DISCLAIMER: This study has been carried out for the Directorate-General for Mobility and Transport in the European Commission and expresses the opinion of the organisation undertaking the study. These views have not been adopted or in any way approved by the European Commission and should not be relied upon as a statement of the European Commission's or the Mobility and Transport DG's views. The European Commission does not guarantee the accuracy of the information given in the study, nor does it accept responsibility for any use made thereof. Copyright in this study is held by the European Union.
FINAL REPORT
Effects of EU Liberalisation on Air Transport Employment and Working Conditions European Commission Directorate – General for Energy and Transport In association with Mr Erwin von den Steinen Dr Ingomar Joerss Mr Vladimir Junek London June 2009 This document is confidential and is intended solely for the use and information of the client to whom it is addressed.
Table of Contents EXECUTIVE SUMMARY .................................................................................................................................. I 1.
INTRODUCTION....................................................................................................................................... 1 1.1 1.2 1.2.1 1.3 1.4
2.
MARKET BACKGROUND AND REGULATORY SETTING............................................................. 5 2.1 2.1.1 2.2 2.3 2.4 2.4.1 2.4.2 2.5 2.5.1 2.5.2
3.
GENERAL REPORT ................................................................................................................................ 1 OBJECTIVES OF THE STUDY .................................................................................................................. 1 Particular aspects to be addressed in this study............................................................................. 2 METHODOLOGY.................................................................................................................................... 3 STRUCTURE OF THE REPORT ................................................................................................................. 4
MARKET BACKGROUND ....................................................................................................................... 5 Growth of Air Transport ................................................................................................................. 6 KEY DRIVERS IN CHANGING EMPLOYMENT PATTERNS ........................................................................ 9 FLEET ANALYSIS ................................................................................................................................ 10 REGULATORY SETTING ...................................................................................................................... 14 The EC Treaty............................................................................................................................... 15 Community Regulations and Directives........................................................................................ 15 AREAS OF CONCERN OF EMPLOYEE ORGANISATIONS ........................................................................ 19 General Context for Social Concerns ........................................................................................... 19 Specific Concerns ......................................................................................................................... 19
LABOUR SUPPLY & EMPLOYMENT ................................................................................................ 24 3.1 AIR TRANSPORT OPERATORS ............................................................................................................. 25 3.1.1 Operators...................................................................................................................................... 25 3.1.2 Total Airline Employees................................................................................................................ 26 3.1.3 Flight Crew................................................................................................................................... 34 3.1.4 Cabin Crew................................................................................................................................... 40 3.1.5 Other Specialised Categories of Airline Employees ..................................................................... 43 3.2 AIRPORTS ........................................................................................................................................... 47 3.3 THE INDEPENDENT GROUND HANDLING INDUSTRY AND AIRCRAFT MAINTENANCE ORGANISATIONS IN THE EU......................................................................................................................................................... 51 3.3.1 The scope and diversity of ground handling services ................................................................... 52 3.3.2 The structure of independent ground handling services provision ............................................... 54 3.3.3 Independent aircraft maintenance providers ................................................................................ 58 3.4 AIR NAVIGATION SERVICE PROVIDERS .............................................................................................. 59 3.4.1 Employment of Controllers ........................................................................................................... 61 3.4.2 Air Traffic Control Assistants ....................................................................................................... 65 3.4.3 Other ATM Professional Categories ............................................................................................ 67 3.4.4 Observations on ANSP Employment Structure ............................................................................. 69 3.5 EDUCATION AND FLIGHT TRAINING ORGANISATIONS ........................................................................ 71 3.6 COMPARISON OF EMPLOYMENT TRENDS IN OTHER STATES ............................................................... 74
4.
TRENDS IN BUSINESS AND EMPLOYMENT STRUCTURE ......................................................... 84 4.1.1 Issues to Consider in Evaluating Responses................................................................................. 85 4.2 OBSERVATIONS OF REGULATORY AUTHORITIES ................................................................................ 85 4.3 ASSESSMENT OF MARKET PERFORMANCE AND PROSPECTS ............................................................... 91 4.3.1 Mobility of Services, Enterprises and Employees ......................................................................... 96 4.3.2 Preliminary Observations on Member State Concerns................................................................. 99 4.4 UPTAKE OF BUSINESS OPPORTUNITIES CREATED BY THE THIRD PACKAGE ....................................... 99 4.5 MARKET CONSOLIDATIONS AND SERVICE CESSATIONS ................................................................... 107 4.6 EMPLOYMENT EFFECTS OF LIBERALISATION – CASE STUDIES OF NEWER MEMBER STATES (CZECH AND SLOVAK REPUBLICS) .............................................................................................................................. 110 4.6.1 Introduction to these Case Studies.............................................................................................. 110 4.6.2 Observations on New Member States’ Case Studies................................................................... 116
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5. TRENDS IN PROFESSIONAL DEVELOPMENT, WORKING CONDITIONS AND EMPLOYEE BENEFITS AND RIGHTS .............................................................................................................................. 118 5.1 5.1.1 5.2 5.2.1 5.2.2 5.2.3 5.3 5.3.1 5.3.2 5.4 5.4.1 5.5 5.5.1 5.5.2 5.6 5.6.1 5.6.2 5.6.3 5.6.4 5.6.5 6.
PROFESSIONAL DEVELOPMENT ........................................................................................................ 118 Cross-border Training................................................................................................................ 119 WORKING CONDITIONS .................................................................................................................... 120 Implementation of Rules on Working Time and Rest Periods..................................................... 121 Age Restrictions on Particular Categories of Staff..................................................................... 122 General perceptions regarding the role of Community-level legislation on work conditions .... 124 RIGHTS AND BENEFITS ..................................................................................................................... 124 Questions on issues of potential jurisdictional conflict or choice of laws .................................. 125 Non-wage Rights and Benefits .................................................................................................... 127 LABOUR – MANAGEMENT RELATIONS & EMPLOYEE REPRESENTATION .......................................... 128 Levels of Employee Organisation in Collective Bargaining Units ............................................. 129 COMPARISON OF EMPLOYEE RIGHTS IN OTHER STATES ................................................................... 130 Air Transport Employee Organisation and Rights in the United States ..................................... 130 Air Transport Employee Organisation in Australia.................................................................... 132 POSITION OF EU TRANSPORT WORKERS & SUMMARY OBSERVATIONS .......................................... 133 Reviewing the implications of new or external forms of competition ......................................... 134 The employer’s perspective......................................................................................................... 134 The regulator’s perspective ........................................................................................................ 135 Perspectives of employee organisations ..................................................................................... 135 Summary observations................................................................................................................ 136
FINDINGS AND CONCLUSIONS ....................................................................................................... 138 6.1 6.2 6.2.1 6.2.2 6.2.3 6.2.4 6.2.5 6.3 6.4 6.5 6.6 6.7 6.7.1 6.7.2 6.7.3 6.7.4 6.7.5
INTRODUCTION ................................................................................................................................. 138 HOW MANY AND WHAT KIND OF JOBS ............................................................................................ 138 Total Industry Employment by State ........................................................................................... 139 Mobile Workers: Flight and Cabin Crew ................................................................................... 140 Air Traffic Management.............................................................................................................. 142 Aircraft Mechanics and Machinists ............................................................................................ 143 General Observations with respect to the above Data ............................................................... 144 WHERE ARE THE JOBS? .................................................................................................................... 145 INDUSTRY DEVELOPMENT AND EMPLOYMENT MARKET TRENDS .................................................... 146 WHAT HAS BEEN THE IMPACT OF ENLARGEMENT?........................................................................... 147 CONSIDERATIONS OF THE SOCIAL PARTNERS GOING FORWARD ...................................................... 149 ROLE OF REGULATION IN AFFECTING QUALITY AND QUANTITY OF JOBS ........................................ 149 Territorial Jurisdiction ............................................................................................................... 150 Working Conditions .................................................................................................................... 151 Non-wage Rights and Benefits .................................................................................................... 152 Employee Representation ........................................................................................................... 152 Education, Training, Skills Qualification and Certification ....................................................... 152
7.
APPENDIX I QUESTIONNAIRE......................................................................................................... 154
8.
APPENDIX II QUESTIONNAIRE RESPONSES ............................................................................... 175 LICENCES ISSUED ........................................................................................................................................... 175 PROFESSIONALS EMPLOYED ........................................................................................................................... 180
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EXECUTIVE SUMMARY INTRODUCTION The European Commission has asked the consultant to follow up and expand upon an earlier (2007) Study by the firm ECORYS on Social Developments in the EU Air Transport. The assigned task is to document what impact the creation of the internal market in air transport, including its recent enlargement, has had on employment in individual Member States as well as on the Community as a whole and to consider trends that may affect the quantity and quality of jobs going forward. Questions of relevance are: •
How many and what kind of jobs exist?
•
Where are jobs located or where have they relocated?
•
What industry development trends will drive job growth in the future?
•
Has the enlargement of the Community to add 12 new Member States in the present decade produced any specific effects having impact on the general job market?
•
What considerations apply to the concerns of the social partners going forward and
•
What has been the role of regulation in affecting employment and in determining which national rules will govern the rights of workers in multinational enterprises?
In seeking to answer these difficult questions, on which data across the Community has been very uneven (see below), we have benefitted from policy insights as well as data provided by Member States, whose cooperation and support are critical. Our first task was to establish a useful database on which to base analysis. Here we believe that (as illustrated below) we have made considerable progress - while at the same time reaching the conclusion that to be reliable and useful such a database requires systematic, periodic updating based on an agreed set of information needs. HOW MANY AND WHAT KIND OF JOBS The scope of our assigned analysis was to survey all areas of direct employment entirely or chiefly involved in producing air transport services. Areas included: airlines (and other enterprises providing transport services for hire), airports, independent providers of groundhandling and maintenance/repair services and air traffic services providers as well as education and training institutions. Collectively we may speak of a “cluster” of interdependent activities that working together are indispensable for providing the economy and the public-at-large safe, secure, reliable, efficient and sustainable forms of mobility. Putting together the air transport product on a daily basis involves hundreds of skills and professional contributions. Some skills are very specific to air transportation, but many are not. Thus as specialisation of labour – a basic attribute of developed economies -- continues to be reflected in the evolution of the EU market, it is likely that certain forms of work will be outsourced just as new functions are also likely to appear. There are basically two ways to examine employment in the air transport cluster:
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1.
By enterprise or institution. That is, to elicit data on total employment by company or institution. This was an approach employed by the ECORYS study and which we have also followed to some degree; and
2.
By professional skill group. This method was called for in the Terms of Reference for this study. In the absence of publically available, standard occupational reporting data broken down to the requisite level of detail, the most logical path was to focus on professional registration, especially the safety-critical professions, in which qualified individuals are licensed or otherwise registered by the state.
Using these two methods in combination and then augmenting the complete or partial responses of 17 Member States plus Switzerland to our Survey, we have reached the following general quantitative findings:1 Total Industry Employment within the EU and by State Our estimate is that direct employment in the EU’s air transport sector2 in 2007 numbered at least 676,000 persons (see Figure ES-1 below). Of these: • •
Some 426,000 were employed by air transport operators; and Some 250,000 were non-airline ground-based employees 3
There is substantial variation in the number of employees in each State as shown below. Total Air Transport Employment 2007
Thousand
676
680 Airports Independent GH
480
Maintenance
460
FTOs
440
ANSPs
178
Airlines
160 140 120
108
103
100 80 54
60 40
26 11 TOTAL
Scandinavia
Slovenia
12 UK
Slovakia
9 Sweden
1
Switzerland
3
Spain
4 Romania
13 Portugal
3
Poland
4
Netherlands
4
Luxembourg
2
Malta
9
Lithuania
5
Italy
Germany
France
Cyprus
Bulgaria
Belgium
Austria
8
Latvia
10
Ireland
0
1
Finland
5
Estonia
11
Hungary
3
Greece
5
Denmark
13 12
Czech Rep.
20
30
29
Sources: Questionnaire responses, IATA ; UK CAA statistics; Air Transport Intelligence, Airport Annual Reports
Figure ES-1: Total Air Transport Employment, 2007
For the full tables, please see Chapter 3. Note: our summaries of the individual categories may not entirely avoid doublecounting. 2 We include here the 27 Member States plus Switzerland 3Persons directly employed by airports, independent ground handlers, ANSPs, FTOs and maintenance firms. Note: estimates made by ACI that we have drawn upon include some impact of indirect employment; see Chapter 3. 1
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As indicated by the figure above, and discussed in Chapter 3, there are significant gaps in reported data for which we have not been able to identify proxy sources. It is thus likely that the total employment in the ground-based support sectors is substantially higher than 250,000. Note that the figure for “Scandinavia” is those employees of ground support services identified from SAS annual reports, but not reported in questionnaire responses.4 Mobile Workers: Flight and Cabin Crew Across the 28 States in our survey, we have been able to identify over 167,000 mobile workers employed by air transport operators: nearly 51,000 pilots and 116,000 cabin crew employees. Licensed Pilots The number of identified pilots employed in 2007 is nearly 51,000 – an increase of 26% from just over 40,000 in 1997 to nearly 51,000 in 2007. Pilot employment by State in 2007 is shown below. Employed Flight Crews
Thousand
2007
51
51 11
11 10 9 8 8
8
4 3
3 2
1
1
2
2
2 1 1
1
1
1
1
1
0
0
0
1
1 0
0
0
0 Slovenia
0
Slovakia
0
Romania
0 0
TOTAL
UK
Switzerland
Sweden
Spain
Portugal
Poland
Netherlands
Malta
Luxembourg
Latvia
Lithuania
Italy
Ireland
Hungary
Greece
Germany
France
Finland
Estonia
Denmark
Cyprus
Czech Rep.
Bulgaria
Belgium
Austria
Sources: Questionnaires, IATA, Airline Annual Reports
Figure ES-2: Employed Flight Crew, 2007, by State
Across the EU the number of pilot licences (ATPL and CPL) issued has fluctuated considerably more than employed pilot numbers. A time series indicating the number of licences issued versus pilots employed is shown below. As indicated, the compound annual growth rate across the period in both cases is 3%, suggesting that supply of formally5 qualified pilots has kept pace with demand.
Recent data suggest that some 58% of ramp (airside) ground handling workers are employed by airlines or airports directly. 5 Does not take account of experience requirements for airline employment 4
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Flight Crew Licenses Issued and Pilots Employed Thousand +3%
70 65
+3%
60 55 50 45 40 35 30 25 20 15 10
Flight crew licences issued Flight crew employed
5 0 1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Figure ES-3: CPL/ATPL Licences Issued versus Pilots Employed
Cabin Crews Like flight crews, cabin crews have increased strongly: by 29% from nearly 90,000 in 1997 to nearly 116,000 persons in 2007. Employed Cabin Crews
Thousand
2007
116
116 34
21 20
20
18 16 14 12
10
10 8 6
6
4
4 2
2
2
3
2
TOTAL
UK
Switzerland
Sweden
Slovakia
0 Slovenia
0
1 Spain
0 Romania
Malta
Portugal
0 Poland
0
Netherlands
0
Luxembourg
Italy
Ireland
0
Lithuania
1
Latvia
0 Hungary
Denmark
Czech Rep.
Austria
Greece
Cyprus
0 Germany
Belgium
1 France
0
0
Finland
0
2
1 Estonia
1
Bulgaria
2
Sources: Questionnaires, IATA, Airline Annual Reports
Figure ES-4: Employed Cabin Crew, 2007, by State
Cabin crews are not licensed by public authorities in a number of States. As discussed in Chapter 3 only a few responses were received to indicate the specific qualifications processes employed. The systematic, state-by-state analysis performed by EGOA in its March, 2007 Report on the Rules and Regulations Governing Cabin Crew in the EC 25, shows that Member States in many cases have placed responsibility for compliance with European safety requirements (e.g. EU OPS) on the operators to train, qualify and effectively license
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their cabin staff. In some nine national cases, however, cabin staff receives direct certification from national regulators.6 With that limitation, the trend identifiable from the comparison of licences versus employment is that the production of qualified personnel has exceeded the employment rate. Cabin Crew Licenses Issued and Employed Thousand 120 115
Cabin crew licences issued Cabin crew employed
+3% 110 105 100 95 90 15
+13%
10 5 0 1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Figure ES-5: Cabin Crew Licences Issued versus Employed
Non-airline Ground Based Employees The 250,000 non-airline ground based employees we have been able to identify in our survey have the following employers. Non-airline Ground-based Employment Airports Independent Ground Handlers Independent Maintenance Organisations Air Navigation Service Providers Flight Training Organisations Total Refer to tables 15, 18, 20, 22 and 31 of the main report for details of reported data.
121,717 38,936 39,390 49,813 424 250,290
Table ES1: Non-airline Ground Based Employment, 2007
As suggested above, we believe that these figures (particularly in the cases of independent ground handlers, maintenance organisations and flight training) underestimate the total number of employees of these types of organisations.7
See EGOA Final Report Rules and Regulations Governing Cabin Crew in the EU25, March, 2007 in particular Chapter 5. This is because of a very limited number of questionnaire responses (including for States with the largest air transport markets), and difficulties experienced in obtaining reliable proxy data. In several cases, States could identify the existence of such organisations in their market, but were not able to report on employee numbers. Refer to tables 15, 18, 20, 22 and 31 of the main report for details of reported data.
