The economic downturn in the United States over the past few years has influenced all spheres of everyday life of the society. Most industries have experienced changes in their financial strength during the recent decade. Air transportation industry has gone under significant changes based on the outcomes of the economic decline. Unionized labor has also contributed to the changes in the system of functioning of airlines in the United States.
The economic downturn in the United States and the Air Transportation Industry
Air Transportation Industry plays an important role in promoting the social and economic growth of the country. It influences the lives of a great number of household people and is a huge employment generator. Therefore, civil aviation has a significant impact on the gross domestic product. The problems experienced by the major financial institutions in the USA over the past years influenced the aviation heavily.
There is a strong connection between the stability of economic growth and the demand for air transportation. Recent failures in economics in the United States led to lower demand for air traveling. Besides, airlines in the USA tend to reduce capacities and delay previously planned constructions and renovations. Rising fuel costs, caused by the economic downturn, led to the significant increase in total operating costs.
This tendency resulted in lower profitability of the airlines. Fall in total profits made the airlines cut jobs and produce severe fall in employment. Besides, the economic downturn caused the rise of popularity of low-cost air carriers. Low-cost carriers offer low ticket costs and no-frills flights. The rise of low-cost carriers’ competitiveness led to declining prices and made air carriages more affordable for common people. In the same time, the airlines are forced to seek new solutions for modernizing their services to attract customers.
Unionized labor and the financial viability of the industry
Unionized labor plays an essential role in controlling the financial viability of the air transportation industry. There is a popular opinion that labor unions inside American aviation have caused the increase in the cost of labor. It led to the inability of American air carriage providers to compete with foreign airlines. Collective bargaining arrangements have a strong influence on the modern aviation.
In my opinion, unionized labor in the USA has a significant impact on air transportation industry. Over the past few years, it has promoted the ability of employees to control the appropriate level of rewards received for the provided services. Therefore, airlines in the United States have experienced lower profit.
Some people consider it to be a disadvantage of an unionized labor and criticize the labor unions for causing financial damage to the companies. I support this position, as labor unions can easily manipulate the employers. Labor unions in aviation are craft unions, and a strike by one craft union can cause a breakdown in the functioning of the whole air carrier (Wensveen, 2012, p. 416).
The airlines cannot stock their inventory and, therefore, there is no opportunity to prepare for the strike. As the demand for air transportation is influenced by the season, labor unions can also press the employers to meet their requirements by organizing strikes on the peak of the season (Wensveen, 2012, p. 416).
The economic downturn in the United States over the past few years has shifted the face of modern aviation in the country and led to the decline in airlines’ profitability. Unionized labor has also contributed to the decreased financial viability of the industry.
Reference
Wensveen, J. G. (2012). Air transportation: A management perspective. Aldershot, United Kingdom: Ashgate Publishing Limited.