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Conclusions 307
One broad lesson from our research is that airlines can benefit from partnering with
other key parties in their networks. Just as airlines can benefit from investing in their
LR and in HR practices that strengthen relationships among front-line employees, airlines
also benefit from partnering with key players in their networks like airports, air traffic
controllers and aircraft manufacturers.
Efforts by airlines to reduce labor costs and reform work systems in recent years have
highlighted another dimension of coordination and partnership of growing importance in
the industry, namely relations between airlines and the various subcontractors that do
work previously carried out by the airline’s own employees. Maintenance of aircraft is
one visible and highly contested example of work that is done partly by airline employees,
partly by aircraft manufacturer representatives, and increasingly by specialized mechani-
cal subcontracting firms. Indeed, the 2005 strike of mechanics at Northwest Airlines was
largely over the company’s decision to contract out much of its heavy (major overhauls
of engines etc.) maintenance work to subcontractors and thereby cut its own mechan-
ics’ workforce in half. The advantage for firms of this arrangement is that it lowers
their fixed labor costs. Moreover, often the outsourcing of work is accompanied by a
reorganization of remaining maintenance work in an effort to increase the type of flex-
ibility noted above that, if combined with other supporting HR practices, can enhance
productivity.
There is great debate over whether the movement to contract out more airline functions
leads to reductions in total costs (direct and indirect labor costs plus contracting fees plus
associated contract management and coordination costs), and how this strategy affects the
bottom-line safety, productivity, profitability and customer service outcomes. While the
verdict on this is still out (there have been no studies to date comparing the bottom-line
effects of these different strategies), evidence from other industries that make substantial
use of contractors is that the results vary depending on the quality of the relationships
among contractors and parent firms and the employee groups of the different enterprises
that work together, often side by side (Kochan et al ., 1994). Ultimately, this ability to
partner is an acquired skill like any other, and one with potentially significant effects