6 7
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Air Traffic Management Total employment by ANSPs in Europe encompassed nearly 50,000 staff in 2006, an increase of over 17% since 2001. Air Traffic Controllers Licensed air traffic controllers overall make up around half of all ANSP employees. ANSP Employment
Thousand
2006
50
50
9 Others
8
ATCOs
7 6 5
5
5
4
4
4
3
3
3 2 2 1
1 1
1
0
1
0 UK
TOTAL
Sweden
Switzerland
Slovenia
Spain
Slovakia
Romania
Poland
0 Portugal
Italy
Ireland
Hungary
Greece
Germany
France
Finland
Estonia
Denmark
Czech Rep.
Cyprus
Bulgaria
Belgium
Austria
0
1
1
Netherlands
0
Luxembourg
0
0
Malta
0
Latvia
0
1
1
Lithuania
1
2
1
1
Sources: Eurocontrol, MUAC, Finavia
Figure ES-6: ANSP Employment, 2006
The rate of growth of licences issued and ATCOs employed show a close correlation, with compound annual growth rate of 3% in both cases. The lower figure for licences issued is due to limited reporting by States (whereas we were able to obtain full employment figures from Eurocontrol). As in previous cases, however, observable trends in growth rates are useful. ATCO Licenses Issued and Employed Thousand +3%
16 14 12
+3%
10 8 6 4 ATCO Licences issued
2 0 1998
ATCOs employed
1999
2000
2001
2002
2003
2004
2005
2006
Figure ES-7: ATCO Licences Issued versus Employed
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Aircraft Mechanics and Machinists We have been able to identify some 59,000 aircraft mechanics, maintenance engineers and machinists employed in 2007. The following figure indicates employment by State. Mechanics and Machinists Employed
Thousand
2007
60
59 12
12 11 10
9
9 8 7
7 6
5
5 5
5 4
3
3 2
0
0
0
1
1
1
1
0
0
0
0 UK
TOTAL
Switzerland
Sweden
Slovenia
Spain
Slovakia
Romania
Portugal
Poland
Netherlands
Luxembourg
Malta
Lithuania
Latvia
Italy
Ireland
Hungary
Greece
Germany
France
Finland
0 Estonia
Cyprus
Austria
0 Denmark
0
0 Czech Rep.
0 Bulgaria
1
0 Belgium
1
2
2
2 1
Sources: Questionnaire responses, IATA, Airline Annual Reports
Figure ES-8: Aircraft Mechanics and Machinists Empolyed, 2007
The number of employees in this category has increased by nearly 11%, from just over 53,000 in 1997. The compound annual growth rate of just 1% is likely to be a reflection of decreasing maintenance needs of modern aircraft. Mechanics Employed Thousand 65
+1%
60 55 50 45 40 35 30 25 20 15 10 5 0 1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Figure ES-9: Aircraft Mechanics Employed, 1997-2007
General Observations with respect to the above Data Given the absence of an established occupational data collection system in the affected fields (analogous for example to what is provided in the United States by its Bureau of Labor Booz & Company Date: June 2009
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Statistics) our estimates cannot hope to match the accuracy and comprehensiveness of an organised official system. As already suggested above, clarification of employment estimates was most difficult in the groundhandling sector, since cross-check data from licensing registers (as available for occupations such as flight crews, controllers, and mechanics) could not be obtained. At the same time it is important to note that a number of industry stakeholders have a clear self-interest in creating credible estimates of the contribution and importance of their industries to the EU economy, including their direct and indirect employment impacts. Such broader estimates may nevertheless provide a useful framework. They also help to identify the further questions that policy must ask in evaluating the key human factors for competitiveness and growth. As estate agents are wont to say that, “location, location, location!” is the key to the value of property; in the modern labour market, the keys seem to be “skills, skills, skills! That is why the Commission’s focus on seeking data on the professional groups is an important step toward a more informed understanding. At the same time – and as will be discussed in the following section – location is also a policy concern in an industry like air transportation where mobility has become a key issue. WHERE ARE THE JOBS? The establishment of the internal Community market took down the walls that in former times established formal national frameworks sharply limiting access to outside companies and persons. Now both individuals and enterprises can move quite freely, creating opportunity for jobs to move out of a national setting, as well as for persons wishing to have such jobs (where they exist) to move in. In a services field like air transport the issue of job movement is, however, different than in the case of manufacturing where products built in one location can be delivered to others. In the case of transportation, delivery itself is the product. So you bring the production process itself (or at least almost all major aspects of it) to the customer. Thus the bulk of the jobs will tend to be where the customers are. Unlike factories which can serve customers from remote locations, airlines and airports need to bring their human resources to the sources of demand. From this perspective it is therefore not surprising that the job creation in air transportation has been the strongest in countries with the largest demand in terms of origin, destination or transfer of traffic and less so in countries of smaller or weaker demand. The EU Member State with the highest absolute growth of jobs in the air transport sector has been Germany (see Figure ES-1 above). Mobility Issues Suggesting that jobs (or at least many key jobs) cannot easily be exported away from the region being served should not, however, suggest that policymakers will not need to consider issues or problems of mobility that occur as the scope and the structure of the air transport market change. Specific issues will arise in individual cases of workers who could be hired in one state, based in another and perhaps reside in a third. These individual cases reflect profound changes as a consequence of the liberalisation of market access. New companies have sprung up as significant examples of cross-border Booz & Company Date: June 2009
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establishment – organised both by Low Cost Carriers and by Full Service Carriers. These investments have led to significant new employment. They have also resulted in transfers of personnel and, in some cases, also attempted transfers of terms of employment (that is, application of contractual terms of one state to employees performing work in another state). As reviewed in Section 1.7.1 below, courts and legislators have been coming to grips with this issue, which has led to the establishment of framework standards at Community level for judging the individual case. Another issue raised by cross border mobility is the general question of quality control of company and individual performance in key areas such as safety, security and workplace protection as they apply to the workforce as well as to customers. While beyond the scope of this study, this situation is likely to raise an ongoing set of oversight issues at both Community and national levels. In sum, intra-Community mobility requires a clear framework defining the opportunities, rights and obligations of individuals as well as organisations – the latter to include employee organisations as well as the commercial enterprises. INDUSTRY DEVELOPMENT AND EMPLOYMENT MARKET TRENDS Market liberalisation under the Third Package of 1997 and successor legislation as well as the establishment of Community-wide standards under a range of other laws collectively known as the air transport acquis have led to a near doubling of airborne traffic since 1997 and the introduction of many new services and routes. High standards of safety and security were maintained while consumers enjoyed more efficient connections and lower (often much lower) fares. The EU air transport market has thereby experienced restructuring processes (that are far from over) that have affected or will be affecting not only airlines but all other vital components of the air transport cluster including airports and all related ground-based support services, maintenance of aircraft and air traffic management services. Restructuring and productivity Restructuring has resulted in both concentration and diversification. For example: •
•
Among the airlines we have witnessed both considerable new entry and expansion of networks of low cost carriers as well as those of full service operators. In an environment in which many airlines have both started and failed, the number of AOC holders offering scheduled airline service within the EU has expanded; At airports, numerous new operations have sprung up at regional airports. Meanwhile at major hubs, services have continued to increase leading to an explosion of connections (see Chapter 4 figure 46);
•
In ground support operations, as a consequence of freedom of market access made possible by the Groundhandling Directive, airports as well as airlines have been able to call on an expanded number of specialists, while at the same time multi-national firms have established integrated operations at airports across the Community.
•
In air traffic management, a coordinated scaled-up system will now create a Single European Sky made up of functional airspace blocks established across national boundaries, whose efficiencies will be expressed through routings that save time, fuel and reduce stress on the environment.
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Restructuring is also a key driver in shaping employment as influenced by general trends and specific factors. These include: •
Pressures to gain productivity in all corners of the system -- intensified now during recession and falling demand -- but a constant factor even in better times;
•
At the same time need to maintain public confidence in the system by quality control systems to assure safety and security as well as protecting public health and the environment;
•
Consequent structural change pressures simultaneously to outsource work and even functions while at the same time strengthening internal competencies in key skills areas.
Thus the industry seems on course to continue experiencing changes in technology and organisation – all the more so if made subject to increasing governmental pressure to meet stringent environmental standards. Should new technologies as well as new operating efficiencies not produce the needed gains in environmental compliance, then regulation ultimately will constrain growth. If growth is constrained then employment is likely to flatten. As we show in this study, the industry has experienced steady growth of labour factor productivity; that is, the rate of job growth will tend to lag the rate of business growth. Comparing rates of growth in output in the Community (e.g. growth of operations and traffic) over the same period as our employment survey (see following figure) it is clear that the employees in the air transport cluster have become progressively more productive. Comparison of Trends in Employment, Flights Operating and Passengers Carried in EU27+Swtzerland (CAGR circled)
8.8%
3.3% 2.7% 1998
1999
2000
2001
2002
2003
Total Employees
2004
2005
Daily Flights
2006
2007
Pax Carried
Sources: Questionnaire responses; IATA, Air Transport Intelligence, Eurocontrol, Annual Reports Notes: (1) for passengers carried, only the largest 8 markets are included as data was not available for the entire period (e.g. in the case of the new Member States, is only available from 2004). (2) employment data is fragmented. In many occupational fields, data was not supplied for full period. Most commonly, earlier years are missing, which would tend to exaggerate the rate of growth indicated (i.e. the true level may be somewhat lower than 2.7%). The above depiction is reasonably robust, however, as the largest employers (airlines) are reasonably well covered. The recent term trend discernible in airport and other employment is one of modest growth. (3) daily flights refers to Eurocontrol area.
Figure ES-10: Comparison of Trends, 1998-2007
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Perceptions of Member States on growth of productivity and employment As shown in our Survey, the national aeronautical authorities in the Member States, by substantial majority, see future industry employment growth as being “selective” and occurring within a restructuring process featured by consolidation on the one hand and the emergence of very competitive individual performers on the other. Dynamic growth of employment is not anticipated (see Chapter 4). On the other hand, the general view toward long term growth prospects remains modestly positive. When asked to consider the market prospects of their operators, airports and ground services companies, responding states in aggregate took the middle position, which was defined as: “Hold market share and enjoy a stable outlook based on ability to keep cutting costs.” Under these circumstances it is not surprising that employee organisations are placing strong emphasis on strengthening job security. Similarly unsurprising is employer emphasis on seeking flexibility. In an industry that is capital as well as labour intensive, with low rates of profitability and faced by periodic and even sudden fluctuations in demand, management is under pressure. WHAT HAS BEEN THE IMPACT OF ENLARGEMENT? Twelve new states have joined the EU between 2004 and 2007, thereby adding population and extending territory – the latter being a factor which, in itself, serves to enhance the role of air transport as the premier mode for connecting an enlarged geography. Air services have grown significantly and not only to connect the new states to the older states. As shown in our recent market study of Georgia, operations via the new states can also play a role in expansion of international services of the Community to third countries8. Growth in national employment in the new Member States, however, has not in general matched the growth of activity. Rather labour productivity there grew strongly, with the number of flights operated rising at a compound annual rate of 12% during the period 2001 2006. As shown below, the rate of growth of air transport employment in the 12 new states eased modestly during the period (from an average annual rate of 4% during 1997-2004 to 3% after 2004).
It was found to be cheaper for passengers from many Western European countries, such as the UK, Belgium and Germany, to fly to Georgia via Latvia, utilising LCCs in the first leg of the journey. See Booz & Company’s The Economic Benefits of a Common Aviation Area Agreement between the EU and Georgia/South Caucasus Region for further information. 8
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Rate of Increase of Flights and Employment in new Member States 2001 - 2006 734,208 697,746
+12% 602,391
498,633 448,850 421,301
+3% 23,356
22,775
25,027
26,083
27,396
28,002
28,628
IFR Flights (excl. Cyprus, Poland) Employment Sources: Eurocontrol ACE Benchmarking Reports, Questionnaire responses
2001
2002
2003
2004
2005
2006
2007
Figure ES-12: Evolution of Flights versus Employment in new Member States
As productivity increased, the different professional groups working in the new Member States have also oriented their compensation expectations upwardly toward prevailing EU models. As examined in some detail in our case studies of the Czech and Slovak national markets (see Chapter 4) the experience of the recent years (which is both short term and fragmentary) suggests, however, that the following trends as either resulting from or being intensified by Enlargement: •
Difficult times for former national flag carriers in the new states. Though it showed strong growth in the years preceding formal entry into the EU, CSA’s situation as a selfsufficient operator has deteriorated since Enlargement. The same can be said of the former national flag carriers of virtually all the new states.
•
Selective growth of the airline labour force. As long as average aircraft size does not increase, load factors are constant and annual hours worked remain more-or-less stable, the employment levels of flight and cabin crews must closely follow the growth of traffic. Here our Czech and Slovak case studies suggested two interesting trends:
•
-
Rationalisation focus on non-flying staff. In the case of CSA it is notable that staff reductions since 2004 have occurred almost entirely among the non-flying staff.; and
-
Stability of hours of flight and cabin crew. It is noteworthy that all Czech and Slovak airlines examined, including the LCCs, record almost identical annual working hours (comfortably within annual maximums prescribed under Community law). Thus while pay scales and benefits may differ, this clearly suggests that working time regulation matters, with direct consequences for the size of the labour force.
Crafts-organisation of employees. As in the EU-15 (and in the international cases referred to elsewhere in this study) air transport employees in the Czech and Slovak examples have now chosen to organise in specialist groups, which has led and will lead to pressures to adapt respective wage scales to match those of the like
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professions in other countries rather than simply accepting much lower scales as might match lower prevailing scales in the national economy in general. •
Possible out-migration of individuals rather than air transport enterprises. While in other economic sectors (for example construction) there may be tendency of enterprises domiciled in the new states to perform work in the EU-15, no such tendency has so far been evident in air transport services.9 International or EU-15 investors have not, so far, begun in any significant degree to create new EU-wide working establishments in the air transport field in the new states. Thus, for the time being at least, outward mobility emanating from the new states has been restricted to the movement of individuals to jobs in the EU-15.
In sum, the Enlargement does not seem to have introduced any larger dynamic tendencies one way or another at Community level with respect to air transport employment but if anything seems to have reinforced existing trends. CONSIDERATIONS OF THE SOCIAL PARTNERS GOING FORWARD Just as employers seek to: reduce costs in general; increase factor productivity in particular; and to improve their ability adjust flexibly to ups and downs in the market, employee organisations are increasingly concerned that their members enjoy a stability-of-career perspective while also benefitting from gains in overall performance. As developed in some detail in the ECORYS Study -- which contrasted employer-employee perceptions in the various fields of air transport activity – a general “glass half full/half empty” dichotomy prevailed in the respective views of the industrial partners: • •
Employers felt employee conditions were good to very good; Employee organisations felt they were acceptable to deficient.
While these attitudes were logical if not predictable, they did (as was clearly brought out by the ECORYS work) also indicate an awareness and understanding of respective positions, which in our view reflects the relatively strong degree of social consensus prevailing today in the European Union, especially in comparison to the fierce conflicts of the 19th and 20th Centuries. As also pointed out by ECORYS, levels of satisfaction and concern, however, varied across the various professional groups. The data obtained by our Survey would strengthen these conclusions. For example, employment stability in air traffic management organisations continues to be very high. In contrast, employee representatives of ground handling organisations remain concerned that Community framework regulation and national implementation as well as additional measures by Member States should work to promote tenure, seniority and re-employment of workers even if new managements bid successfully on time-limited franchises to perform ground handling services. Especially where such services are specialised and relate to safety or where the work occurs in sensitive areas (from a security perspective), arguably bidding
9 By contrast, companies in EU-15 states have created new establishments in other EU-15 states to provide both direct air transport and supporting groundhandling services (see Chapters 3 & 4 of the Study).
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procedures should at least enable if not encourage the retention of known, experienced and well-qualified workers. Employers on the other hand must be able to offer efficiency and value-for-money when competing for new entry or retention of business in the ground handling market. Representatives of mobile workers also express concern with respect to job stability -- and as related to working conditions and the organisation of training and qualification. They fear that employers may find scope in the current regulations for hiring mobile staff, especially pilots, from temporary agencies on short term contracts. They are also concerned that permanent contracts that provide for basic as well as on-going training not use the cost recovery of such training (through individual re-imbursement provisions) as an indirect tool to cut compensation levels. This said, there is strong agreement about the importance of training and qualification and that governments should require high standards and formal qualification in all safetyrelated professions, including individual certification or licensing of cabin crews. ROLE OF REGULATION IN AFFECTING QUALITY AND QUANTITY OF JOBS Community law aims to assure free, open and fair competition under which a wellfunctioning market becomes the basis for creating economic growth. This said, regulations also establish framework conditions to ensure balance, protect employee rights, regulate basic conditions in the workplace in order to protect safety and health of employees as well as the public they serve. In our Survey, responding states confirmed that they implement minimum standards established or mandated under Community law and in a number of areas exceeded them (see Chapter 5). The Terms of Reference of this Study called upon us, drawing upon the views of Member States as well as our own analysis, to consider the qualitative impact of regulatory standards. Certain summary observations on how regulations affect or might affect employment markets may be appropriate in the following areas: •
Territorial jurisdiction
•
Working conditions
•
Non-wage rights and benefits
•
Employee representation
•
Education, training, skills qualification and certification.
