A Summary of the Article

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A Summary of the Article

Having been plagued by uncontrolled fuel prices, several bankruptcies and consumer displeasure the US aviation industry in 2005 faced probably the worst labor unrest in the history of the airline industry. The 2005 airline industry strikes brought to mind the disruptions experienced in the 80s and 90s when carriers such as  the Eastern Airways, Continental Airlines, World Airways and Pan-American were ruined by the anger of their workforce who saw  their jobs vanish in the wake of benefits and pay cuts. This unrest resulted in the grounding of Pan Am and Eastern Airways. These forces came again to bear in 2005. All the seven principal airways in the United States of America reduced their benefits, spending, wages and jobs in the end they managed to cut billions in expenses and thousands of jobs (Davies, 2007).

The US Airlines and the United Airlines did so under grounds of bankruptcy which protected them from going under. Upon asking fielding their case for bankruptcy they asked Judges to allow them to terminate their contractual agreements with their employees and replace them with affordable agreements.  They also requested to be allowed to terminate conventional pension agreements for their employees’ moves that in the end helped them to save billions. This brought strike threats that were led by the association of flight attendants a labor union organization that began carrying out a strike authorization vote amongst its members employed by the US Airways (Fisher, 2009).

However, according to the federal law flight attendants are not permeated to engage in industrial action unless they terminate their contracts.  On the other hand, if the contracts are set aside by bankruptcy courts the unions would be free to continue with their industrial action albeit under obligatory rules. Following this ruling by the courts the labor unions breathed a sigh of relief and backed the court’s judgment that their case was different from a negotiated contract.   On the other hand, the airlines maintained that this ruling was illegal. The airline companies still shocked by this ruling kept their eyes on the rising price of jet fuel which had risen by 74% in 2003. According to analysts local airlines which in a period spanning five years had already lost $30 billion had been projected to lose a further $5.6 billion in 2004 and indications were high that they could lose even more in 2005 in case the rise in fuel prices was not contained (Maynard, 2004).

Despite these concerns the South West Airlines Chairman, Herbert D. Kelleher was upbeat about the US Airline industry and cited different issues in this regard.  According to him in spite of whether fuel prices were low, high or medium the airline industry as a whole had experienced profound and deep changes. He was even optimistic that by the mid of 2005 the US Airline industry would have had experienced lower process and substantial competition. Herbert believed that this was just but a fait accompli as far as his projection was concerned. Though planes in the US Airline industry were busy in most of 2004, the industry started noise driving in August of the same year. This provoked the Airline industry led by companies renowned for their low fares like Jet Blue and South West to provide winter and fall sales earlier than the norm and they even offered extensions (Morris, 2012).

South West Airlines which was the largest amongst the low fair companies was projected by economic analysts to be the only major airline to be profitable in 2004. In 2003 it had achieved two different high points. Firstly, it started offering its services from Philadelphia which was a big challenge to the US Airways that had boasted of having monopolized the route for many years. Secondly, it overtook the Delta Airlines becoming for the first point in time the largest mover of airborne passengers within the USA (Davies, 2007).

However, before the end of 2004 it was faced with a daunting task for instance it had to decide the cities it needed to add to its flight schedule to contain its many new aircrafts. Jet Blue also faced similar dilemmas. Long perceived by analysts to be the best company on Wall .............

Type: Essay || Words: 1590 Rating || Excellent

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