British Airways Industrial Dispute in 2010 - Case Study Example

British Airways 2010 Industrial Dispute Name Course Name and Code Instructor’s Name Date Introduction British Airways is an airline company that is based in United Kingdom and it is recognised across the world. British Airways is among the best airline service business across the world and it has also continuously expanded its operations across the globe (Barrow, 2011). British Airways was founded in 1974 and it is the flag carrier of United Kingdom and its main hub is located in London Heathrow Airport. However, British Airways has of late experienced enormous competition resulting in operations in an environment, which is competitive (Upchurch, 2010). Competition and other business related as resulted in the organisation introducing strategies such as reduction of costs to sustain operations. Regarding human resource, the organisation decided to lay off employees and also have requested employees to improve on productivity. The aim of this report is to analyse the British Airways industrial dispute and contribution of Unite towards the dispute. Industrial Dispute Description (cause and effect) British Airways industrial dispute involved its employees and Unite (Unite is a labour union that has more than two million members). The industrial dispute is unique in itself because it did not only affect employees and employer, but it introduced the aspect of political parties, media, customers and also the government. Inclusion of numerous stakeholders indicates the contribution of British Airways to the socioeconomic environment of many people involved. British Airways has about 13,500 employees. Out of these 13,500 employees, 12,000 employees are Unite members. The industrial dispute started after 81% of British Airways cabin crew staff voted in February 2010 in favour of strike. These 81% were members of Bassa, which is a Unite branch that dealt with cabin crew (Barrow, 2011). The major concern of these employees was the proposed changes in working conditions and also staffing cuts. The voting was a follow up of a ballot, which had occurred in late 2009 whereby the employees had supported it wholly but British Airways challenged the vote because it had not followed the regulations provided in 1992 Trade Union Act (Williams and Scott, 2011). The injunction was permitted and it resulted in cancellation of the strike (Upchurch, 2010). The problem can also be attributed in decision making within British Airways. Organisations bring together different stakeholders who are supposed to fulfil specific goals (Williams and Scott, 2011). For example, decisions involving human resource should involve inclusion of agents of human resource within the organisation. However, British Airways unilaterally decided to reduce the number of cabin crew on long haul flights. The aim of this strategy was to reduce the number of employees because of the reported pre-tax loss of £401 million in 2008 (Barrow, 2011). The Unite union started campaigning against the court injunction stating that the law was tilted in favour of the employers rather than the employees (Pearson, Anitha and McDowell, 2010). Since the management of British Airways did not follow on with negations, it resulted in the ballot of February 2010, which allowed for the strike. The ballot resulted in a seven day strike and it occurred twice separately in March 2010. On the other hand, The British Airways responded to the strike in a number of ways, that may be assumed infuriated the employees and union further (Upchurch, 2010). One of the strategies utilised by British Airways is withdrawal of travel perks for the air stewards. These perks were significant and important benefit for the air stewards (Williams and Scott, 2011). The second strategy employed by British Airways was ‘borrowing’ cabin crew from competitors, utilising volunteer crew such as British Airways pilots and chartering of jets. Even though these strategies were employed, British Airways experienced financial losses. For example, British Airways estimated that the strike may have costed £45 million and carried fewer passengers compared to such period the previous months (Barrow, 2011). These statistics represented a decrease of 15% while competitors such as Ryanair reported an increase of 13% within the same period. Within the seven days of the strike, only 58% of short haul trips were successful and 79% of its long haul flight was successful, and they achieved these through borrowing and hiring services from rival carriers. British Airways decision on the ongoing struggle was to achieve reduction of operation costs because of rising non-labour costs e.g. fuel, increased competition and declined demand for services. The cost of labour is the major expense for any airlines and also it is an important constituent that ensures effectiveness is encouraged and championed (Williams and Scott, 2011). Moreover, the cabin crew usually contributes the largest workforce for any airline. The aim of British Airways was to lay off “expensive” employees who were protected by labour unions (Barrow, 2011). The “expensive” is associated to inflexible and expensive demarcation that is witnessed with the current environment. New employees could have been employed to operate in a separate fleet and would have been given less favourable conditions and terms. Concern of the labour union, Unite, was that such strategy could affect the collective bargaining power of the employees with the employers resulting in division of the workforce (Williams and Scott, 2011). In addition, these cheaper employees could result in lower paid workers, and the idea that the new fleet could take the more lucrative routes resulting in marginalisation of current employees (Upchurch, 2010). Moreover, Unite were not free to discuss the new fleet proposal because it could have not succeeded if legal considerations could have been requested (Williams and Scott, 2011). Other strategies proposed by British Airways to cut costs include restructuring of the cabin crew, abolishing seniority system during promotion ensuring that the pay is comparable to components. It is widely reported that the competitors usually pay significantly lower for cabin crew employees compared to British Airways. Consequence of the Problem (outcome) A factor of this dispute is the claims and counter claims about the outcome of the strike (Barrow, 2011). For example, the British Airways claimed that the second time of the strike showed more cabin crew employees were fulfilling their duties and more flights were on operation, which indicated a weakened industrial action. Another example illustrated by British Airways is comparison of two Saturday flights (Williams and Scott, 