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dc.contributor.authorGolden, Darragh
dc.contributor.authorUnderthun, Anders
dc.date.accessioned2020-08-20T07:24:42Z
dc.date.accessioned2021-04-30T08:35:08Z
dc.date.available2020-08-20T07:24:42Z
dc.date.available2021-04-30T08:35:08Z
dc.date.issued2016
dc.identifier.isbn978-82-7609-375-9
dc.identifier.issn0807-0865
dc.identifier.urihttps://hdl.handle.net/20.500.12199/6275
dc.description.abstractThe objective of this report is to assess important developments in the global aviation industry and how this affects civil aviation in Norway and Europe. The report is based on an academic literature review and other secondary sources. The challenges brought about by deregulation and the emergence of low cost carriers (LCCs) as well as more recently, the ‘Middle East 3’ airlines (Emirates, Etihad Airways and Qatar Airways), call for major political attention from a range of stakeholders. With this in mind, we have drawn on a wide literature, both geographically and chronologically speaking, with a view to drawing insights from experiences of deregulation. An appraisal of the American deregulation experience is provided, which results in various unintended consequences whose ripple-effects continue to shape the sector. In particular, we point to changes in the field of labour, in the broad sense, and the network infrastructure. With regard to the former, it is apparent that a job in aviation no longer carries the prestige it once did. Intense competition has led to increased labour productivity and wage cuts. The example of Colgan Air bears out some of the risks identified with increased pressures and strains in aviation. However, it would be spurious to assume a connection between inferior labour conditions and LCCs. In terms of network and infrastructure, research identified so-called ‘pockets of pain’ where fare prices remain high while connectivity remains relatively low. Also, airline consolidation has not delivered the certainty purported by the economic theory. Despite initial innovations by LCCs, these airlines, in terms of service and fares, are now largely indistinguishable from their U.S. legacy counterparts. Today, we can speak of four major U.S. airlines. Consequently, yet another industry is deemed ‘too big to fail’ and its costs, some of which can be the result of poor decision-making, are borne by the general public. For some, this oligopolistic tendency is best addressed through further liberalization. This raises an important question regarding the efficient market hypothesis and the spatial boundaries of deregulation. While the European experience of deregulation in the aviation sector, by comparison, has been more piecemeal it has by no means been less complex. On the contrary, a variety of social and fiscal regimes has complicated matters considerably. This heterogeneity has implications for the industry structure, business and employment models as well as regulatory oversight mechanisms. In particular, LCCs adopt different business or employment models thereby defying a ‘one-size-fits-all’ approach. While intrinsically linked, it is important, for analytical purposes, to distinguish between the business and employment models that are adopted by airlines. Hence, understanding the specific models that LCCs adopt is critical to drafting a relevant and effective aviation strategy. In addition to the standard employment relationship, typified by the legacy carriers and some LCCs, this report examines four possible employment models that LCCs might use. Approaches can vary whether we speak of pilots or cabin-crew. By providing practical examples, it is possible to discern the increasingly contentious nature of such employment arrangements. For too long aviation has operated under the radar of public imagination. The findings of the so-called Ghent Report from 2015, which highlights the extent of atypical employment in the case of pilots, should not be overlooked. Nor should the potential consequences for flight safety be underestimated. Phenomena such as zero hour contracts and ‘bogus’ self-employment are becoming increasingly commonplace in the cockpits of aircraft. To boot, young and inexperienced pilots are entering schemes called pay-to-fly (P2F) on revenue-earning flights. There is an onus on politicians to be up to speed on such developments and their deleterious effects on the aviation sector. Equally, there is a responsibility on the media not to be co-opted by industry and to report accurately on such practices. This is in the public interest. For the best part, we have focused on the different employment and business models adopted by two LCCs that are of particular relevance to the Norwegian context, namely Ryanair and Norwegian Air Shuttle (NAS). Clearly, there is a preference for litigation in the legal arena where loopholes make a mockery of national legal systems. This