Territorial Jurisdiction As outlined in Chapter 2 and discussed in Chapter 5, the freedom of mobility provided for under the EC Treaty can give rise to mixed personal situations for employees with regard to the states in which they reside, physically work or have contractual attachments. Particularly in a field such as air transportation (in which most of the services in the EU occur between rather than within states) complex situations have arisen in determining whether work locations in particular states are temporary (qualifying as “postings” under Community legislation) or “habitual.” Arguably, a certain tension has existed (and perhaps must continue to exist) between the rights and efforts of enterprises and individuals to compete and contract freely across Booz & Company Date: June 2009
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borders on the one hand and decisions on social policy aimed to ensure minimum general rights and obligations on the other -- especially to the degree that the standards or their implementation vary across borders. Both the Posting Directive 96/71/EC and Community regulations on contracts (see below) create both general standards and criteria under which authorities are to determine where and when an individual’s work location is temporary or habitual. Time periods spent at a location are a relevant factor but not the only factor. For example, the Posting Directive enjoins or conditions the recurrent use of temporary staff to perform regular functions. Its terms also restrict companies from deviating from local standards and/or give Member States ability to ensure compliance by employers with regulations such as minimum wage laws when compensating posted employees. Thus applying Community regulations on territorial jurisdiction begin with fact finding in the individual case to determine circumstances and jurisdictions. In general, Community law is based on the principle that the individual employee is, however, the “weaker” party to a contract and therefore, entitled to a presumption of most-favoured treatment in cases of conflicting provisions. Employers, in part to ensure transparency and avoid discrimination, may wish to standardise terms of work and comparability of wages and benefits among employees of different nationality, especially those directly employed in cross-border services of a like character. However, they will also accept or seek out compliance with local rules, traditions and patterns of operation, especially when they offer favourable economic conditions. In this complex situation, recent reforms of Community legislation (Regulation 593/2008) will be introducing clearer standards by the end of this year with respect to the territorial jurisdiction of contracts.10 These reforms confirm or expand upon two basic principles that: 1. In case of dispute, provisions of all national laws that are relevant to the case are to be considered, while: 2. Even when a so-called “choice of law” is made otherwise by the parties to an employment contract,11 the rules of the country where or, henceforth also, from where the employee habitually performs work will apply.12 New language to this effect, which did not exist under the Rome I Convention on contracts (which Regulation 593/2008 expressly supersedes) should in our view work to clarify the future legal situation and to support the line taken by legislation and case law in France, that the laws and standards of the country in which or from which work is regularly performed, for example from “an operating base,” will prevail in such cases unless a choice more favourable to the employee is made possible by the law of the contract.13
10 Regulation 593/2008 will take full effect from 17 December 2009 and its governing provisions will affect all contracts agreed from that date. 11 Meaning that parties to the contract (e.g. employer/employee) have agreed that the law of a particular state will be applied in regulating or adjudicating any issue arising under the contract (such as termination and retirement, for example). 12 Regulation 593/2008 Article 8 on “Individual Employment Contracts” specifies that employees cannot be deprived of protections under the “law of the country in which or, failing that from which the employee habitually carries his work in performance of the contract.” 13 As pointed out in the ECORYS Study, there has been some confusion in the recent past with respect to standards for determining the location of work. In 2007, in the same period that the French Conseil d’État rejected an airline challenge to a recent French law that established the jurisdiction of French employment laws over employees of a non-French airline working in and from an operating base in France, a Belgian Court of Appeals rejected a lower court ruling on behalf of
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Working Conditions As set forth in their responses to our Survey (see Chapter 5), Member States confirm that they implement or exceed the minimum standards limiting working and providing for rest times for mobile workers as set forth by Directive 2000/79 as well as enforcing flight time and duty limitation rules set forth in safety regulations contained in Regulation 1899/2006 amending Regulation 3922/91 Annex 3 Subpart Q. The adequacy of these rules to maximise safety continue to be subject to some debate and is under study by EASA. Regulation within the Member States varies somewhat with respect to mandatory retirement in safety-critical professions, with some now permitting pilots to fly until age 65 and others still setting limits at 60 and in one case 58. In some cases age limits are placed on cabin staff as well. Air traffic controllers must in some cases retire at earlier ages than pilots. For details, see Chapter 5. Non-wage Rights and Benefits In an aging population, issues such pension claims, health, accident and disability insurance, protection against loss of employment, etc. assume increasing importance. Benefits in general are provided by Member State and company plans and forms of participation will often be compulsory. As described in Chapter 2, Community legislation provides a framework for regulating situations in which the employee by virtue of his or her employment history has been required to pay into several national systems, just as national legislations must ensure that minimum levels and scope of coverage is provided. Employee Representation Community laws affirm the freedom of employees to organise and responses to our Survey confirm that in the air transport industry employees are, in general, well represented at the collective level with some variation among the different employee groups. In the Member States responding to our Survey, this ranged from 94% in the case of flight and cabin crews to 69% in the case of groundhandlers. No states, however, expected collective representation to increase and 19% of those responding felt that it might decrease. Employee organisations for their part are concerned that workers not be pressed or overly influenced to agree to individual contracts rather than being covered by collective ones. There is also some concern that the continuing reliance on national regulation in the employment field tends to retard the development of employee associations at the EU level, even though law and policy do not stand in the way of this. Indeed Community regulation encourages the formation of transnational representation, as evidenced, for example in the air transport field, by the establishment of a European Works Council incident to the Air France/KLM merger.14
employees at Charleroi who claimed that the termination procedures under their Irish contract were illegal under Belgian law. Since the employees participated in providing cross border transportation, the Belgian Court found that the locus of habitual work could not be determined as having occurred in a particular country. Now that the jurisdictional standard has been widened to include habitual work “from” a country, it seems more likely to us that a different finding would be reached in the future. 14 Council Directive 94/45/EC, the scope of which was extended to the UK by Directive 97/74/EC, provides for the establishment of European Works Councils in trans-national companies with more than 1,000 workers in Booz & Company Date: June 2009
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Education, Training, Skills Qualification and Certification Our Survey sought to determine the composition and size of education and training institutions. Member states responses to this query produced mixed results. Unclear for example was the structure of flight training which seems to be provided in a very diverse manner through private flying schools, some institutional instruction and significantly by operators. In other safety-critical functions, notably air traffic control, the procedures seem to be more standardised in the form of standard national qualifications and training programmes. The question of advanced skills in this field, which seems important given the increased applications of technology taking place, however, may also merit attention. In general, education and training appear to us to be the keys to future competiveness in the industry. Therefore we believe that the timely inquiry initiated by the Commission in this area merits serious follow up. Logically Member States would cooperate in strengthening competencies at the Community level. Our Survey indicated that while most Member States made use of training facilities to some degree in other states that in general not more than 10% of students came from other Member States or non-EU countries. Now that the institutional framework for pursuing technical excellence is being strengthened at Community level through the expansion of work by institutions like EASA, we believe that enhanced qualification of human resources in aviation and air transport could be a key step in strengthening the industry and employment in it going forward. Indeed the main objective of EC policy as regards air safety, as provided for under Regulation 216/2008 establishing EASA, aims precisely at harmonising further the qualification of professionals dealing with the manufacturing, maintaining and operating aircraft, the operation of aerodromes and associated ground handling services as well as the provision of air traffic control services. CONCLUDING OBSERVATIONS Air transport, which provides crucial and indispensable underpinning for international trade and travel, is, as the data show, simultaneously a major employer in the European Union. A wide range of skills are required to ensure the safe, secure and efficient provision of its services. Employment in the air transport cluster has grown steadily and significantly over the past 10 years, even though productivity growth has more than matched employment growth; that is, traffic grew at more than twice the rate of employment. Community consumers have benefitted from an explosion of new services at lower prices. The accession of 12 new Member States has extended the EU physically and culturally and created new needs and incentives for the growth of air transport services. The growth of
employment in EU Member States where there are more than 150 staff in at least two Member States. A new Air France-KLM European Works Council was set up on 14 February 2006. This Council does not, however, replace the staff representative bodies in each company and in each country.
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employment, however, has not spread in the same way. That is, more new jobs have tended to develop in and around the major origin, transfer and destination markets. Reforms of air transport regulation in the mid 1990’s, culminating in the so-called Third Package market access liberalisation measures of 1997, have introduced a much higher degree of enterprise mobility within the Community, as restrictions on direct services between Member States and outright barriers to so-called 7th, 8th and 9th freedom services were removed, thus enabling and stimulating exploitation of rights of operators to establish intra-EC services entirely outside their home Member State markets. Market reforms have thus been encouraging the emergence of European-scale air transport operators who in some cases have been establishing operating bases in a number of countries. Similarly, Community led action to liberalise access to formerly restricted markets to provide groundhandling services has facilitated the emergence of multi-national operations by firms specialised in providing such services. Such development of new competition across national borders has raised issues of how best to safeguard employee rights which, while protected by minimum Community standards, still depend importantly on national legislation and procedures. A challenging reform process has thus been underway with a goal of producing both more legal certainty and at the same time standards and procedures that will enable fair, efficient and over time more consistent resolution of the individual case disputes that will inevitably arise. Finally, we conclude that far better information on this industry and its employment structure is needed so as to inform policy makers in the years ahead. A periodic and standardised reporting system based on occupational skills as well as enterprise employment will be of great relevance. This is particularly so, because aviation and air transport depend on skills and innovation. To be competitive and to establish leadership at the global level the EU will need to develop the right people with the right skills through education and training.
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1.
INTRODUCTION
1.1
GENERAL REPORT
This document forms a final report that assesses the effects of EU liberalisation on air transport employment and working conditions in the industry. Booz & Company Ltd of London and its subcontractors, Mr Erwin von den Steinen, Dr Ingomar Joerss and Mr Vladimir Junek have prepared this study.
1.2
OBJECTIVES OF THE STUDY
The European Commission has engaged the Project Team to assess the effects of EU liberalisation, as contained in the Third Package reforms,15 on air transport employment and working conditions in the industry within Member States as well as in the EU as a whole. This study is tasked to build upon (but not repeat) work done by ECORYS in 2007, which involved the systematic participation of stakeholders in examining the perceptions of employers and employees on the evolution of social conditions for different employee and professional groups in the air transport industry in a period of greatly increased competition. New or expanded areas of data gathering and analysis to be addressed in this report include: •
Establishing a comprehensive time series data base (1997-2007) on numbers of persons employed by occupation and Member State for all of today’s 27 Member States as well as other relevant data on industry structure and development trends (NB. The Ecorys Study was limited to the 15 states that constituted the EU prior to 2004, henceforth referred to as the “EU-15”),
•
Obtaining the views of the 27 Member States + Switzerland with respect to industry and employment trends as well as the regulatory situation and social policy concerns in their individual states, and
•
A consideration of the changes observed in the social dimension of the air transport internal market.
This study follows a number of other market and regulatory studies performed by this consulting team of a wide range of countries. It will also include some international comparison of employment trends. Past studies have determined that a general liberalisation, created under fair and uniform competitive conditions (including common or equivalent standards on working hours, other
15 General reference is made here to Regulations 2407/92, 2408/92 and 2409/92 that collectively comprise what is often referred to as the “Third Package”; namely reforms that established Community-wide standards for the granting of operating licenses to providers of commercial air transport services while removing quantitative limitations on market access and authorising freedom of service offers intra-EU, including the right of an airline of one state to offer services between points in another state (cabotage).
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protections on health and safety, professional qualifications, insurance coverage and rights of representation), is likely to lead to significant economic benefits for both the EU and individual Member States. The principal aim of the work is to provide both a historical review and a high level analysis of the possible effects on air transport employment and working conditions in the industry of liberalisation of the aviation market within the EU with emphasis on the impact of increased labour mobility within the Community. 1.2.1
Particular aspects to be addressed in this study
1.2.1.1.
In the quantitative field:
•
An analysis of information on employment in air transport in the EU, disaggregated by countries, forms of organization and occupation, providing evidence over the ten year time series 1998 – 2007
•
An impact analysis, as far as data permits, eliciting the job creations and / or losses in the sector and the impact on the functioning of the labour market.
•
A projection of trends for the coming years.
•
An overview of recent evolutions in the market of European air transport and their comparability with similar markets in third markets in third countries, in particular in the United States, including: -
The number of operators for commercial air transport and flight training organisations, including as far as possible, and at a summary level, fleet size and the number of staff employed.
-
The number of aircraft in the aircraft registry, operational bases, airports and aerodromes, ground handling support, maintenance, air traffic management services – that is, a description of the infrastructure involved in the direct provision of air transport services and the numbers and qualifications of persons employed and numbers of staff by occupation.
1.2.1.2.
In the qualitative field
•
A presentation of changes and trends, and the ways in which actors are adapting to the market.
•
Examination of working conditions and of the application of relevant legislation, including inter alia: -
For mobile workers, regulation of flying hours and retirement age.
-
Staff mobility within the Community.
-
Trends and practices in training of staff
•
A presentation of the evolutions of social relations in the sector, including relations between trade unions and employers.
•
A comparative review of trends in compensation, focusing on social benefits and protection, rather than wages actually paid.
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1.3
METHODOLOGY
This report is based on research and analysis obtained by a number of methods, primary amongst which was the solicitation of data from the Member States on employment within their national industries. This data was collected via the distribution of a questionnaire to all the EU Member States and Switzerland. The questionnaire was developed in consultation with the Commission and other experts in the field, and aimed at obtaining quantitative data as well as qualitative appreciations of market conditions and trends from the Member States. In terms of quantitative data, the questionnaire requested information on the numbers of licensed professionals (e.g. flight crews, air traffic controllers, etc) as well as absolute numbers of staff employed in services directly related to air transport by occupation and sector of employment over the period 1997-2007. Qualitative responses were also sought from the Member States on the key issues set out above. The text of the questionnaire is appended as an annex to this report. The questionnaire was sent to the aviation administrations of all Member States and Switzerland. Of these 28 countries, we received 18 responses: nine from EU15 countries, eight from newer EU States as well as a response from Switzerland. However, some countries did not respond to all the questions or provided only partial information. Countries that Responded to the Questionnaire Belgium EU15 Finland (count = 9) France Germany Netherlands Portugal Spain Sweden United Kingdom Bulgaria Newer EU Cyprus States Czech Republic (count =8) Hungary Lithuania Malta Poland Slovakia Other Switzerland Total: 17 EU27 Member States + Switzerland Table 1: List of countries who responded to the Survey
The questionnaire response includes the four countries with the most air passenger traffic in Europe – the UK, France, Germany and Spain, as well as a good sample of the new Member States.
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Gathering data to create consistent ten year time series for a period of considerable structural change within the aviation industry, during which there was no consistent pattern of staff number reporting, created real difficulties in some cases. Where information was not available or not provided by the Member States, the data obtained by the questionnaire responses was supplemented by industry resources and informal consultations with stakeholders as well as EASA in order to obtain as complete a picture as possible. Sources of data are identified throughout.
1.4
STRUCTURE OF THE REPORT
After this Introduction, the study will be presented in 5 further chapters as follows: •
Chapter 2 - Market Background and Regulatory Setting: In this chapter we describe and assess the development of the Community’s air transport industry over the past 10 years, including the growth of services and capacity as well as the evolution of business structure -- with focus on the general implications for employment. We then outline the regulatory context; that is, set forth the governing legal standards, general terms and scope of relevant Community regulations and directives on employment standards, working conditions and employee rights as well as concluding with a summary identification of particular issues from the standpoint of the social partners.
•
Chapter 3 - Labour Supply and Employment. This chapter contains the time series data requested by the Commission supplemented by appropriate explanations regarding the strengths and weaknesses of the information obtained as well as certain observations on the policy implications that could be drawn.
•
Chapter 4 - Trends in Business and Employment Structure. Drawing on analyses provided by Member State Administrations (in the form of Survey results) as well as inputs from stakeholders and our independent analysis, this chapter attempts to identify trends in business development -- looking beyond the immediate global financial and economic crisis. With respect to the internal market, it focuses particularly on the issue of enterprise and employee mobility. The analysis will also include a case study review of the impact of Community membership on the structure of service provision in the Czech Republic and Slovakia.
•
Chapter 5 - Trends in Professional Development, Working Conditions and Employee Representation in the Member States. This chapter reports the Survey responses on the situation in the Member states regarding training of professional staff, regulation of working conditions and employee rights. It also identifies concerns of employee organisations in these areas, as well as broadly comparing the situation in the EU with regard to social protections to that of other countries, in particular the USA.
