Preprints (www.preprints.org) | NOT PEER-REVIEWED | Posted: 29 December 2020 doi:10.20944/preprints202012.0723.

v1

New normal: An HRM perspective of post COVID-19 in the airline industry

Hassan Imam1
Department of Management
Ca’ Foscari University of Venice, Italy

Abstract

In January 2020, the World Health Organization declared a public health emergency and

announced a new coronavirus disease (COVID-19), which would later go on to be declared as a

pandemic, changing the global sphere and placing the economies of almost all countries under

heavy stress. The airline industry, that had just begun recovering after facing crises one after

another in the last two decades, from early 2000 due to 9/11, to the global financial crisis later, is

now oce again facing an enormous challenge of closed borders and greater lockdowns due to the

pandemic. Borders are closed, with very few planes are in the air, while the rest are grounded.

The purpose of this paper is to give a conceptual understanding of the current pandemic situation

and its consequences on the airline industry. The paper takes a unique perspective of human

resource management (HRM) that is rarely used in the airline industry.

Keywords: Airlines, Human Resource Management, COVID-19, Crisis

1
Email: hassan_zazaus@yahoo.com

© 2020 by the author(s). Distributed under a Creative Commons CC BY license.

Preprints (www.preprints.org) | NOT PEER-REVIEWED | Posted: 29 December 2020 doi:10.20944/preprints202012.0723.v1

1. Introduction
The industrial setup is fuel to the economy and a main pillar to run a country; therefore,

industries have dense roots in society. However, in the wake of a crisis, its (non)financial effect

can be felt in almost every social aspect (Hutchins 2008, p. 301). Crisis – an unwanted occasion

which occurs due to recession, economic sanctions, war, or pandemic – is an enormous threat for

industry that brings about a higher level of uncertainty in the business environment. In the recent

past, when the 2007-08 global financial crisis hit the market and major economies, including US,

Europe and Asia, they were severely injured and businesses had to change their methods of

operation. In the case of a pandemic, effects on economies may be different because it increases

the medical costs and affects tourism and retail businesses. The recent example of an epidemic is

SARS, which majorly affected businesses in Asia-Pacific (Lee & Warner, 2006; Qiu, Chu, Mao,

& Wu, 2018). Another major difference between a pandemic and other types of crisis is that a

pandemic changes lifestyle from a medical perspective, so that people can stay healthy after the

spread of disease. Thus, the businesses have to reshape their policies according to this new

lifestyle, particularly after a pandemic has occurred.

The world has currently encountered another pandemic named COVID-19, after Ebola

and Swine Flu, which brought about a large economic challenge for almost every country on this

planet. It has hit almost every business and, amongst others, the airline industry is one of the top

sectors that is suffering heavily during this pandemic. In the past few decades, especially post-

9/11, air travel has declined, and airlines have undertaken additional passenger safety protocols

which increased their cost. Likewise, in the global financial crisis (2007-08), the air industry lost

$8.5 ~ 10.4 billion USD alone in one fiscal year, due to an unprecedented hike in oil prices, drop

in passengers, and cargo revenue (University of Pennsylvania, 2009). This financial loss

suffering was not limited to one region, but occurred all across the world, with companies

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deferring new aircraft delivery and cutting dividends (Done, Wiesmann, Lau, & Murray-Brown,

2009). It took a decade for the airline industry to recover from the global financial crisis – but no

later than two years of recovery later, in more than 150 countries, people were advised to stay at

home, resulting in a “greater lockdown”. Borders and airspace were closed, in order to reduce the

spread of COVID-19. The current crisis overshadowed the previous economic crisis, and this

time, the airline industry suffered differently. Fresh statistics of the International Air Transport

Association (IATA) for the first quarter revealed that air passenger demand (with global revenue

passenger kilometers) fell drastically (52.9%, less than the last year, 2019) (IATA Economics,

2020a). This is due to the global spread of the virus which compelled people and governments

alike to begin restricting travel activities. This greater lockdown also disturbed the industrial

cargo, due to a fall in manufacturing and a disrupted supply chain. Somehow, shipping of the

medical supply compensated the cargo business. The regional (Asia-Pacific, Europe, and North

America), as well as global air transport, suffered, and airlines have lost almost 50% of their

value (IATA Economics, 2020a).