is especially the case with Ryanair, and the Cocca case is demonstrable of this. This case can also help explain Ryanair’s departure from Rygge airport. More recently there is evidence that NAS is becoming just as inclined to challenge, what might hitherto have been taken as granted, in a courtroom be it in Norway or further afield. In terms of business models, there is a marked difference between the two LCCs. For instance, NAS has created a number of subsidiaries (e.g. Norwegian UK). Since, May 2013, Norwegian has entered the long-haul market to Asia and the U.S. and has created two subsidiaries, Norwegian Long Haul (NLH) and Norwegian Air International (NAI), registered in Norway and Ireland, and with Norwegian and Irish AOCs, respectively. The decision to register NAI in Ireland has been the source of controversy, which is exemplified by the unprecedented delay in the U.S. DOT granting NAI a foreign carriers permit. The principal reason for this is that there is a genuine concern that NAI will operate trans-Atlantic flights with ‘crews of convenience’ from Asia. NAI deny any such intentions.  Ryanair’s corporate structure, on the other hand, is less fragmented; however, the Irish airline has a clear preference for the use of secondary airports, the use of which have been central to its competitive business strategy. This has put airports in direct competition with one another with, at times, perverse outcomes. In doing so, Ryanair seeks to extract concessions from airports. Negotiations take place under the threat of severe service reduction or even complete base abandonment. Furthermore, it is not unusual for such negotiations to be conducted in the public realm. Ryanair has become synonymous with publicity stunts in a bid to build their brand or strengthen their bargaining hand. The Rygge debacle is emblematic of such antics. While it is possible to discern variations between different airlines with regard to employment models vis-à-vis pilots there is a degree of commonality in consequential terms. The question is whether a culture of safety, integral to the aviation sector, is being replaced by a culture of fear? By removing any semblance of security, through employment legislation or trade union membership, a pilot’s future employment is at the whim of the airline bosses. In such an environment, pilots are reluctant to raise their heads above the parapet for fear of being identified as being a troublemaker. Such a development inevitably impinges on the question of flight safety. To demonstrate the risks pilots run in highlighting safety concerns, we present the case of Captain Coleman. This case is indicative not only of the intimidating environment created through atypical employment, but also how regulatory oversight is compromised. The use of different business and employment models creates procedural ambiguity, which leads to a knowledge gap with regard to airline employees and/or a regulatory gap when it comes to determining with which regulatory agency responsibility actually lies. Individually or accumulatively, such ambiguity negatively affects a culture of safety. In light of these developments in the European aviation industry, a number of recommendations are made which should inform Norway’s aviation strategy. These recommendations can be divided into four broad approaches: i) ensuring the continuance of a culture of safety is paramount; ii) addressing regulatory loopholes that facilitate social dumping by clarifying key concepts such as ‘operator’ and ‘home base’ is necessary to create a level playing field; iii) when engaging with the ME3s, a European strategy is essential so as to counter a divide and conquer strategy; and iv) increased demand for aviation must be met with a commitment to well-trained pilots with pay-to-fly schemes being prohibited. Naturally, these recommendations require political will. In addition, regulatory agencies, including the tax authorities, must work in close cooperation with each other. Addressing social dumping and regime shopping also requires cross-border action and greater coordination between national regulatory agencies, as well as an enhanced role for organized labour, so as to ensure that regulatory and knowledge gaps are closed. While the success of airlines’ decisions are reliant on good timing, such a comfort cannot be afforded to the question of regulatory oversight. Hence, political will and the enactment of rules will not suffice. Coordinated and proactive oversight, both within and between countries, is fundamental.no_NB
dc.publisherOslo: Arbeidsforskningsinstituttet ved HiOA
dc.relation.ispartofseriesAFI Rapport 2016:09
dc.subjectLuftfart
dc.subjectEmployment
dc.subjectAviation
dc.titleCivil Aviation in an Age of De-Regulation – Social Risks and Benefits.no_NB
dc.typerapport
fagarkivet.source.pagenumber75


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