•
Chapter 6 - Conclusions. This chapter summarises the findings of the report and includes a high level analysis of changes observed in the social dimension and the way actors have adapted to the evolution of the air transport internal market.
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2.
MARKET BACKGROUND AND REGULATORY SETTING
The air transport industry as treated in this report will be considered as a “cluster” – to use Professor Michael Porter’s well known formulation.16 That is, we shall examine all the direct components of service provision such as airports, air traffic control and all other relevant forms of ground-based services as well as airline operations that go into the direct provision of the air transport product (with exception of certain public sector services such airport security). The efficient interaction of these components is essential for purposes of competitiveness and for meeting key Community public interest goals in areas such safety, security, health and consumer and environmental protection as well as reliability of the overall transportation system. Thus we must take a holistic approach to market and regulatory analysis, which is expressed in EC organisation and regulation generally and in the Third Package that has successfully established the open internal market in air transport in particular. The so-called air transport acquis is a compendium of laws regulating technical requirements, financial fitness, competition rules and market framework, including social standards. This chapter consists of two principal Sections: 1) A description and analysis of market development in the period under study; and 2) a general elaboration of the legal and regulatory framework at Community level pursuant to which national administration’s regulate labour markets (an area where Member States continue to exercise fundamental competence in key areas subject to agreed minimum Community standards and guidelines).
2.1
MARKET BACKGROUND
This report generally, and the data provided herein in particular, cover the period January 1998 to the end of 2007. The context of this study is thus established for a time frame when market expansion, having suffered some set backs in the early years of this decade, reestablished a growth profile extending through the end of 2007 (and indeed into 2008). However, in the period of conducting research for this study, negative factors in international financial markets also had begun to impact the real economy in serious ways and -- by the end of 2008 – were also depressing air transport demand. It is the hope (if not always the belief) of most analysts that recovery will not be long delayed and that the growth path, that has in general marked air transport ever since World War II ended, will soon resume -- as a reflection of general advances in per capita income, growth of global connectedness and new efficiencies in technology, including reduction of green house gas emissions. In short for the purposes of analysis we shall assume that air transport continues to be a growth industry – albeit one that will (and possibly must) continue to experience significant gains in productivity in both application of technology and efficiencies of organisation – if it is to expand demand.
16
See Michael Porter, The Competitive Advantage of Nations, New York, 1990.
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2.1.1
Growth of Air Transport
Prior to considering the evolution of employment in the air transport sector, we first provide a high level overview of development of the sector. The number of air transport flights within geographic Europe (the Eurocontrol region17) has increased over the decade reviewed, with a compound annual growth rate18 (CAGR), or average annual growth rate, of 3.4%. The number of flights decreased in 2001 and 2002, but grew more rapidly after that period, with a CAGR of 4.6% per annum from 2004. Average Number of Daily Flights in Europe (Compound Annual Growth Rate given in brackets)
28,000
27,700 CAGR (3.4%)
(4.6%)
27,000 26,000 25,000
24,200
24,000 23,100 23,000
22,500
22,000 21,000 20,000
19,800
0 1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Source: Eurocontrol
Figure 1: Growth of Daily Flights in Europe
From 1997-2000, the number of daily flights increased by 16.7% from 19,800 to 23,100; between 2004-2007, the increase was 14.5% from 24,200 to 27,700. In terms of passenger figures, EU-wide data was unfortunately not available for all the years considered, as pre-2004 figures excluded the newer Member States.
The Eurocontrol region includes the EU27 plus Albania, Armenia, Bosnia and Herzegovina, Croatia, Moldova, Monaco, Montenegro, Norway, Serbia, Switzerland, The former Yugoslav Republic of Macedonia, Turkey, Ukraine. 18 Compound annual growth rate is the geometric mean growth rate on an annualised basis, or more simply described as the average annual growth rate over a period of time. 17
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Total Passengers Carried to/from EU
Pax (millions)
(Millions)
1,100 1,000
885 40 42
900 800 700 600
618
663
689
703
953 47 45
1,017 58 50
1,097 3 73 53
2007 Members 2004 Members Lu-Se-Dk
738
540
500 803
400
861
909
2005
2006
969
EU12*
300 200 100 0 1998
1999
2000
2001
2002
2003
2004
2007
Source: Eurostat; for intra-EU and domestic passengers there is ‘double-counting’. EU12* Passenger numbers were only available for 12 of the EU15 Member States for the entire time series. The missing three: Luxembourg, Sweden and Denmark, are given separately from 2004 onwards to avoid distortion of the trend 2004 Members - countries acceding to the EU in 2004 2007 Members - countries acceding to the EU in 2007
Figure 2: Passenger Growth in Europe19
Overall passengers carried to/from/within the EU have increased year on year, with the events of 2001 resulting in dampened growth rather than a reduction in passenger numbers. Since the number of flights fell in 2002, this suggests that load factors increased over the same period. Analysis of the 2004-2007 period suggests that passenger numbers have grown faster than the number of daily flights. In this period, total passengers carried in the EU25 increased by 24% (from around 885 million to 1.09 billion, a CAGR of 7.3%), while the average number of daily flights increased by 15% (from 24,200 to 27,700, a CAGR of 4.6%) in the same period. In 2007, the total number of passengers carried in the 27 EU Member States (including Bulgaria and Romania), stood at over 1.09 billion. Of these, 1.02 billion, or 93%, were carried within EU15 Member States. Passenger traffic from the newer Member States grew at a faster rate – 22% compound annual growth rate (CAGR) from 2004 to 2007, compared with a 6.5% CAGR for EU15 states over the same period. Considering the largest markets in more detail, the graph below shows the development of passenger traffic for the EU States with the greatest numbers of passengers (note: total passenger numbers comprise international (third country), intra- EU and the domestic carriage within the individual Member States).
19 ‘Total passengers carried’ are used in the above graph, which double-counts passengers travelling on intra-EU and domestic flights, since they are counted both on arrival and departure. However, it was felt that this measure best reflected the work entailed for EU aviation workers – since intra-EU and domestic flights will use two EU airports, rather than one (in the case of extra-EU flights) and are highly likely to use EU airlines, whereas with extra-EU flights non-EU airlines, and therefore non-EU employees may be used.
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Total Passengers Carried for the Top Eight EU Member States (Compound Annual Growth Rate given in brackets)
220,000,000
UK
(+7%)
Germany
(+5%)
Spain
(+10%)
200,000,000 180,000,000 160,000,000 140,000,000 120,000,000
France
(+4%)
100,000,000
Italy
(+7%)
80,000,000 60,000,000
Netherlands (+5%)
40,000,000
Greece
(+6%)
20,000,000
Ireland
(+9%)
0 1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Source: Eurostat
Figure 3: Growth in Total Passenger Traffic for Top Eight EU Member States
As illustrated, most of these countries experienced growth rates in excess of 5% over the entire period 1998-2007 (though as above, stronger growth occurred in later years than earlier). Spain, Ireland, Italy and the UK show particularly strong growth. This may reflect the impact of low cost carriers (LCCs), as there are key LCC bases in UK, Ireland Italy, Spain. In contrast, markets such as France may have been somewhat less exposed to the LCC phenomenon and an exceptionally competitive high speed rail offer may also have influenced a lower growth rate. Note that the above “total passenger traffic” figures are drawn from Eurostat data, which avoids double-counting of domestic and intra-EU traffic. Hence, a smaller total is indicated than in Figure 2 above and direct comparison should not be made between the two charts. Considering specifically international intra-EU traffic, a subset of the above, growth has been strong over the same period. For the 12 EU Member States, where we have information for all the years, passengers carried have grown by approximately almost 80% (CAGR 6.7%). Once again, traffic growth slowed in 2001 but did not decrease.
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Cross-border International Intra-EU Passengers Carried
Pax (millions) 300 275
252 13 13
250 225 200 175
325 1
(Millions)
325
170
180
181
186
272 16 13
294 20 16
28
2007 Members 2004 Members
17
Lu-Se-Dk
279
EU12*
199
156
150 125
226
100
242
258
75 50 25 0 1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Source: Eurostat; pax numbers have been halved to adjust for doublecounting EU12* Passenger numbers were only available for 12 of the EU15 Member States for the entire time series. The missing three: Luxembourg, Sweden and Denmark, are given separately from 2004 onwards to avoid distortion of the trend 2004 Members - countries acceding to the EU in 2004 2007 Members - countries acceding to the EU in 2007
Figure 4: Cross-Border Intra-EU Passenger Growth
Considering the recent period, 2004-2007, intra-EU passenger numbers grew at a faster rate than total passengers carried. The EU15 countries experienced a compound annual growth rate of 7.4%, while the new EU Member States experienced a growth rate of 28% CAGR. While their growth rates are impressive, the newer Member States still have a much smaller aviation market. Indeed, the new Member State with the largest total number of air transport passengers (Poland with 17 million in 2007), has fewer air passengers than 13 of the EU15 states, (exceptions Finland and Luxembourg with 14 million and 1.6 million respectively in 2007). Thus, when considering the strong growth in the newer Member States it is important to place it in the context of their starting base. Key questions for the role of the aviation sector in the life of the European Community are the relationship between this growth in traffic, consequences for employment, on which this study focuses, and broader economic value added.
2.2
KEY DRIVERS IN CHANGING EMPLOYMENT PATTERNS
The increased use of outsourcing, by airlines and airports, has been strongly in evidence over the past decade. For example, it has been estimated that over 50% of overall maintenance at major airlines is outsourced20. Discussions with employees’ representative groups in the course of compiling this report indicate that the use of wet leasing or contracted flight and cabin crews is also increasingly widespread (see further discussion in subsection 2.5.2.1). This makes for difficulties when trying to track employment, as people employed in outsourcing firms will not typically appear in airline and airport employment figures.
20
David Stewart, principal of AeroStrategy, quoted in Airline Business, October 2007
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The focus of this study is only on those employees directly employed in the air transport sector. Companies providing indirect services, such as catering for airlines, have been excluded as it is impossible to know the number of employees whose jobs are exclusively concerned with air transport and not with catering for other industries. However, other elements of ground handling are included as far as possible. The increase in low cost carriers accounts for much of the growth in traffic volumes seen over the last decade. Detailed studies have been made on the LCC business model, which we do not propose to go into here. Low cost carriers, serving short-haul destinations with intensive fleet utilisation, have had several effects on employment pattern. Their emphasis on low cost has led them to embrace outsourcing, increase staff productivity, and reduce the provision of “frills”. Such emphasis would tend to decrease numbers of people directly employed. However, the rapid expansion of this section of the market has also created employment. As will be discussed in several sections of this report, employment in certain professions, especially in the safety-critical occupations, in general still tend to follow the growth of capacity in the market. Advances in technology are, however, also impacting upon employment, though we are still some distance from pilot-less or controller-less flight, which is sometimes envisioned. Thus, the role of flight engineer, a person who assists the captain and co-pilot in large aircraft by monitoring and operating many of the systems, has virtually vanished, its place taken by computer technology able to reliably monitor and adjust systems automatically. Aircraft reliability has increased, with higher build standards and advanced materials. For instance, it is estimated that the lifetime maintenance requirements of a Boeing 777 for the airframe, minus modifications, is around 63,000 man-hours, equivalent to a fifth of that required for Boeing 747 Classics. This figure is expected to be lower still for the Boeing 78721. This is partially offset by higher fleet utilisation (see below) and traffic growth.
2.3
FLEET ANALYSIS
The nature of the air transport fleet operated in Europe has direct implications for employment, particularly in respect of flight and cabin crews, the need for which is proportional to aircraft size, utilisation and overall number. In this section, we thus examine changes in aircraft fleet over time. Data for this section of the report is sourced from IATA, which although not accounting for the total European aircraft fleet, does cover a large number of airlines and provides a useful indication of evolution of aircraft sizes across the EU. Our analysis further focuses on fleet size and observable trends in aircraft size, at country level. Fleet represents all aircraft owned or leased over the period.
21 Bruce Hunter, general manager for operations maintenance at British Airways, quoted in Air Transport Intelligence, January 2007
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Aircraft by Size (EU27 & Switzerland) (Compound Annual Growth Rate in brackets)
Aircraft 1,600
101 to 200 seats (+3%) 1,400 1,200 1,000
Less than 100 seats (+4%)
800 600
More than 300 seats (+6%)
400
201 to 300 seats (-1%) 200
Cargo (+6%) 0 1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Source: IATA; Booz & Company analysis
Figure 5: Evolution of Fleet Aircraft Size (EU27 & Switzerland)
Throughout the period, the predominant size category has been aircraft between 101-200 seats, and the numbers of these have been increasing. Likewise, aircraft below 100 seats – those primarily used by regional carriers – have also increased strongly. In large aircraft types, +200 seats, some substitution of aircraft types is evident trending toward larger aircraft. Growth in this segment has also been strong, particularly in the latest years. Decreases in growth in 2000 and post-2002, are likely due to the global economic slowdown and the September 11 terrorist attacks respectively. Overall, the picture is one of steady slow growth in the number of such aircraft in the fleet, and a decline in the use and acquisition of aircraft with 200 to 300 seats (though the latter is largely taken up by increase in the number of aircraft over 300 seats). The following figure indicates the proportion of fleet in each size category in 1997 compared with 2006. Aircraft Fleet Proportions (EU27 & Switzerland) 1996 versus 2006 1996
2006
2%
3%
11%
14% 24%
26%
14% 9%
Less than 100 seats 101 to 200 seats 201 to 300 seats
48%
More than 300 seats
47%
Cargo
Source: IATA; Booz & Company analysis
Figure 6: Aircraft Fleet Proportions, 1996 versus 2006
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Changes in fleet proportions are relatively minor – with the major changes coming in increased proportions of aircraft below 100 seats (regional services), and a slight contraction of the proportion of large aircraft (+200 seats). However, growth has occurred in all segments and the number of passengers carried by larger aircraft is naturally likely to be higher. At the same time, the overall implication for employment of flight and cabin crews is that greater numbers are likely to be required. Variations in fleet size development are not, however, uniform across Europe. Average Seating Capacity of Fleet 350
350
300
300
250 250 200 200
150
150
100
0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Air France -3%
Adria Airways
British Airways p.l.c. +1%
Air Berlin
Deutsche Lufthansa A.G. -1%
Air Europa Líneas Aéreas, S.A.
Scandinavian Airlines System (SAS) +3%
Ryanair Ltd.
Source: IATA; Booz & Company analysis
Figure 7: Average Seating Capacity per Aircraft for Selected EU Carriers
Comparing the average capacity of aircraft, there are no clear trends. There appears to be some convergence around the 160 seat capacity mark for our sampled major network carriers, though BA is a significant exception to this. The regional and low cost carriers in our sample have converged at a higher capacity of around 170-190 seats, with Adria Airways the exception to this development. Below we examine the individual fleet changes of some of Europe’s major carriers.
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Air France
Aircraft
Aircraft
Aircraft by Size
160
160
140
140
120
120
100
100
80
80
60
60
40
40
20
20
0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Scandinavian Airlines System (SAS)
Aircraft by Size
160
140
140
120
120
100
100
80
80
60
60
40
40
20
20
0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Source: IATA; Booz & Company analysis
300 seats
Cargo
Figure 8: Fleet Composition of Selected Major EU Network Carriers
As described above, steady growth has occurred in the acquisition and leasing of 101-200 and 300-plus seat aircraft and numbers of 201-300 seat aircraft have declined. Individual carriers show markedly differing trends with respect to utilising aircraft with less than 100 seats. British Airways has reduced their fleet of smaller aircraft in light of a reduction in their regional market and rise in low cost airline competition. In contrast, Air France have increased their fleet of small size aircraft, serving regional flights. Lufthansa appears to have a mixed fleet with more smaller sized aircraft than large aircraft, which is likely to be due to substantial regional operations and the acquisition of SwissAir in 2005. As expected, there is greater homogeneity of fleets amongst regional airlines, as indicated by the figure below.
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Ryanair
Aircraft
100
80
80
60
60
40
40
20
20
1999
2000
2001
2002
2003
Aircraft by Size
120
100
0 1998
Air Berlin
Aircraft
Aircraft by Size
120
2004
2005
2006
2007
0 1999
2000
2001
Air Europa Líneas Aéreas, S.A. 30
25
25
20
20
15
15
10
10
5
5
1999
2000
2001
2002
2003
2004
2005
Source: IATA; Booz & Company analysis
2004
2005
2006
2007
Aircraft by Size
35
30
0 1998
2003
Adria Airways
Aircraft by Size
35
2002
2006
< 100 seats
2007
0 1998
1999
101-200 seats
2000
2001
2002
201-300 seats
2003
2004
2005
2006
> 300 seats
2007
Cargo
Figure 9: Fleet Growth and Composition of Selected Regional and Low Cost EU Carriers
The fleets of short-haul and low cost carriers in our sample show prominent growth, especially with 101-200 seat aircraft (with the exception of Adria Airways). These carriers’ data have reflected less adverse impact from events such as the 2001 terror attacks, with growth of around 25% for low cost carriers and around 8% for regional carriers. Air Berlin’s jump in fleet size from 2006 results from acquiring DBA and LTU, low cost and charter airlines respectively. Adria Airways has been affected greatly by economic events and has decreased by 12% in seat size. In respect of flight and cabin crews, a reduction in aircraft capacity (the number of passengers that can be transported per aircraft), all other factors being equal, must imply an increase in the number of flight/cabin crews required, as a greater number of flights (and hence crew hours) would be needed to transport the same number of passengers when the aircraft are smaller.22 Given the need to maintain alertness of crews and the consequent requirements to assure safety through regulation of flight duty and rest times higher utilisation of aircraft will also serve to increase employment requirements.