Due to the lockdown and travel restrictions imposed by the governments, pilots, crew and

ground staff are now jobless. And although the governments are announcing bail-out packages

for airlines, the airlines are going to have to cut their costs in order to survive in the face of this

pandemic. According to the United Nations World Travel Organization's recent report,

international tourism could fall by 60-80% in 2020. The World Health Organization has warned

that maintenance of social distance and personal hygiene can prevent the transmission of virus.

This indicates that travel in the future will demand modern protocols to be followed, and shall be

guided by new standards. Thus, airlines will also have to operate with a new set of customers and

an updated employees’ policy. This paper helps to understand the possible future challenges of

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the airline industry, as well as how these challenges can be addressed. We have employed an

HRM perspective to address these challenges. It is imperative to study HRM perspective,

because every crisis introduces a “new normal” for the industry, in which management has to

make hard decisions, and where cost-cutting is a paragon. For instance, during the SARS

epidemic, Singapore went through a socio-economic crisis, and companies massively adopted

cost-cutting measures for market survival (Lee & Warner, 2006). Decreasing headcounts by

retaining the skillful workers is probably the first hard decision that management has to face, in

situations like this. Airlines have done the same across the globe, and millions of employees

have been furloughed and laid-off. During these testing times, airlines ought to exhaust their

opportunities in a dynamic and innovative environment, with risk to change in policy. For

example, during the Malaysian crisis, HR managers shifted their attention from general targets to

more specific ones by focusing on new opportunities, and emphasized on employees’ training

and development (Smith & Abdullah, 2004). Similar strategies were espoused during the global

financial crisis by many other countries (i.e., Estonia, Spain, Hungry, and Slovakia) (Fodor &

Poór, 2009; Vösa, 2010; Susaeta, Suarez, & Pin, 2013).

HRM is worth studying in an airline, for the very fact that it has been less studied despite

its strategic significance; particularly for employees’ training – a core HRM activity. Post-9/11,

the health and safety of passengers became a growing concern, and the training of ground and

crew staff served to improve the passengers’ health and safety (Boyd, 2001). Moreover, a few

airlines (e.g. Singapore airline) gained their strategic position with the help of HRM; particularly,

they improved their cost effectiveness and service excellence (Wirtz, Heracleous, & Pangarkar,

2008). Strategic alliance (i.e., OneWorld, Star Alliance, or SkyTeam) is an area where HRM can

still further add value, especially in mutual organizational learning (Holtbrügge, Wilson, & Berg,

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2006). However, in this case, standardization in policies and procedure becomes quintessential.

Therefore, HRM – directly linked with individual and organization growth – typically

implements the policies and procedures throughout various systems (i.e., recruitment and

selection for the acquisition of a talented workforce) to meet both the organizational and

customers’ needs (Igbokwe-Ibeto, 2011). The next section briefly outlines the challenges posed

by the greater lockdown; how HRM can help airlines? Due to the principal role of HRM in

developing strategic goals of the organization and in duly communicating them to the employees

that an organization’s growth is a main factor for their career growth (Armstrong, 2009; Guest,

Michie, Conway, & Sheehan, 2003).

2. Post-greater lockdown challenges and remedies

Unlike that of local buses/trains, the recovery from this unprecedented drop in airline

passengers due to the pandemic may begin as soon as the flight operations start, albeit possibly

with additional standards or protocols in place. It is equally challenging to operate for airlines,

because the risk of exposure to the virus still exists for both the staff and the passengers. Thus

far, social distancing – an essential protocol in the workplace, traveling, and even going out for

groceries – is the largest challenge for airline businesses, due to the seating design of airplanes.

