way individual goals can be clearly
aligned with the business strategy: every employee knows what they need to do to maximise
efficiency. “One measure of Southwest’s success is the remarkable lack of trying to be all
things to all travellers. This discipline – the ability and willingness to focus on what will and
will not be done – helps differentiate Southwest from its competitors” (Morgan et al, 2007:
153). Other characteristics of the company’s business model include: no in-flight meals, no
baggage transfers, no connections with other airlines, automatic ticketing machines and
limited use of travel agents. Many major airlines have attempted to replicate Southwest
Airline’s business model and failed.
In terms of people management, the company provides very competitive salaries and a high
level of stock ownership, flexible union contracts, and cross-functional training. The company
uses the recruitment process not only to identify a range of functional skills but also to
identify relational competence and assess the candidate’s potential to develop this relational
competence through training and development. This relational competence embraces
awareness of other people and a respect for their work, as well as the willingness to do what
it takes, over and above the immediate job assignment, to ensure a successful outcome. To
minimise the likelihood of a blame culture developing mistakes, such as delays in turnaround
times, are treated as team problems that require a team resolution. At the same time, frontline employees are encouraged to resolve conflicts among themselves whenever possible.  
There is also a concern for work/family balance. The company has always been committed
to employment security and wherever possible has avoided compulsory redundancies.
Senior management have strived for a partnership relationship with union representatives
and the company “prides itself on outstanding relationships with its unions” (Gittell, 2003:
120. However, this approach has not eliminated conflict. The work environment is intensive
but the culture is characterised by shared goals, shared knowledge, high levels of employee
commitment and mutual respect. While Southwest’s unit costs have been some of the lowest
in the US airline industry, its labour unit costs have been among the highest due in part to its
commitment to offering employees job security. Rather than viewing its employees as a cost
to be minimized, the company views employees as partners in reducing costs and producing
value. It’s a very different approach at Ryanair which has adopted a much more robust
approach to people management and even charged flight attendants for their uniforms.
Ryanair operates a fleet of over 290 new Boeing 737-800 aircraft and carried over 75 million
passengers in 2011. In the same year profits rose 25% to a record €503m despite higher
fuel prices. Ryanair’s approach to customer service has been described as minimal and
reflects a ‘no frills’ approach to meeting customer needs. The company defines the customer
experience much more narrowly than its competitors: low fares and punctual flights. Fees
have been introduced for a number of ‘services’ including: priority boarding, online check-in,
seat selection and baggage. However, in 2010 the CEO of Ryanair, Michael O’Leary
indicated that an average fare of €40 (£33) was unsustainable and a new strategy would be
needed in the future. The airline was already facing pressure on costs at this time as it
moved into major airports closer to city centres in its quest for more passengers.
© Oxford University Press, 2013. All rights reserved.
Truss, Mankin, and Kelliher: Strategic Human Resource Management
 
A similar approach to customer service is evident in its people management practices. Pilots
were asked to take substantial pay cuts, and agree to changes in working conditions which
also involved relocation. The company did not help with their relocation costs. Pilots were
recruited from the Romanian state airline Tarom in response to the pilots’ criticisms of the
changes (through the Irish Airline Pilot’s Association). The media has also reported on a
confrontational management style. Consequently, in contrast to Southwest’s focus on
balancing work and family, Ryanair’s approach has been characterized by high levels of
stress and long working hours, with the latter being seen by senior management as an
indicator of employee commitment. The company offers competitive salaries and stock
options for certain employee groups only as a way to compensate employees for their hard
work and to keep unions out of the company. However, the stress of working at Ryanair has
been exacerbated by passenger complaints about customer service and the attitude of some
Ryanair staff. Although management have held parties to enable staff from different
departments to meet in an informal way, there is a strong emphasis on employees doing the
job that they are paid to do rather than a strong inculcation of team spirit. Overall, the
company focuses on minimizing costs and this includes labour costs. While profits have
been substantial at Ryanair, there have been considerable costs to customer service and to
employees. Although the company’s reliability measures (on-time and baggage handling)
have improved, Ryanair continues to experience problems and receive negative publicity
about its treatment of employees which appears to be based on a philosophy of control
rather than one of commitment.
Activity
Using theories, models, and concepts from chapter 5, critically analyse the approach to
strategic HRM adopted by the two airline companies.
Sources
http://www.airlinequality.com/Forum/ryan.htm [accessed 6th November 2012]
http://articles.cnn.com/2011-01-19/travel/ryanair.boarding.fee.judge_1_ryanair-irish-airlinefee?_s=PM:TRAVEL [accessed 6th November 2012]
http://articles.cnn.com/2009-02-25/travel/ryanair.blog_1_ryanair-bloggerslunatic?_s=PM:TRAVEL [accessed 6th November 2012]
Bamber, G. J. (2009) Up in the Air: How Airlines Can Improve Performance by Engaging
their Employees, Ithaca, NY: Cornell University Press
Bennett, S. A. (2003) ‘Flight crew stress and fatigue in low-cost commercial air operations
an appraisal’, International Journal Risk Assessment and Management, Vol. 4, Nos. 2/3, pp.
207-231
http://blogs.hbr.org/taylor/2012/08/when_bad_service_is_good_busin.html
November 2012]
[accessed
http://www.dailymail.co.uk/news/article-2214646/Italian-passengers-fury-Ryanair-flightattendant-describes-Bari-city-mafia-bosses.html [accessed 6th November 2012]
© Oxford University Press, 2013. All rights reserved.
6th
Truss, Mankin, and Kelliher: Strategic Human Resource Management
 