2.4
REGULATORY SETTING
Regulation is of high importance, especially in aviation, where quality control is essential. The dynamic liberalisation of the European air transport market , which took place in the 1990s, cannot be understood as simply a one-sided removal of former (protectionist) market 22 Other factors include the average hours that crews work and average seat utilisation (load factor). However, while more efficient and extensive fleet utilisation will mean greater capital (equipment) productivity, a like increase in labour productivity does not necessarily follow. Given regulatory constraints on maximum working hours (see Chapter 2), increases in aircraft block hours flown will imply expansion of mobile labour force unless conditions of under-employment pre-exist.
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access restrictions at national level. The full elimination of quantitative barriers (that is, the taking away of controls on how many airlines could compete on how many routes with how much capacity) was accompanied by the institution of systematic qualitative controls aimed at, inter alia, ensuring safety, security, health and a reasonable prospect of financial stability as well as fair and open competition. Basic standards were also established with respect to employee rights and working conditions. This section briefly describes the principal legal instruments that have established these standards at Community level. Principally, the Treaty on the European Union and the EC Treaty foresee a high level of employment and social protection and the raising of the standards of economic and social cohesion and solidarity among Member States23. 2.4.1
The EC Treaty
The following parts of the EC Treaty deal with specific social aspects: •
Title III, Art. 39 – 42, with the freedom of movement for workers,
•
Title VIII, Art. 125 – 130, with a strategy for employment and for promoting a skilled, trained and adaptable workforce and
•
Title XI, Art. 136 – 145, with the promotion of employment, improved living and working conditions, social protection and dialogue between management and labour -- taking reference to the European Social Charter signed at Turin on 18 October 1961 and the 1989 Community Charter of the Fundamental Social Rights of Workers.
•
So far as specific issues of civil aviation are concerned as training, licensing, mutual acceptance of personnel licenses Title V, especially Art. 80 of the EC Treaty provides the necessary basis and context.
2.4.2
Community Regulations and Directives
In the field of secondary EU-law the following regulations and directives may be cited: 2.4.2.1.
23
With respect to working conditions and personnel qualification
•
Directive 2000/79 of 27 November 2000 - Working Time of Workers in Civil Aviation implements an agreement on the organisation of working time of mobile workers in civil aviation concluded by the European Airline Association (AEA), the European Transport Workers´ Federation (ETF), the European Cockpit Association (ECA), the European Regional Airline Association (ERA) and the International Air Carrier Association (IACA) which sets maximum hours for flight and cabin crews for purposes of protecting workers’ health and safety and improving living and working conditions of these aircraft employees while protecting the safety of the public.
•
Directive 2003/88 of 4 November 2003, which sets minimum standards of working time and rest periods in general (not just mobile workers in civil aviation) also lays down rules concerning certain aspects of the organisation of working time.
See Art. 2 EU Treaty and Art. 2 of EC Treaty.
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•
Directive 2008/104/EC of 19 November 2008 – on temporary agency work. The purpose of this Directive is to ensure that workers employed from a temporary agency, during the term of their assignments, enjoy at least those working and employment conditions as would apply if they had been recruited directly to occupy the same job. This Directive is to be transposed into national laws no later than 5 December 2011.
•
Regulation 1899/2006 of 12 December 2006 amending Regulation 3922/91 on the harmonisation of technical requirements and administrative procedures in the field of civil aviation introduced the former JAR-OPS 1 standards as Annex III into Regulation 3922/91 with the Subparts N (composition and training of flight crew), Subpart O (composition and training of cabin crew) and Subpart Q (flight and duty time limitations (FTLs) and rest schemes for flight and cabin crew).24
•
Regulation 2042/2003 of 20 November 2003 on the continuing airworthiness of aircraft and aeronautical products and on the approval of organisations and personnel regulates the training and licensing of maintenance staff (Annex III) and the related training organisations requirements (Annex IV).
•
Regulation 216/2008 of 20 February 2008 on common rules in the field of aviation and the establishing a European Safety Agency, and repealing directive 91/670, Regulation 1592/2002 and Directive 2004/36 postulate essential requirements for pilots, flight instructors and examiners and aero-medical examiners (Art. 7 (2) and (5) with Annex III) and for cabin crew (Art. 8 (4) with Annex IV). However, these Articles will not apply before the respective implementing rules are introduced (Art. 70).
•
Directive 91/670 of 16 December 1991 on mutual acceptance of personnel licenses for the exercise of functions in civil aviation foresees the mutual acceptance of licenses issued by Member States for cockpit personnel. This Directive will be repealed as from the entry into force of the implementing measures referred to in Art 7 (6) of Regulation 216/2008.25
2.4.2.2.
With respect to mobility, cross-border employment and change of employers
•
Article 39 of the EC Treaty guarantees the freedom of movement of workers. Regulation 1612/68 of 15 October 1968 on the free movement of workers within the Community contains further details. However, the act of accession of the new Member States (2004 and 2007) provides for certain derogations. The old Member States may limit the free movement of workers from the new Member States for a transitional period of seven years at the most.26
•
Convention on the law applicable to contractual obligations opened for signature in Rome on 19 June 1980 (also known as the Rome I Convention) has been providing a basic framework with respect to the jurisdiction of employment contracts and choices of law for employees assigned to work outside the state of contract or in cases where the contract does not specify a national jurisdiction.
Safety standards for aircraft certification, maintenance and operations which were formerly developed by the Joint Aviation Authorities (JAA) have been transferred into European law by several Regulations. 25 See Art. 69 (2) of Regulation 216/2008. 26 See EU Website http://europa.eu/scadplus/leg/en/lvb/123013.htm). 24
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•
Regulation 593/2008 of 17 June 2008 on the law applicable to contractual obligations (Rome I) was adopted by Commission Decision of 22 December 2008, which shall apply from 17 December 2009 (Art. 29). It will replace the Rome Convention (Art. 24). This regulation is to ensure that even though the substantive law of the Member States is different, all courts of the Member States will apply the same law – be it their own or that of another country – to the contract in question. It also contains specific conflictof-law rules for cases such as individual employment contracts.
•
Directive 96/71 of 16 December 1996 concerning the posting of workers in the framework of services guarantees workers posted to the territory of another Member State the conditions of employment in the Member State where the work is carried out (Art. 3).
•
Directive 2001/23 of 12 March 2001 on the approximation of the laws of the Member States relates to safeguarding of employees´ rights in the event of transfer of undertakings, businesses or parts of undertakings or businesses.
•
Directive 2008/94/EC of 22 October 2008 on the protection of employees in the event of the insolvency of their employer (codified version).
•
Directive 98/59/EC of 20 July 1998 on the approximation of laws of the Member States related to collective redundancies.
2.4.2.3.
With respect to non-wage benefits:
•
Regulation 1408/71 of 14 June 1971 on the application of social security schemes to employed persons, to self-employed persons and to members of their families moving within the Community. 27 This Regulation applies to workers to whom the legislation of one or several states applies and to the members of their families and their survivors. It governs all legislation relating to social benefits and insurances such as health and accident insurance, disability benefits, retirement and survivors´ pensions, benefits in respect of accidents at work and occupational diseases, unemployment insurance, maternity leave and family benefits and death grants. 28 Article 14 (2) expressly addresses the situation of flying personnel.
•
Regulation 883/2004 of 29 April 2004 on the coordination of social security systems simplifies and clarifies Community rules so as to ensure that the application of the different national systems does not harm persons who exercise their right to free movement. It applies to all the traditional forms of social insurance. The Regulation also recognizes the principle of the aggregation of periods, pursuant to which periods of insurance, employment or residence in the legislation of a Member State are taken into account in other Member States.29
Consolidated version after many amendments of 28 April 2006 via http://europa.eu.scadplus/leg/en/cha/c10516.htm (146 pages). 28 See http://europa.eu/scadplus/leg/en/cha/c10521.htm. 29 See Art. 6 of the Regulation. 27
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2.4.2.4.
With Respect to the Right of Association and Employee Information and Consultation30
•
Directive 2002/14 of 11 March 2002 establishes a general framework for informing and consulting employees in the European Community sets out minimum requirements for the right of information and consultations of employees.
•
Regulation 1612/68 of 15 October 1968 on freedom of movement for workers within the Community under Article 8 provides that a worker who is a national of one Member State and who is employed in the territory of another Member State shall enjoy equality of treatment as regards membership of trade unions and the exercise of rights attached thereto, including the right to vote.
•
Directive 94/45 of 22 September 1994 on the establishment of European works councils sets forth procedure in Community-scale undertakings and Community-scale groups of undertakings for the purpose of informing and consulting employees.31
Aside from the legislative situation, it has to be pointed out that “the dialogue with the social partners constitutes one of the pillars of the European social model.” These discussions, consultations, negotiations and joints actions involve the European representative social partner organisations.32 2.4.2.5. •
Other legislation having bearing on issues discussed in this report Directive 96/67 of 15 October 1996 on access to the groundhandling market at Community airports. This directive aimed at opening the groundhandling market to competition and created rules on market access to be transposed into national legislation. In its Article 18, however, Member States are recognized to have the right to take measures to provide for environmental and social protection, without prejudice to the other provisions of Community law.
As will be discussed in the following Subsection, the above directive merits particular mention because of concerns raised by employee organisations with respect to the job tenure of staff employed in groundhandling functions, such as restricted access airside groundhandling, for which the provider companies are now selected for a limited time. Community rules provide that when the number of companies that can offer services is restricted33 at an airport, the suppliers authorised to provide ground handling services have to be selected on the basis of competitive bidding and re-competed periodically.
30 Although the EC Treaty itself does not regulate the right of association and the right to strike, (see Art. 137 (5): “The provisions of this article shall not apply to pay, the right of association, the right to strike or the right to impose lock-outs“), Community law implicitly and explicitly recognises such rights. 31 According to Jean-Paul Tricart, Head of Unit Social Dialogue and Industrial Relations, DG EMPL, in his contribution “EU Labour Law” at the EU-US Aviation Forum on Liberalisation and Labour 3-4 December 2008 in Washington, there are 820 European works councils active including airlines such as Aerlingus, Air France/KLM, Alitalia, British Airways. 32 See “Social Dialogue and Employee Participation” in http://europa.eu/scasplus/leg/en/s02307.htm 33 This is in the case of so-called "airside services"(baggage handling, ramp handling, fuel and oil handling and freight and mail handling) or in the case (rare and temporary) of exemptions to the directive for capacity reasons.
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2.5
AREAS OF CONCERN OF EMPLOYEE ORGANISATIONS
In Section 2.1 we have outlined general lines of business development and the attendant development of employment policies from the employer perspective. In this Section we shall outline briefly certain areas of concern of unions and professional associations, which are of a more ongoing or recurrent character, as they have emerged during the past 10 years. We omit, however, any consideration of appropriate compensation levels or other such issues that clearly fall within the framework of collective bargaining -- focussing rather on those conditions which might be seen to be more logical subjects of public regulation. Such issues include: •
The impact of laws and public policies on job security and tenure;
•
Controls on employers to prevent wage/benefits dumping;
•
Rules on duty time and safety and health-related working conditions;
•
Training procedures and certification of qualifications and/or licensing of staff to perform safety-related functions;
•
Quality controls on the outsourcing of skilled work such as heavy maintenance.
2.5.1
General Context for Social Concerns
Based on conversations with stakeholders as well as on other research, we believe that employee representatives in general recognise and accept the working of market forces that seem likely to lead to a restructuring of services in air transportation within the Community. Mergers and acquisitions - or business failures - that reduce the number of scheduled services operators are seen as likely. In the course of a tough competitive process, however, employee organisations hope to constrain if not prevent the use of certain practices such as the reduction of tenured work positions (see below) and concentration in cost-cutting on labour-factor productivity. In the EU under the Third Package (but also for many airlines in other markets world wide) physical productivity of operators (that is, the amount of available seat or ton kilometres produced per employee) has increased steadily. Employment growth, therefore, has depended on business volume growing faster than productivity. To the extent that output slows, job creation will slowdown, stall or become regressive. Social policy under such circumstances is likely to orient strongly toward job stability. 2.5.2
Specific Concerns
2.5.2.1.
Job Security and Tenure
It is evident that, under the pressure of intense competition, airlines and also airports seek to economise in all discretionary and variable cost areas and to reduce areas of fixed cost as much as possible. As also suggested in earlier Sections of this chapter, several tools are used for this purpose such as: •
Outsourcing of functions that can be performed more cheaply by sub-contractors
•
Substitution of automation (e.g. automated check-ins at airport) for labour.
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•
Insourcing of functions where automation can replace labour (substituting internet sales while reducing reliance on travel agents and other intermediaries); and
•
Substitution by hiring staff or services employed under temporary contracts (such as wet leasing) that can be easily let go in periods of soft demand rather than staff on permanent or long term contracts enjoying protections against termination for economic reasons.
While it is also relevant to point out that in a number of industries expanded use of temporary contracts will increase total work force numbers (as employers reduce use of overtime by their permanent staff in favour of using lower-cost and flexible temporary labour that does not enjoy job security), in the airline business – particularly in the case of mobile workers (flight and cabin crews) -- it is important to note that at least in theory subcontracted, temporary crews can also raise productivity and effectively decrease staff. That is, the structure of Community rules on flight and duty time limitations, which allow, for example, 100 block hours in a month but restrict annual block hours per individual flight crew member to 900,34 suggests that working with outsourced pilots, hired or sub-contracted in by quarterly or semi-annual contracts, could lead (in the absence of other considerations and constraints) to fewer full time equivalent (FTE) positions. The company pursuing such a course would of course face very significant if less tangible costs to productivity in the form of lost experience and commitment. It is the fear of employee organisations, however, that operators who take this more traditional view will lose out to new entrants such as LCC’s. A more explicit concern with respect to loss of tenure occurs in the groundhandling sector where worker representatives have sharply opposed the potential consequences of the groundhandling directive of 1996; namely, that experienced airport workers will lose jobs when, for example, ramp services are rebid; that is, if the incumbent provider is outbid by a new entrant who may be competitive because of low cost or less experienced labour.35 Thus the European Transport Workers Federation (ETF) has lobbied for several years for a revision of the groundhandling directive to establish a Community-wide requirement that, in instances where groundhandling companies at an airport get replaced wholly or in part, that the existing employees must be taken over by the new management.36 When such takeovers of existing staff are provided for or encouraged under the national laws or procedures of individual Member States (per their powers under Article 18 of the current Directive) some level of staff protection will exist -- while scope must also exist for competition by new entrants. As has been pointed out in the ECORYS Study,37 several
Block hours as defined in Regulation1899/2006Annex 3 Subpart Q, Definitions 1.2. It must be noted that reduced prices may also reflect the competing away of inflated charges or what economists term “rents,” as is likely to occur when competitive entry replaces monopoly service provision. Recent studies of the European ground handling market have shown that users experienced such cost reductions in formerly closed markets that have now been liberalised as a consequence of the Community Directive. See for example Mueller, Orak, Petkov and Schulz, Restructuring of the European Ground Handling Market after the EU Market Liberalisation, Berlin, 2008, p. 6-7. 36 See ETF Position Paper on transfer of staff in the European ground handling sector of 23 March 2006. 37 See ECORYS, 2007, Section 4.2.3. 34 35
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Member States (Spain, France, Germany and Italy are examples), in the process of transposing the Groundhandling Directive, adopted legislation and/or procedures to protect the jobs of existing employees incident to a transfer of undertakings. In the cases of Italy and Germany, the Commission believed that the Member States had exceeded or misapplied their authorities under Article 18 of the Directive. This view was confirmed by the European Court of Justice (ECJ) in February, 2005 (See Judgment C-460/02) in finding that: The power to ensure an adequate level of social protection for the staff of undertakings providing groundhandling services, which Member States retain under Directive 96/67 on access to the groundhandling market at Community airports, does not confer an unlimited jurisdiction and must be exercised in a manner that does not prejudice the effectiveness of that directive and the objectives it pursues.38 Thus, as discussed further in Chapter 5, it has become clear that a sensitive balance must be sought between reasonable claims to promote job stability on the one hand and the need to promote competition in the interests of users and consumers on the other. The Commission for its part has actively monitored the effectiveness of the Directive, including consideration of whether amendments are needed or warranted. Following studies and a formal review conducted in 2006, it reported in early 2007 that on the whole the Directive was achieving key stated objectives to increase competition and provide better value for money while there was no evidence of an overall reduction of jobs, notwithstanding “a modest shakeup in market shares.”39 A new European Commission study about the impacts of the groundhandling directive was launched in 2008 at the request of the European Parliament and should be published in mid-2009.40 The conclusion of the report on employment issues, already available, indicates that the differing regulatory frameworks in the Member States make it impossible to identify a clear impact of the Directive (if any) on groundhandling employment conditions. 2.5.2.2.