2011). The first Saturday flight which had the first strike, 43,000 passengers on 350 flights flew while in the second Saturday, 60,000 passengers on 470 flights flew. According to British Airways, such statistics indicate that the second strike was not successful compared to the first strike. However, the management of Unite and some employees termed these statistics as a “con trick” (Williams and Scott, 2011). The Unite management argues that these passengers and flights were possible only because British Airways had commissioned other carriers to fulfil their role. Another concern raised by the management of Unite is that passengers were flown by unknown brands while the services offered by these carriers were not comparable to those of British Airways. Therefore the entire process was degrading the brand and quality of British Airways (Williams and Scott, 2011). In addition, the media played a major role in this industrial dispute. The media played a role in shaping public opinion about the matter and also becoming an outline of airing claims, counter claims and leaking sensitive information (Barrow, 2011). Leaking information resulted in both benefits and shortcomings to parties involved. For example, the media leaked sensitive information such as spreading rumours of losses experienced by British Airways (Upchurch, 2010). This resulted in fluctuations in British Airways share price. The British Airways industrial dispute also had political angle. The strike took place during general election in which the opposition maximised on the issue to defeat the current leader (Williams and Scott, 2011). It was a duel between David Cameron who was in opposition and Gordon Brown who was the current prime minister. The opposition stated that the government did not support non-strikers and also the government had a negative attitude towards the dispute (Barrow, 2011). The opposition stated that the government should have played a role in ensuring the concerns of the government and stakeholders were addressed effectively (Williams and Scott, 2011). In addition, the opposition argued that the Gordon’s government supported the unions because the unions had contributed immensely to the Labour Party operations (Williams, 2010). Conversely, the Labour Party stated that the industrial dispute was not beneficial to British Airways, the public and the workers and the leader of the party termed the issue as ‘unjustifiable and deplorable’. The Labour Party also requested the workers and other stakeholders to resume operations. This was based on the fact that the party had feared that political consequences would have affected negatively there aspirations of retaining the political governances (Upchurch, 2010). The government was also aware of the high rates of unemployment and any decision by British Airways could have increased the number of unemployed people (Williams and Scott, 2011). It was a major concern and the Labour Party tried to ensure that the strike was stopped as soon as possible. Another component of the dispute was the claims that were championed by numerous commentators stating that British Airways wanted to “kill” Unite (Williams and Scott, 2011). Moreover, these commentators spread the claims that the British Airways were aiming for a new fleet to counter the current fleet, they did not contribute positively towards negotiations and also the entire response to the dispute (Barrow, 2011). The commentator claim British Airways and Unite have been in numerous problems and a history of misunderstanding (Upchurch, 2010). Specifically, British Airways were not able to provide a pre-strike proposal but they deliberately obstructed any peace offer in which Unite would have utilised as basis for a new deal. Another component associated with the industrial dispute was the conflict and relationship between different stakeholders after the strike (Williams and Scott, 2011). Mistrust could exist between the employees who were in strike and those who refused to participate in the strike because only 81% of the employees voted for the strike. In addition, mistrust and indirect reprisals could exist between the employees and British Airways management. Moreover, mistrust and the continuous misunderstandings between British Airways and Unite could exist. Therefore, strikes usually have negative consequences to stakeholders involved and other times benefits can only be achieved by specific players. Conclusion Industrial disputes are common in an environment that encourages presence of unions and in those scenarios in which employees are not satisfied. Unsatisfied employees may not operate effectively and efficiently and can affect the way organisational duties are accomplished. The British Airways strike that occurred in 2010 indicates consequences of unilateral decisions taken by a stakeholder. Due to business and environment problems, British Airways had decided to cut operational costs through reduction of employees and benefits. However, the employees with the help of labour union, Unite, voted to participate in a strike, which was grouped as the first strike and the second strike. The strike was unique because it involved numerous stakeholders, which include media, politicians and customers. The entire dispute and associated consequences were marred by claims and counter claims. Industrial disputes are sometimes important but it is imperative to understand and analyse the consequences of the strike. For example, single stakeholders should not only view an issue from their own angle rather should factor into consideration views and expectations of other stakeholders. References Barrow, C. 2011. UK Courts, balloting requirements and the right to strike: recent developments. The Law Teacher, vol. 45, no. 1, pp. 132-144 Upchurch, M. 2010. Creating a sustainable work environment in British Airways: Implications of the 2010 cabin crew dispute. Technical Report. Middlesex University, London. Williams, D. 2010. Industrial policy. Local Economy, vol. 25, no. 8, pp. 612-621 Grundy, M., and Moxon, R. 2013. The effectiveness of airline crisis management on brand protection: A case study of British Airways. Journal of Air Transport Management, vol. 28, pp. 55-61 Tuckman, A. 2010. Defying extinction? The revival of the strike in UK employment relations. WorkingUSA, vol. 13, no. 3, pp. 325-342 Pearson, R., Anitha, S., and McDowell, L. 2010. Striking issues: from labour process to industrial dispute at Grunwick and Gate Gourmet. Industrial Relations Journal, vol. 41, no. 5, pp. 408-428 Williams, S., and Scott, P. 2011. The Nature of Conservative Party Modernisation Under David Cameron: The Trajectory of Employment Relations Policy. Parliamentary Affairs, vol. 64, no. 3, pp. 513-529 Read More