The current design has not complied with social distancing protocols, resulting in less seats for

passengers. A few airlines (in Europe and locally-operating) have adopted this protocol, for

example, in a typical 3-3 seating configuration, where the middle seat was free from both sides

of the aisle. In the 2-2 seating configuration, airlines are compelled to fill one seat per row (see

figure 1). IATA calculated that social distancing will reduce the available seats for reservation up

to 62% of normal capacity worldwide (IATA Economics, 2020b). It is not yet decided how long

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we have to follow this protocol, but it is expected to that it will be followed until a vaccine hits

the market. This new arrangement makes airlines financially unrealistic, and costs expensive

travel up to 54% more per passenger (IATA, 2020). Likewise, taking care of personal hygiene

provides another challenge for the cabin crew, and even for the ground staff. This would increase

the pre-flight checks (i.e., passenger screening, including temperature checks, adequate distance,

and hygiene), which requires more time before check-in, catering, and plane cleaning. It also

affects the flight routes, since planes will be staying on the ground longer. Lesser routes will

increase airline expenses and reduce profits, especially for long-haul flights. It is not unlikely to

say that the key players of the market, who already have achieved the economies of scale, might

face difficulties (i.e., the extra cost involved), but airlines with a small market share – or with

low-cost leadership – are more likely to struggle with this pressure.

Figure 1. British Airways flight from Milan to London (picture courtesy of Newsweek)

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Concerning social distancing, it is difficult for airlines to alter the seating configuration of

the plane for two reasons: first, airlines will bear the cost of this modification, and it will

ultimately serve to increase flight costs, due to a reduced seating capacity; secondly, this social

distancing is a reaction to virus exposure. It is likely that, once a vaccine is launched, social

distancing might not be practiced strictly during flight, but a possibility to follow pre-flight

checks (i.e., vaccination or temperature checks) exists. For example, some governments are

planning to make COVID-19 tests mandatory before going onboard. Before the discovery of a

vaccination, airlines will have to operate in this mode by following additional protocols. Thus,

the training of ground and crew staff is also mandatory, in order to make travel possible. This

will indeed increase the cost from both ends (i.e., training budget and operational processes), but

it is a must-do, to sustain the business. In the current situation, where airlines are in an uncertain

environment, cost-cutting is the key remedy – or at least the only one so far. Despite the

furloughs/lay-offs, wage level may still be a challenge for airlines. For instance, British Airways

announced that their employees can claim 80% of their wages, and pilots can claim 50% of their

wages during the lockdown period. This will be a challenge for the airlines because following

additional protocols (i.e., social distancing) will reduce the flight operations, and airlines cannot

utilize their full employees’ potential. The case of reduced salary or permanent lay-off will hit in

two ways: first, the survivors’ commitment will reduce, and for this, they have to take additional

steps to maintain trust, fairness, and commitment; second, effective negotiation with the

employees’ union will also present a challenge. A possible strategy to work with is a lesser

ground staff, to create a local alliance and share the workers. Few airlines are practicing this, but

this should be practiced in order to reduce the compensation, training, and development cost

(Holtbrügge et al., 2006). A possible anomaly in this strategy may occur because each airline has

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its own HRM policy, according to their business model. A standardization of HRM in airlines

may help to reduce the cost and make air travel more viable.

Though the HRM is not studied enough in airlines, organization researchers have

highlighted that the role of HRM is pivotal during a crisis (Arzenšek & Musek Lešnik, 2016),

because it deals with organizational culture and leadership which shapes organization during the

period of change (Cooper, 2009; Shen & D'Netto, 2012). Therefore, in the current crisis, airlines

should revise/review their HRM policy for the short-medium term to maintain the break-even,

particularly right after lockdown, and then begin making profits in the next phase, once things

have gone back to normal. We conclude that crisis not only brings destruction, but opportunities,

too, in which management needs to rediscover its roles by devising a new policy; and that is

where management proves the post-modern symbiosis of management and leadership in the

capital market.

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