Controls on employers to prevent wages or benefits dumping
A concern of governments as well as of employee representatives has been that airline enterprises and management would seek to seize market share by using the lowest cost, least organised national labour force with fewest rights and benefits to operate across national markets in the Community. Broadly seen, the potential risks to be controlled against (from the employee representatives’ point of view) may be summarised under two points: 3. The risk of unrestrained mobility at the individual level that could enable under paid or under qualified workers with lower compensation expectations from the Member States with lower per capita incomes to displace experienced, skilled employees with seniority in the richer Member States; and
See C-460/02, Summary of findings. See REPORT FROM THE COMMISSION COM(2006) 821 final on the application of Council Directive 96/67/EC of 15 October 1996, p. 10. 40 Reference is made here to the MVV/ARC Groundhandling being conducted for DG/TREN. 38 39
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4. The risk of enterprises seeking a regulatory comparative advantage: that is, seeking to organise their employment relationships under those Member State rules which give employers the greatest flexibility (a phenomenon also known in the legal field as “forum shopping”). As will be shown in following sections of this report, it is the second point which seems to have been raising most of the issues. That is, jobs have not migrated as much as issues have been raised with respect to attempted export of business and regulatory models. 2.5.2.3.
Rules on duty time and safety and health-related working conditions
Employee organisations focus on-going attention on work rules generally, and, in the case of air transport, on the rules for flight and duty times particularly. It should be noted that these concerns are the subject of general international debate, because they are safetyrelated. The increase in very long haul flying has also been a particular factor in accelerating the debate in which key Community bodies such as EASA have been actively participating.41 As will be discussed in Chapter 5, there seems to be growing general agreement that Community rather than national standards must apply as all safety-related rules on dutytimes evolve and a level playing field is desired by airlines for the sake of more fair competition. 2.5.2.4.
Training procedures and certification of qualifications and/or licensing of staff to perform safety-related functions
There is a general agreement among employee organisations that skills recognition -- and, as appropriate, expressed by governments in the form of formal licensing and certification – establishes professional credentials and responsibilities and thereby standing in the employment market. It also creates a personal accountability of the licence holder to the public. While such licensing is nearly universal with respect to flight crews as well as in key ground-based occupations such as air traffic controllers and maintenance inspectors, requirements for cabin crews and ground-based occupations such as flight dispatchers – which vary by Member State – are less so. Responsibility may be placed on the airline to ensure that staff has achieved required familiarity with general as well as specific safety procedures (as would apply for example to certification to work in aircraft of a particular type). Thus an issue raised by employee organisations is whether licensing or certification of cabin crew competencies should not be made subject to higher minimum standards. As was most recently demonstrated in the United States, in the remarkable safe recovery of all persons onboard USAIR Flight 1549 following forced landing in the Hudson River, competent and timely actions by cabin crew are critical in dealing with emergency general
41 See the report performed for EASA by Moebus Aviation of 30 September 2008, and for an excellent and comprehensive summary of international science on fatigue analysis by the well-known Flight Safety Foundation, see Linda Werfelman, “Easing Fatigue”in Aerosafety World, March, 2008, pp. 22-27.
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situations such as the need for rapid exit from a sinking or burning aircraft42 as well as being capable of handling a full gamut of individual emergencies or problems. Thus regulatory bodies such as the US Federal Aviation Administration routinely inspect the credentials of cabin staff with regard knowledge of emergency procedures as related to aircraft type. Other illustrative areas where cabin staff are likely to face growing professional challenges are in dealing with the emergency health issues of an aging traveller population as well as playing a key professional role in maintaining calm in situations of insecurity and danger. 2.5.2.5.
Outsourcing of skilled work
As companies seek to control and reduce costs, the phenomenon of outsourcing (see also discussion of temporary contracts above) has increased across a range of areas. It is in fact a global issue. Thus firms will even relocate customer service as well as back office functions to subcontractors in distant countries such as India. An issue of continuing concern to the air transport industry world wide has been the outsourcing of heavy maintenance of air frames and engines. On the one hand it is entirely logical for enterprises (which include large departments of established airlines) to specialise in servicing certain types of aircraft for a range of customers other than their own fleets and thereby not only achieve economies of scale but also higher levels of professional skill. On the other hand, airlines and oversight bodies must be extremely vigilant with respect to quality controls as regards competition based on the use of counterfeited spare parts and on inadequately qualified labour. Thus safety bodies such as the FAA and now EASA have required and will require effective surveillance and quality controls of so-called foreign repair stations in the interests of consumers as well as airlines and their employees.43 Employee representatives in developed economies such as the US and the EU are concerned that foreign repair stations are constrained from competing by offering low prices based on lower levels of quality that would jeopardise safety.
42 In the instant case, flight attendants prevented passengers from opening the aft door of the aircraft (which was under water) while organising an extremely rapid evacuation through the forward door. 43 U.S. policy has been to permit use by US carriers (who now outsource 71% of their maintenance work) of foreign repair facilities, subject to inspections by the FAA. Most of the work is done by independent US facilities, but some 19% of total maintenance is now contracted for in other countries. In proposed legislation, the Chairman of the Transportation Committee of the House of Representatives, Hon. James Oberstar, is calling for a new statutory requirement of at least 2 annual inspections of foreign facilities by the FAA with expanded scope to ensure safety and security. In recent remarks in Washington he called for expanded and reciprocal work between US and EU authorities in this area. See Remarks of the Hon. James L. Oberstar, Chairman House Committee on Transportation and Infrastructure, International Aviation Club Washington, DC, March 23, 2009.
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3.
LABOUR SUPPLY & EMPLOYMENT
The chief purpose of this chapter is to provide sets of tables designed to assist the Commission, the Member States and other interested bodies (notably EASA) in establishing a reliable and comprehensive data base in the form of time series for the period 1998-2007 to demonstrate the employment market effects of liberalisation with emphasis on key professional fields as well as at the organisation level. Areas of the air transport cluster to be covered have included: •
Airlines and the professions directly associated (such as flight and cabin crew) as well as all other types of staff directly employed by airlines
•
Airports and their professional services
•
Groundhandling when organised independently of airlines and airports and aircraft maintenance (which is a listed ground handling function but which is also sometimes organised independently to the extent organised independently of airlines, airports or groundhandling)
•
Educational and training services
•
Air traffic control services and associated professional fields
Each of these fields is networked with the others and with a host of other service providers in the general economy (electronic data processing services being but one very obvious and major example). Within the cluster itself, by way of illustration, we can note that aircraft maintenance is performed: a) at least to a modest and in some cases very great extent within airlines; b) as a groundhandling function at airports; and c) by entirely independent maintenance repair organisations. Similarly education and training are provided in a very diverse range of organisational and institutional contexts. Thus the “division of labour” (to quote Adam Smith) in this industry cannot be easily sorted into mutually exclusive categories. The scope of groundhandling alone comprises dozens of functions and tasks involved in the provision of ground support services to flying operations. Thus there are also formidable data organisation issues as well as collection problems, which may help explain some of the difficulties faced by Member States in providing statistical information. The data gaps and overlaps, it must be emphasised, are not only at Community and Member State level. In the course or reviewing a range of sources (see below), we find that periodic staffing reports which ICAO Member States are tasked to make also suffer from lack of clarity and completeness not to speak of lack of adaptation to the emerging trends in the industry. We have been asked to determine as accurately as possible specific employment levels across time. Drawing on industry sources as well as responses by Member States, we have undertaken a quantitative analysis of active licensed professional staff and professionals employed in the air transport sector. For example, we reviewed information on the number of licences issued by each State for categories of professional staff in addition to data on employment levels in service provider organisations.
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The information on employment within the individual states was gathered via the use of questionnaires (see Appendix 1 for copy of questionnaire used). Respondents were asked to report the total number of licences valid/current at year-end, for each category of staff indicated. The chapter is divided in staff employed by airlines, airports, groundhandling and maintenance organisations, air navigation service providers, and (to the extent they can be usefully identified) flight training organisations. The data covers the calendar year, January to December, unless stated otherwise. Due to the inadequate information supplied in the questionnaires, questionnaire data has been supplemented by other sources, most notably airline employee data derived from IATA’s World Air Transport Statistics. This has been further supplemented by analysis conducted by Booz & Company, such as industry sources and annual reports. For many of the tables that follow, an indexed trend is supplied in the final row of the table to give an indication of growth and contraction in the number of persons employed or licences issued. This index is set at 100 in 1998 and thus its movement is always relative to this start date. Only countries where data was available for the start and end year are included. Where there are gaps within the data series, an interpolation was made on the basis of the previous and subsequent years – this may have the effect of “smoothing” the index slightly. All the data entries provided in questionnaire responses received can be found in Appendix II.
3.1
AIR TRANSPORT OPERATORS
This section reviews developments within the airline industry. Based on questionnaire responses and supplementary industry data, an analysis is made of patterns in the number operators, flight crews, cabin crew, ground staff and maintenance staff. The figures for air transport employees (1B.1B – 1B.1F)44, were derived using data supplied from the questionnaire. The primary proxy data source is IATA World Air Transport Statistics (WATS). The source of the input is referred to as a questionnaire response (Q) or based on IATA WATS data (I) As noted above, the IATA employee data does not account for all carriers. Comparison with questionnaire responses indicates that IATA data may cover around 50% of the full market. Nevertheless, it is a strongly indicative source. Where received questionnaire data was incomplete across all years, it has been supplemented with IATA data, and scaled up in order to present a trend. This is referred to in the source as (IQ). 3.1.1
Operators
In this subsection, the total scope of employment by operators is investigated. This comprises all classes of airlines as well as air taxi services holding valid operating licences
44
For full text of questions, see Annex
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issued pursuant to Council Regulation 2407/92 to provide air transportation services for remuneration within Member States. The study does not concern companies that perform aerial work or offer flying services that do not transport persons or goods from a point of origin to a different point of destination.45 Air Transport Operators 1998 1999 2000 2001 2002 2003 2004 Belgium 21 22 22 16 17 16 17 Bulgaria 13 13 13 16 16 16 16 Cyprus 2 2 3 3 3 3 3 Czech Republic 19 18 19 19 20 19 17 Finland 60 53 55 51 43 46 46 Germany 145 133 120 119 France 137 136 127 124 124 115 114 Lithuania 6 6 6 6 6 6 7 Malta 3 3 3 3 3 3 3 Poland 10 13 37 54 42 42 10 Portugal 22 22 22 23 21 22 22 Slovakia 4 4 4 5 5 5 5 Spain 80 Sweden 51 54 59 Switzerland UK 201 197 198 206 Sources: Questionnaire responses (question 1B.1) Table 2: Number of Air Transport Operators
2005 16 19 3 19 42 153 114 8 4 13 24 5 60 114 209
2006 15 19 3 18 43 170 124 8 4 15 23 5 85 58 112 209
2007 15 11 2 18 42 171 128 10 6 17 25 6 88 57 112 193
The table above shows that – although it does not include all Member States - numbers of operators have remained relatively steady for most of the responding countries. Poland has seen the widest variation in numbers of operators, while strong recent growth is evident particularly in Germany. The trends presented here are broadly consistent with the perceptions of trends set out by respondents in the next paragraph. 3.1.2
Total Airline Employees
In collating information on employee numbers, the data has been derived from a range of sources. Eleven of the surveyed countries provided responses: Bulgaria, Cyprus, France, Lithuania, Malta, Poland, Portugal, Slovakia, Spain, Sweden and Switzerland. To derive employment figures for the remainder of the countries, we used IATA airline employment data and supplemented it with figures from Air Transport Intelligence and airlines’ annual reports. Air taxi operators are not included in IATA data and figures on employment in this small but growing sector have been difficult to source. There are other minor differences due to the varying data sources, such as the date when the employment numbers were
45 The authors of the Study must note and acknowledge that in formulating the Questionnaire (See Annex 1), notwithstanding peer review of several authorities of the draft Questionnaire, reference was inaccurately made to holders of “A.O.C.’s” issued pursuant to Regulation 2407/92, whereas the term “Operating licence” would have been more exactly correct to connote an airline or other operator of commercial transportation services. Aircraft Operator Certificates (AOC’s) as have been issued under Regulation 3922/91 can also include operators of aircraft for non-transportation purposes. Thus we cannot exclude the possibility that the statistics provided by Member States do not include a few enterprises that provide other forms of flying services (such as sightseeing flights, aerial work, etc.) that do not involve air transport.
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reported, the type of employment (permanent, temporary), and also the location of staff, although the analysis has taken these factors into account as far as possible. Total Airline Employees in EU 0.7% CAGR 439,049
440,000
437,343
430,000 426,021 420,000 414,710
410,000 401,357 400,000
0 1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Sources: Questionnaire responses (question 1B.1a); IATA, Air Transport Intelligence, Annual Reports
Figure 10: Total Airline Employees, EU27, 1998-2007
As shown above, the number of employees broadly follows market developments described in the previous chapter. Growth was reported until 2000, followed by a period of contraction after the events on September 11 2001 and the later SARS outbreak, and with renewed growth apparent beyond 2005. Interestingly, while the number of flights increased from 2002 onwards (shown in figure 1 above), the number of airline employees was still declining at this point and did not begin to increase until 2006. This would suggest that either employee numbers decreased disproportionately to the decrease in flights, or that substantial productivity gains (e.g. associated with privatisations, outsourcing and efficiency gains) followed airline cutbacks after September 11. The above representation, showing average annual growth rate of just 0.7% over the 1998-2007 period, does not present a full picture, however: airline reorganisations and outsourcing can exaggerate or mask true employment trends as functions (and employees) are transferred to alternative entities. See discussion below on restructuring effects, and Table 4 which illustrates this effect in respect of SAS and airline employment figures for Denmark and Sweden. The full details of individual States are given below (the principle data source is given in the final column and footnoted below):
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Employees at Airline Operators 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 S: Austria 6,069 6,992 7,016 9,462 7,551 7,037 8,263 8,176 8,138 7,703 I Belgium 17,236 15,954 10,720 1,238 3,526 3,859 4,083 4,274 4,274 4,726 IQ Bulgaria 3,727 2,742 2,732 3,918 1,309 1,755 1,971 2,245 2,326 1,773 Q Cyprus 1,897 1,892 1,925 1,970 2,058 2,058 2,105 1,932 1,577 1,536 Q Czech Republic 3,721 3,930 4,135 4,452 4,411 4,588 5,036 5,440 5,247 4,774 I Denmark 8,957 8,839 8,182 8,878 7,621 6,881 7,083 2,996 2,981 3,137 I Estonia 368 393 371 365 308 322 347 384 425 455 I Finland 9,003 9,841 9,069 9,534 8,832 8,424 8,177 7,676 8,309 6,256 I France 65,910 70,275 74,349 74,399 75,239 73,623 73,484 73,485 73,840 74,653 Q Germany 59,980 71,785 77,623 97,555 103,447 103,009 100,602 102,870 103,120 108,402 I Greece 7,786 7,030 7,297 7,114 8,228 1,246 3,205 3,381 3,569 3,776 I Hungary 3,215 3,209 2,937 2,615 2,694 2,830 3,050 1,787 1,670 1,563 I Ireland 6,607 6,113 6,190 6,193 5,000 5,038 4,740 4,432 4,231 4,733 I Italy 17,028 17,942 24,332 24,818 25,802 25,350 23,979 23,618 23,730 16,768 IA Latvia 327 277 264 279 291 292 482 712 850 1,016 I Lithuania 987 1,006 864 843 845 828 817 851 860 871 Q Luxembourg 2,759 2,024 3,260 3,472 3,468 3,492 3,475 3,621 3,625 3,807 I Malta 1,842 1,974 2,040 2,044 2,049 1,983 1,902 1,889 1,731 1,732 Q Netherlands 28,535 29,862 28,972 28,487 28,562 24,849 24,736 25,057 25,719 26,072 I Poland 4,870 5,040 5,534 5,900 5,300 3,770 4,030 3,870 4,146 4,433 Q Portugal 10,391 10,852 11,399 11,410 10,678 10,861 11,009 8,293 8,795 10,437 Q Romania 2,921 2,879 2,842 2,687 2,645 2,609 2,323 2,326 2,318 2,412 I Slovakia 70 75 85 85 198 396 648 799 810 1,001 Q Slovenia 585 578 575 577 555 539 552 543 592 679 I Spain 30,165 34,294 34,601 34,700 34,300 34,700 35,800 36,750 38,450 37,700 IQ Sweden 9,723 11,225 11,568 10,404 10,167 9,092 8,239 4,397 4,864 4,380 Q Switzerland 19,821 20,901 21,781 3,859 10,277 8,838 8,838 8,805 8,497 9,210 I UK 76,857 78,464 78,384 77,309 71,983 72,017 71,552 74,101 72,797 82,016 C Total 401,357 426,388 439,049 434,567 437,343 420,286 420,528 414,710 417,491 426,021 Sources: (Q) Questionnaire responses (question 1B.1a), (I) IATA ; (C) UK CAA statistics; Air Transport Intelligence, Airline Annual Reports Table 3: Number of Employees at Airline Operators
Overall the data indicate there has been some turbulence within employment during the period under discussion, with compound growth being a mere 1% over 10 years. This trend is broadly consistent with that shown in Figure 3.5 of Ecorys’s report for the EU15, with employment in airlines rising for the five member states with the largest starting number of employees (Germany, the UK, France, Spain and the Netherlands) and falling for the rest. Drivers appear to be two: the consolidation of the market in the hands of carriers domiciled in a small number of Member States, and the disaggregation of activities from operators to separate their service enterprises, which is discussed further below. Responses to this and succeeding questions on actual employment were predominantly received from the new Member States, enabling comparisons to be made with the EU-15 figures published in the Ecorys report. The table above shows that direct employment with operators in the seven new States responding actually fell through the period, by almost 20%. This is further illustrated by the figure below, which shows the rate of growth of
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airline employees in EU15 States versus the new Member States. In this figure, the base year 1998 is set at 100, and the change indexed to, or compared to that year is shown for each group (i.e 110 indicates 110% of the base year figure, 95 indicates 95% of the base year). Growth of Airline Employees in EU (1998=100, CAGR in brackets) 113
115
110
110 110 105
105
107 100
100
98
99 95
95
92
93
92
90
90
91 EU15 (1.1%)
0 1998
New Member States (-1.1%)
1999
2000
2001
2002
2003
2004
2005
2006
2007
Sources: Questionnaire responses (question 1B.1a); Booz & Co analysis, IATA, Air Transport Intelligence, Annual Reports
Figure 11: Indexed Growth in Airline Employees
There is a clear difference between employment growth in the EU15 and the new Member States. In the former case, the overall change was a positive growth of 10% over the period considered (equivalent to 1.1% CAGR). In contrast, the new Member States have experienced a decrease of a similar magnitude. It should be reiterated that overall the net overall trend is of modest growth in employment, since EU15 airlines employ considerably more people than the new members. Some of the variations in evolution of airline employment within EU Member States are explored below.
