United Airplane, photo by Paul Sullivan, via Flickr
If you’ve flown United Airlines recently, you’re not the only one tightening the belt.
In its ongoing chase of competitive costs, United International Holdings Inc. announced Monday that it is toying around with the idea of expanding its 2014 outsourcing policy that moved some 600 jobs at 12 airports abroad just last year. This time, though, the airline looks to more than triple that figure by cutting 2,000 jobs from its immediate staff at 28 airports like Indianapolis and St. Louis, among others.
An outsourced contractor would replace these positions with their own staff, mostly for check-in, baggage-handling, and customer service. United employees given the (up until this point hypothetical) axe would be offered transfer jobs at other airports, but could expect lay offs should they decline. Meanwhile, for company accountants working the numbers and managers signing the checks, the cuts are just sound business.
Times are tough at United: the company has struggled with some of the lowest profit margins in the North American airline industry. As such, it’s to no surprise as it looks for ways — outsourcing included — to cut from its roughly $37 billion in annual operating expenses.
The plan also subtly puts the screws on the International Association of Machinists (IAM), which protects employees from layoffs at the major hubs. Increasing outsourced employment means fewer workers in the union, which may erode some of the IAM’s bargaining power in future contract negotiations, as well as limit its authority and influence in smaller markets. Indeed, it’s hard to not see the cue taken from Delta, whose employment policies strongly discourage unions and sometimes cost the jobs of those who advocate for them.
While it’s certainly possible outsourcing the ground staff may improve service of those most regularly and closely interacting with passengers, the continual downward slide of service inside airports doesn’t inspire confidence. Instead, outsourcing seems to add rotation to a vicious circle where cost cutting begets poor service, which begets lower profits, which begets more cost cutting. No doubt 2,000 employees hope United considers this while mulling their fate.