http://www.forbes.com/sites/michelinemaynard/2012/09/07/ryanair-ceo-calling-customersstupid-makes-this-airline-kids-blood-boil/ [accessed 6th November 2012]
Fung, V. K., Fung, W. K. And Wind, Y. (2008) Competing in a Flat World: Building
Enterprises for a Borderless World, Upper Saddle River, NJ: Wharton School Publishing.
Gittell, J. H. (2003) The Southwest Airlines Way: Using the Power of Relationships to
Achieve High Performance, New York, NY: McGraw-Hill
http://www.guardian.co.uk/environment/2005/jun/24/theairlineindustry.travelnews [accessed
6th November 2012]
http://www.guardian.co.uk/business/2009/jul/14/british-airways-cash-reserves-airline-industry
[accessed 6th November 2012]
http://www.guardian.co.uk/business/2008/oct/10/ryanair-theairlineindustry
November 2012]
[accessed
6th
http://www.guardian.co.uk/business/2009/nov/17/easyjet-ryanair-add-on-charges [accessed
6th November 2012]
http://www.guardian.co.uk/business/2010/sep/12/ryanair-move-away-from-low-fares
[accessed 6th November 2012]
http://www.guardian.co.uk/business/blog/2011/oct/24/ryanair-boeing
November 2012]
[accessed
7th
Hamel, G. (2012) What Matters Now: How to Win in a World of Relentless Change,
Ferocious Competition, and Unstoppable Innovation, San Francisco, CA: Jossey-Bass
http://www.itfglobal.org/campaigns/messageboard.cfm [accessed 6th November 2012]
Levis, K. (2009) Winners & Losers: Creator and Casualties of the Age of the Internet,
London: Atlantic Books.
Morgan, M., Levitt, R. E. And Malek, W. (2007) Executing Your Strategy: How to Break it
Down and Get it Done, Boston, MA: Harvard Business School Press.

ness [accessed 6th November 2012]
http://www.ryanair.com/en/about [accessed 6th November 2012]
http://www.southwest.com/html/about-southwest/history/fact-sheet.html#financial_statistics
[accessed 6th November 2012]
© Oxford University Press, 2013. All rights reserved.
Truss, Mankin, & Kelliher: Strategic Human Resource Management
 
Case Study: Singapore Airline
Singapore has a reputation for being a world class airline company that has been in
existence since 1972 and employs approximately 21,000 people. Since the start of
the global financial crisis and a consequent fall in the number of passengers the
airline has had to reduce the size of its fleet. The airline is renowned for the quality of
its in-flight service which can be linked to its corporate values of pursuit of
excellence, and customer first. Other values are safety, concern for staff, integrity
and teamwork. The airline has consistently outperformed its competitors. The
company has a HR division that includes a People Networks department that is
responsible for communicating Singapore Airline’s mission, core values and strategic
goals to all employees. Communication channels used include: printed media, online
systems (e.g. bulletin boards and email), and face-to-face meetings and road-shows;
as well as corporate events. There is also an organizational climate survey. Different
publications and road-shows are used to target specific occupational groups within
the company.
Every employee and manager, no matter how senior, has a training and
development plan. Training and development interventions are used to communicate
the company’s mission, values and strategic goals (e.g. at induction, on training
programmes). Cabin crew undergo a four month immersion programme so that their
behaviour is consistent with the brand image projected to customers (even down to
details such as how they should greet customers and maintain eye contact at
boarding). Subsequent, ongoing training interventions continue to reinforce the
alignment of personal and corporate values. In order to ensure employees behave in
line with corporate values there is an evaluation system in place. During their initial
training and subsequent career, crew employees also spend time at welfare homes,
to get a close-up engagement with the less fortunate, who have to depend on others
for their survival. This is aimed to help them develop empathy for others and put
themselves in the shoes of the passengers. Cabin crew can select refresher
courses, and on average attend 3–4 days of such courses a year. Popular courses
include ‘‘transactional analysis’’ (a counselling-type course), leadership courses, and
European languages. The company is moving from a system of directing which
courses cabin crew should attend, to one of self-directed learning, whereby staff take
responsibility for their own development.
To what extent is the airline’s approach to training strategically aligned? What are
the potential implications of the firm’s training methods?
Sources:
Chong, M. (2007) ‘The Role of Internal Communication and Training in Infusing
Corporate Values and Delivering Brand Promise: Singapore Airlines’ Experience’,
Corporate Reputation Review, 10 (3), pp. 201-212.
© Oxford University Press, 2012. All rights reserved.
Truss, Mankin, & Kelliher: Strategic Human Resource Management
 
Heracleous, L and Wirtz, J. (2009) ‘Strategy and organization at Singapore Airlines:
Achieving sustainable advantage through dual strategy’, Journal of Air Transport
Management , 15, pp. 274–279.
http://www.singaporeair.com/pdf/Investor-Relations/AnnualReport/annualreport1011.pdf [accessed 27th November 2011]
© Oxford University Press, 2012. All rights reserved.
You are expected to analyze the case study in a written report (2-3 pages; double-spaced)

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