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Total Airline Employees for EU15 Member States (Employees in thousands; Compound Annual Growth Rates given in brackets) 120
30
Germany
(+7%)
100
Netherlands (-1%)
25
80
UK
(+1%)
France
(+1%)
60
20 15
40
Spain
5
2000
2002
2004
2006
(-1%)
Ireland
(-4%)
Greece
(-8%)
(+3%) 10
20 0 1998
Italy
0 1998
2008
25
18 16
20
14
2000
2002
2004
2006
2008
12
15 Portugal 10 5 0 1998
2000
2002
2004
2006
(0%)
10 8
Austria
(+3%)
Switzerland (-8%) 6 Finland (-4%) 4
Belgium
(-13%)
Sweden
Denmark
2008
Luxembourg (+4%)
(-8%) 2 0 1998
2000
2002
2004
2006
(-11%)
2008
Sources: Questionnaire responses (question 1B.1a); Booz & Co analysis, IATA, Air Transport Intelligence, Annual Reports
Figure 12: Airline Employees for EU15 & Switzerland
Most of the countries in the EU15, shown above, experienced modest growth in the number of employees. Switzerland’s figures are volatile due to bankruptcy of Swissair in 2001. Its assets were subsequently taken over by Crossair and the airline was relaunched as Swiss International Air Lines in March 2002. Ireland’s figures show a slight decline, reflecting the decrease in numbers of employees for Aer Lingus. While Ryanair has grown hugely in this time, our analysis suggests that many (if not most) of their employees are not based in Ireland but rather in those countries where it maintains operational bases (the greatest of which, by far, is the UK)46. In order to estimate Ryanair’s decentralised operations, we allocated employees to countries on the basis of flight patterns, which may slightly understate the number employed in or (on a periodic basis) from Ireland. A case study outlining the development of airlines operating services outside their home states can be found in the next chapter.
46 Traditonal airlines, whose as aircraft are rarely based outside the home country, maintain a relatively modest number of personnel in countries other than their country of registration. Thus in such cases there will still tend to be some logical correlation of the nationalities of employer, employee, work site and permanent residence. In the case of carriers like Easyjet and Ryanair, who are establishing brand images across the EU, these correlations break down. An airline like Ryanair maintains multiple operational bases outside its country of registration – indeed, its largest operational bases may be outside the home country. Setting aside the issue of employment contract location (see Chapter 5), the nationality distribution of the employees as well as their work locations will be extremely diverse. Thus it seems most relevant to associate the employment effects and issues with those countries where staff are employed rather than with the base nationality of a multinational employer. In short, assuming that Ryanair staf were fundamentally based in Ireland would be misleading.
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Airline Employees for New Member States in EU (Employees in thousands; Compound Annual Growth Rates given in brackets) 6
4.0
5
Czech Republic (+3%) Poland
4
(-1%)
3.5 3.0 2.5
3
Bulgaria (-8%)
2.0 Romania
(-2%)
2
1.5 1.0
1 0 1998
(-1%)
Hungary
(-8%)
0.5
2000
2002
2004
2006
2008
0.0 1998
2.5
1.2
2.0
1.0
1.5
Cyprus (-2%)
1.0
Latvia (+13%) Lithuania (-1%)
0.5 0.0 1998
Malta
2000
2002
2004
2006
2008
Slovakia (+34%)
0.8 Slovenia (+2%) 0.6 Estonia (+2%)
0.4 0.2
2000
2002
2004
2006
2008
0.0 1998
2000
2002
2004
2006
2008
Sources: Questionnaire responses (question 1B.1a); Booz & Co analysis, IATA, Air Transport Intelligence, Annual Reports
Figure 13: Airline Employees for New Member States
Many of the new Member States have experienced a decrease in the number of employees. The exceptions to this are the Czech Republic, and the four countries which ten years ago had the lowest number of employees – Latvia, Slovakia, Slovenia and Estonia, suggesting a convergence effect. In Slovakia, the rapid growth can be largely explained by the start-up and quick expansion of low cost carrier SkyEurope Airlines. In Latvia, airBaltic quickly expanded its fleet and operations from 2003 onwards, following a joint venture with SAS. In the cases of Hungary and Bulgaria, the former faced a struggling national flag carrier in the case of Malev, while the latter saw the bankruptcy of Balkan Bulgarian Airlines. A general factor may be that new states that lacked the tradition of a national flag carrier started from a very low base, whereas those with such carriers faced the need to adapt formerly protected businesses with weak economies of scale and scope to a much tougher competitive environment. 3.1.2.1.
Observations on Employee Evolutions
The largest fluctuations indicated in the section above have occurred in the cases of Belgium, Bulgaria, Denmark, Greece, The Netherlands, Sweden, Slovakia and Switzerland. Although there have been fluctuations in the number of air transport operators in the EU and numbers have increased in some States, overall the total has declined (see Table 2 for details). The fluctuations in employee numbers are often caused by airline restructuring (which may involve outsourcing - and the transfer, rather than reduction of employees), bankruptcies or increased competition. The effects of restructuring are most clearly visible in the case of Denmark, Greece and Sweden. In the case of Denmark and Sweden, Scandinavian Air System (SAS) embarked on
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a rigorous operational restructuring of its business, outsourcing ground services, maintenance and catering to new subsidiaries independent from the airline ‘mother’ in 2004. The following table, compiled from successive annual reports, gives a good indication of the effects of the restructuring on employee numbers in the SAS Group (which, although reducing over time, represent a case of reorganisation more than the reduction indicated by the table above). 2002 10,146 10,146 6,392 16,538 11,844 28,382
2003 9,147
2004
2005
2006
Scandinavian Airlines SAS Denmark 1,628 1,983 SAS Norway 2,965 2,840 2,604 SAS Sweden 1,468 1,615 SAS International 671 650 Total SAS Airlines 9,147 9,254 6,607 6,852 Blue 1 366 444 491 Wilderae 1,277 1,331 1,393 Spanair 2,631 3,393 3,570 Braathens Total Subsidiaries 7,032 4,274 5,168 5,454 Total Airline Operations 16,179 13,528 11,775 12,306 SAS Ground Services 6,962 6,952 6,622 SAS Tech 3,594 2,678 2,509 SAS Cargo 1,266 1,328 1,434 Total Support Businesses 11,691 11,822 10,958 10,565 Grand Total 27,870 25,350 22,733 22,871 Source: SAS Annual Reports Note: Only total figures available for 2002-2003, and in selected cases 2004 Table 4: SAS Employee Evolution
2007
2008
2,188 2,465 1,704 782 7,139 506 1,358 3,415
2,162 2,422 1,665 753 7,002 460 1,329 3,334
-
-
5,279 12,418 6,873 2,422 1,356 10,651 23,069
5,123 12,125 7,040 2,344 1,247 10,631 22,756
A similar explanation is true for Greece in 2003. In the latter case, state-owned Olympic Airways faced imminent bankruptcy and was bailed out by the government. Healthy assets were placed under a new subsidiary, which immediately outsourced some of the non-core services including ground handling. A significant bankruptcy occurred in the case of Belgian carrier Sabena, which went bankrupt in 2001, causing a substantial decline in employees. The substantially smaller and semi-LCC Brussels Airlines has filled part of the gap, with employee numbers in Belgium stabilising from 2002 onwards. Bulgaria’s network airline Balkan Bulgarian struggled to compete with LCCs and eventually went bankrupt. Another large bankruptcy was that of Swissair in the same year as Sabena, causing a similar decline in employee numbers. Its assets were taken over by Crossair and eventually evolved into Swiss International Airlines, which was sold to Lufthansa in 2005. In Italy, the decline in 2006 was influenced by the bankruptcy of LCC Volare, which was bought by Alitalia in 2007. However, the latter went itself into administration in early 2008, following a difficult 2007 in which decline of employee numbers is also evident. The decline in employees in The Netherlands between 2002 and 2003 was caused by the bankruptcy of Air Holland, Dutchbird and the Exel
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Aviation Group. The merger of Air France - KLM in 2004 did not, however, lead to a substantial decrease in staff. Increased competition and new start-ups are clearly visible in Latvia and Slovakia. In Latvia, airBaltic quickly expanded its operations with the introduction of Boeing 737s in 2004 and showed continued growth ever since. In Slovakia, the initially successful roll-out of SkyEurope, which quickly expanded its European network and successfully marketed Bratislava Airport as an alternative to Vienna, is the most plausible explanation for continued growth since 2003. However, in a decade dominated by increased LCC competition and struggling flag carriers, besides the large fluctuations and high-profile bankruptcies described above, the number of employees has remained remarkably strong in five largest Member States surveyed (refer Table 3 above), particularly those at the forefront of the LCC revolution. In the case of the United Kingdom, besides a plunge after September 11, employee numbers have grown modestly during the period surveyed. Numbers of employees working for LCCs have probably accounted for the net increase, offset to some extent by probable decreases among employees with the legacy carriers. Germany, which has had by far the strongest employment growth, has experienced very strong growth of LCC services including national operators such as Air Berlin as well as Lufthansa, which experienced rapid growth of staff between 1998 to 2002, which then levelled. Another factor has been the emergence of an indirect form of outsourcing under which the large operators have cooperative arrangements with specialist carriers as well as LCCs. Lufthansa, for example, has an interest in German Wings, which operates an extensive European network by focussing on secondary point-to-point markets. The modest growth of the employee numbers in the case of France follows the relatively solid operations of Air France and entry of LCC competition also influenced by the increasing presence of competitive high speed railway services in the domestic market. An indication of productivity changes may be given by comparing EU-wide airline employee numbers with passengers carried. Between 1998 and 2007, the average number of employees per 1000 passengers decreased by over 33%. Taking the total number of employees and the number of flights into account, productivity per employee appears to have increased substantially, with the caveat that some of this productivity gain could be due to an increase in outsourcing which removes employees from this form of calculation. This change in productivity is shown in the figure below, which indicates the change in number of employees required to service 1,000 passengers. In this figure, the base year 1998 is set at 100, and the change indexed, or compared to that year is indicated. As shown, the number of employees required per 1,000 passengers in 2008 was some 36% lower than in 1997.
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Decrease in Airline Employees per 1000 Passengers in EU (Index: 1998 = 100)
100 100
87
88
80 64
70
60 40 20 0 1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Sources: Questionnaire responses (question 1B.1a); Booz & Co analysis, IATA, Air Transport Intelligence, Annual Reports; Eurostat Note: these figures were calculated only on data series that were complete for the entire time period; no account is taken of cargo.
Figure 14: Index of Airline Employees per Thousand Passengers 1998-2007.
Whilst the overall number of airline employees has increased, and simultaneously it is possible to discern a decrease in overall employees compared to passengers (or increased employee productivity), this analysis does not take account of factors such as outsourcing. An examination of changes in the types of employment within the airline sector is required to gain insights into real trends. In the subsections below, we examine trends in specific employee groups. 3.1.3
Flight Crew
In this section, “flight crew” refers to employees working on the flight deck as pilots and flight engineers. First, the total number of flight crew employed by operators based in the Member States is discussed. This is followed by a further breakdown of the data in the next sections, which compares the number of flight crew with the different forms of licences issued in the respective states. The table below shows the total number of flight crew employed by operators active within the Member States and Switzerland. These are either based on questionnaire responses or analysis of IATA WATS data, although the latter only includes the member airlines and excludes smaller operators and LCCs.
Austria Belgium Bulgaria Cyprus Czech Rep. Denmark Estonia Finland
1998 631 805 654 140 1,040 937 53 594
1999 748 861 625 140 1,105 930 56 720
2000 765 962 584 167 1,115 842 55 651
Flight Crew Employed 2001 2002 2003 1,296 1,048 1,006 398 780 691 621 447 489 171 192 196 1,120 1,130 1,060 952 871 694 46 44 45 753 771 790
2004 1,150 871 496 218 1,133 775 51 785
2005 1,180 705 526 204 1,165 710 54 670
2006 1,141 717 552 199 1,310 729 63 826
2007 1,049 859 343 200 1,370 748 64 860
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S: I I Q Q Q I I I
France Germany Greece Hungary Ireland Italy Latvia Lithuania Luxembourg Malta Netherlands Poland Portugal Romania Slovakia Slovenia Spain Sweden Switzerland UK
1998 7,088 5,120 552 284 488 1,439 54 630 310 125 2,067 626 594 328 21 96 2,322 926 3,355 9,008 40,286
Flight Crew Employed 1999 2000 2001 2002 2003 2004 2005 7,499 7,692 8,002 7,916 7,828 7,719 7,517 5,285 5,676 6,251 6,372 6,570 6,829 7,355 553 530 481 476 533 692 663 278 264 237 221 220 261 273 561 550 645 628 682 666 694 1,433 2,833 3,083 3,362 3,182 2,831 2,956 46 38 41 46 56 87 135 643 499 480 474 465 463 476 125 403 458 482 488 477 500 128 153 141 134 145 148 140 2,162 2,117 2,172 2,187 1,804 1,819 1,828 669 754 846 811 847 824 789 626 663 663 884 951 967 1,411 297 264 225 224 219 157 161 28 30 29 32 63 113 114 91 89 91 86 90 105 106 2,976 3,214 3,362 3,289 3,336 3,443 3,486 992 1,033 995 1,028 886 959 683 3,648 3,936 1,826 3,382 2,553 2,227 2,786 9,700 9,776 10,257 10,129 9,880 9,900 10,140 42,926 45,656 45,643 47,447 45,771 46,166 47,427 Table 5: Number of Employed Mobile Workers - Flight Crew
2006 7,558 7,153 685 276 638 3,032 158 483 508 131 1,886 862 1,649 168 134 118 3,521 719 2,761 10,828 48,805
2007 7,820 8,204 724 272 744 2,189 183 492 538 139 1,912 910 1,994 202 185 132 3,746 721 2,803 11,407 50,809
EU-wide, the increase in flight crew employed is some 26%, from just over 40,000 to nearly 51,000. On an individual State level, this ranges from a 781% increase (in the case of Slovakia) to a 47% decline (in the case of Bulgaria). The percentage change in each country, 1997 versus 2007 is shown below.
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S: Q I I I I I I Q I I I Q Q I Q I I IQ IQ Q
Employed Flight Crew 781%
% Change 1997 versus 2007 239%
236%
74%
66%
61%
60%
52% 52%
45%
43% 32%
45%
38%
31%
27% 26%
21% 11%
10%
7%
-4%
-7%
-20%
-22%
-22%
-16%
-38% -48% TOTAL
UK
Switzerland
Sweden
Spain
Slovenia
Slovakia
Romania
Portugal
Poland
Netherlands
Malta
Luxembourg
Lithuania
Latvia
Italy
Ireland
Hungary
Greece
Germany
France
Finland
Estonia
Denmark
Czech Rep.
Cyprus
Bulgaria
Belgium
Austria
Sources: Questionnaires, IATA, CAA
Figure 15: Percentage Change Employed Flight Crew, 1997 vs 2007
Of the 28 States, 20 have seen an increase in flight crew numbers. Particular markets that stand out for substantial increases in flight crew numbers (volume as well as percentages) are Austria, Germany, Spain and Portugal. As indicated earlier in this chapter, and in Chapter 2, these are markets which have also expanded substantially in terms of air traffic flown. In the case of Portugal, however, much of the increase in flight crew results from expansion of international (i.e. outside Europe) air services. For example, a recent report by this study team has shown that TAP Air Portugal has expanded its operations to/from Brazil from 17 services per week in 2000, to some 67 services per week in 2008. Such expansion of long haul international services requires far higher numbers of flight and cabin crew than a similar expansion of short haul services would. 3.1.3.1.
Comparing licence registries
The flight crew employee figures can be compared with the number of licences issued by country. This information was gathered via the use of questionnaires (see Appendix 1 for copy of questionnaire used). Respondents were asked to report the total number of licences valid/current at year-end, for each category of staff indicated. The highest level of pilot certification is the Air Transport Pilot Licence (ATPL) which allows the holder to pilot large commercial aircraft (with a maximum certified take-off mass greater than 5,700 kg). However, pilots first need to obtain a Commercial Pilot Licence (CPL). In many cases, once a pilot has gained their ATPL they would cease to hold a CPL, but this may vary from country to country. France, for instance, states that a single pilot may at the same time hold a CPL and an ATPL, as well as separate licences for fixed wing and helicopters. Thus, the number of licences given in the two tables below only provide an indication of the number of pilots; it may range from, at most, the sum of the two licences, to, at the least, the larger of the two figures obtained, minus any double counting of fixed wing and helicopter licences.
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Air Transport Pilot Licences Issued 2000 2001 2002 2003 2004 2005 2006 2007 Belgium 524 648 609 635 648 724 983 Bulgaria 263 352 393 430 Cyprus 0 0 0 0 0 0 0 0 0 0 Czech Republic 316 401 403 421 465 482 501 520 545 571 Finland 546 585 631 661 702 737 738 773 803 France 4,824 4,660 3,954 5,664 6,764 7,15447 7,33848 6,374 6,463 6,932 Germany 8,857 9,390 10,255 10,817 11,477 8,108 8,919 9,353 9,330 9,464 Hungary 382 267 289 423 456 448 473 475 485 468 Lithuania 117 130 144 140 137 143 151 158 162 164 Malta 103 104 92 107 65 120 125 139 145 142 Poland 512 512 686 550 589 631 733 749 795 852 Portugal 610 715 794 856 920 996 1,092 1,159 1,203 1,280 Slovakia 68 68 70 69 66 66 77 85 86 113 Spain 130 246 271 249 282 141 248 251 273 355 Sweden 1,340 1,428 1,563 1,681 1,705 1,776 1,836 1,916 1,917 1,962 Switzerland 1,837 2,036 2,223 2,160 2,185 2,094 2,104 2,086 2,055 2,101 UK 11,090 11,946 - 13,591 13,008 - 13,583 Index (1998=100) 100 106 111 119 125 118 121 121 122 126 Sources: Questionnaire responses (question 1A.1) Note: It should be noted that Cyprus does not grant nor offer Commercial and Air Transport Pilot licences. Table 6: Air Transport Pilot Licences (ATPL) by State of Issuance (helicopters and fixed wing) 1998
1999
The table Error! Reference source not found. shows a broad ten year growth trend in air transport pilot licences for the seventeen states that responded to the questionnaire. The index (based on the 13 countries that provided relatively complete data) indicates an increase of 26% over the period, equivalent to 2.6% CAGR. There is a notable drop in German Air Transport Pilot Licences in issue from 2002 to 2003, which is almost exactly offset by an increase in commercial licences in Germany (see below). New Member States generally saw more rapid growth in numbers than EU-15 members – an unsurprising “convergence effect”.
Note on French data: “Following changes of regulation in licensing matters, databases were used in a way which consequence is that figures concerning valid ATPL are a little overvalued for the years 2003 and 2004” 48 See footnote above. 47
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Commercial Pilot Licences Issued 2000 2001 2002 2003 2004 2005 2006 2007 Belgium 548 811 1,002 1,392 1,396 1,499 1,717 Bulgaria 200 245 333 420 Cyprus 0 0 0 0 0 0 0 0 0 0 Czech Republic 633 609 620 606 611 521 580 591 717 752 Finland 0 720 769 858 945 1,033 1,112 1,029 1,055 1,050 49 50 France 7,799 6,856 5,216 6,382 6,114 6,525 6,836 6,167 6,393 6,007 Germany 785 4,001 2,943 2,897 2,852 5,900 5,463 4,953 5,945 5,064 Hungary 367 385 328 376 397 387 398 371 375 351 Lithuania 243 245 226 217 210 215 223 227 230 231 Malta 48 76 76 69 54 58 59 59 61 64 Poland 2,186 1,940 1,342 976 980 971 1,063 1,084 1,121 1,099 Portugal 778 753 778 813 820 851 858 914 997 1,100 Slovakia 260 250 242 198 187 203 222 237 195 183 Spain 394 401 365 673 886 786 601 601 529 663 Sweden 1,962 2,091 2,146 2,307 2,359 2,275 2,317 2,293 2,025 2,004 Switzerland 1,318 1,384 1,421 1,396 1,399 1,190 1,236 1,000 900 959 UK 3,184 3,496 4,021 4,173 5,333 Index (1998=100) 100 113 98 104 103 120 120 117 121 119 Sources: Questionnaire responses (question 1A.2) Note : Cyprus does not grant nor offer Commercial and Air Transport Pilot licences. Table 7: Commercial Pilot Licences (CPL) by State of Issuance (helicopters and fixed wing) 1998
1999
A similar broad pattern is seen for Commercial Pilots Licences as for Air Transport Pilots Licences; the jump in German commercial pilots licences from 2002 to 2003 offsets the fall in numbers of Air Transport Pilots Licences in the same period almost exactly.51 In the same way, it is notable that the UK market appears to have become rapidly more stratified over the same period, with a far more rapid increase in numbers of commercial pilots’ licences than of air transport pilots licences; commercial pilots licences only entitle a pilot to act as pilot-in-command of the very smallest (less than nine seats) types; there could be potential human factors issues in situations where “lesser” pilots consistently work under fullylicensed ones. Comparison with the tables of licences in issue above are striking in that there is a substantial gap for some countries between the number of flight crew holding licences and the number employed by the operators, as set out in table 5. This is particularly true for Poland, where the latter is less than half the former. This either suggests a large amount of excess skilled human resource, or a trend towards pilots working on a basis other than on a permanent basis for an airline. Such a situation might tend to increase labour mobility and flexibility, but also vulnerability. In general, labour mobility tends to be quite flexible for pilots. It is common practice that pilots work in countries other than the ones that issued
49 Note on French data: “Following changes of regulation in licensing matters, databases were used in a way which consequence is that figures concerning valid CTPL are a little overvalued for the years 2003 and 2004” 50 See footnote above.
Readers will note that the growth rates in Germany for the two categories of licences in the ten year period were very different. Taken in aggregate they produce an increase of licensed commercial pilots of 50.7% 2007/1997.
51
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their licence. This could be particularly the case for pilots working for the LCCs with decentralised base models. For example, a German pilot can be employed by easyJet while operating out of a German base. Another tendency could be the export of licensed pilots. CPLs and ATPLs meeting the JAR standards are generally recognised EU-wide, regardless in which Member State they have received their training. This would by itself already enable a considerable degree of potential labour mobility for pilots. However, due to the voluntary nature of compliance with JARs and to the tendency of some Member States to react carefully if not protectively in their licensing policies, the complete mutual recognition of all pilot licences remains a work in progress.52 Pilots Per Aircraft 18
18
16
16
14
14
12
12
10
10 8
0
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Air France -4%
Adria Airways -4%
British Airways p.l.c. +1%
Air Berlin +4%
Deutsche Lufthansa A.G. +1%
Air Europa Líneas Aéreas, S.A. 0%
Scandinavian Airlines System (SAS) +1%
Ryanair Ltd. +8%
Source: IATA; Booz & Company analysis
Figure 16: Ratio of Pilots Employed to Fleet Size
Figure 16 shows the number of pilots employed compared to aircraft in the fleet. It is not surprising that Ryanair and Air Berlin have the highest number of pilots per aircraft; the cornerstone of the LCC business model is high aircraft utilisation (on average more than 12 block hours per day). The legacy carriers on the left chart have smaller number of pilots per aircraft, signifying lower rates of aircraft utilisation than LCCs. One role which has shown a significant decline is that of flight engineer, as the figure below attests. Advances in technology have eliminated the requirement for a flight engineer, although their work has over the last decades been limited to older types of long haul aircraft.
A certain scope for such carefulness has been provided by language in Articles 3 & 4 of Directive 91/670 which provided for recognition of licenses issued by another Member State “where a licence issued by a Member State is based on requirements which are equivalent to those of the host Member State.”
52
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Decrease in Licences Issued for Flight Engineers (Index: 1998 = 100)
100 100 80
68
57
60 40 20
20
26
0 1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Sources: Questionnaire responses (question 1A.3); Booz & Co analysis
Figure 17: Flight Engineers - Indexed Trend of Licences Issued
Data on flight engineer numbers was only supplied by twelve states (see appendix for details). The role appears to be diminishingly relevant, as older types of aircraft are replaced, with the indexed trend showing an 80% decrease in licences issued. 3.1.4
Cabin Crew
In the same manner as pilots, we have surveyed the total number of cabin crew employed by operators within the Member States, based on either questionnaire responses or IATA WATS. These numbers are further broken down on the basis of analysis of cabin crew qualified or certificated within the Member States in accordance with procedures that, as shown by a recent study, can vary considerably.53
As determined in a systematic state-by-state survey conducted in 2007 by Egoa in the framework of a study of cabin crew organisation and qualification in the EU-25 on behalf ETF, AEA, ERA and IACA, it was determined that some 9 Member States issued licenses to Cabin staff, whereas 16 did not. In the latter case it was not always made clear what alternative qualification path was followed, but typical procedure was to place responsibility on the employer to ensure that cabin staff possessed requisite qualifications to meet safety, security and health responsibilities.
53
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Employed Mobile Workers – Cabin Crew 1998 1999 2000 2001 2002 2003 2004 2005 Austria 1,497 2,065 1,835 2,633 2,031 1,800 2,365 2,229 Belgium 1,703 1,527 1,668 21 554 718 761 743 Bulgaria 559 537 467 490 219 313 350 454 Cyprus 391 403 414 478 462 500 570 501 Czech Rep. 1,027 1,059 1,151 1,379 1,230 1,319 1,582 1,711 Denmark 1,543 1,660 1,495 1,693 1,472 1,252 1,432 1,080 Estonia 59 67 61 57 61 67 83 94 Finland 1,700 1,812 1,645 1,725 1,718 1,671 1,697 1,619 France54 15,458 16,399 17,721 18,689 18,420 18,874 18,973 19,507 Germany 12,442 13,619 15,553 16,454 17,109 17,019 17,489 18,768 Greece 920 820 1,062 954 960 672 1,058 1,041 Hungary 476 450 417 401 398 375 379 350 Ireland 1,252 1,420 1,520 1,604 1,437 1,426 1,327 1,419 Italy 3,276 3,333 5,562 5,792 6,468 6,336 5,796 6,150 Latvia 65 51 52 47 53 70 158 224 Lithuania 208 214 215 211 218 209 200 219 Luxembourg 111 146 136 142 151 145 142 127 Malta 86 140 118 118 137 99 48 42 Netherlands 5,911 6,220 6,181 6,152 6,105 5,162 5,833 5,621 Poland 916 929 895 1,058 1,034 950 980 1,010 Portugal 1,644 1,612 1,748 1,686 2,054 2,145 2,109 2,214 Romania 346 337 335 320 314 315 245 265 Slovakia 15 20 20 19 41 87 147 148 Slovenia 72 70 69 68 65 71 70 65 Spain 6,167 7,869 8,402 8,440 8,838 9,234 9,475 9,908 Sweden 1,420 1,432 1,455 1,395 1,435 1,212 1,336 1,094 Switzerland 3,493 3,997 4,294 990 3,225 2,868 2,529 2,352 UK 26,967 28,466 28,819 30,460 28,546 28,397 29,634 31,414 Total 89,724 96,674 103,308 103,476 104,755 103,306 106,769 110,369 Sources: Questionnaire responses (question 1B.c); (I) IATA Table 8: Number of Mobile Workers - Cabin Crew
2006 2,213 734 418 453 1,951 1,059 101 1,871 19,832 18,858 1,133 342 1,337 6,251 243 219 116 23 5,882 1,078 2,372 291 202 77 9,755 1,041 2,262 32,715 112,830
2007 1,945 883 437 439 2,020 1,137 102 1,917 20,555 19,764 1,196 319 1,514 4,397 330 219 122 110 5,963 1,250 2,084 336 300 93 10,365 1,064 2,628 34,369 115,857
Overall, cabin crew employees have increased by some 29%, from nearly 90,000 in 1997 to nearly 116,000 in 2007. Note: the above table is based substantially on proxy data (as are several others later in this report), which is collected by the International Air Transport Association (IATA). Although this should be very accurate for the carriers reported, it should be noted that not all carriers are included (though the majority of network carriers and major LCCs are). This would mean that the above figures may under-represent the total, though this should not be by a substantial percentage. Based on the figures above, the general trend is that the situation differs per Member State and largely follows the pattern that has already been discussed in paragraph 3.1.2. Notable fluctuations – other than those caused by bankruptcies already discussed in the previous
54 France notes that these figures are the same as licensed cabin crew; indeed, the number of valid certificates for cabin crew may only be known through the number of employed cabin crew.
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S: I I Q Q Q I I I Q I I I I I I Q I Q I Q Q I Q I IQ I IQ Q
paragraph - can be seen in the case of Austria and Latvia. In Austria the fluctuation in personnel was caused by the integration of Lauda Air in the Austrian Airlines Group, as well as financial difficulties and restructuring within Austrian Airlines. The increase of cabin crew in Latvia in 2004: was caused by the aforementioned significant fleet expansion of airBaltic with Boeing 737s. By contrast, the above table shows substantially more people working as cabin crew than recorded below as being formally licensed as such, as set out in table 9 below. 3.1.4.1.
Comparing licence registries
The table below gives all staff employed licensed or qualified as cabin crew satisfying JAROPS 1, national equivalent or Regulation 3922/91, Subpart O, cabin crew, as reported in the Survey. NB: the cited Regulation entered into force in January 2007 and its Annex III is applicable since 16 July 2008. Licensed Cabin Crew 2000 2001 2002 2003 2004 2005 2006 2007 Bulgaria 450 550 679 983 Cyprus 391 403 414 478 462 500 570 501 453 439 Czech Republic 1,027 1,059 1,151 1,379 1,230 1,319 1,582 1,711 1,951 2,020 Finland 1,658 1,780 1,797 1,550 1,762 1,736 1,823 1,891 2,000 2,149 France 15,458 16,399 17,721 18,689 18,420 18,874 18,973 19,507 19,832 20,555 Hungary 549 537 583 578 573 618 623 629 621 635 Lithuania 208 214 215 211 218 209 200 214 213 217 Malta 210 229 219 217 225 223 212 216 214 213 Portugal 842 1,219 1,377 1,489 2,420 Spain 1,072 1,596 973 1,106 651 603 1,522 1,884 1,508 1,762 Switzerland 2,529 2,352 2,262 2,678 Index (1998=100) 100 108 112 118 114 117 124 129 130 136 Sources: Questionnaire responses (question 1A.5) Note: France notes that licences are the same as employed cabin crew: the number of valid certificates for cabin crew may only be known through the number of employed cabin crew. Table 9: Licensed Cabin Crew 1998
1999
Analogous to the experience in the Egoa Study of 2007 (see Footnote 32 supra) in which 9 of 25 states provided limited or no information of cabin crew qualification procedures, only 11 of 16 states responding to this section of the Questionnaire replied to the question on number of cabin crew licensed/qualified. We believe this reflects the relative absence of central control/oversight of cabin crew in some states compared to pilots. In some cases, for example, cabin crew are trained and qualified only by airlines. In Germany (for which there is no response entry above), airlines have had legal responsibility to ensure the cabin staff are properly trained so that direct licensing of individual cabin crew by aeronautical authorities has not generally existed. The United Kingdom, which has the highest number of cabin crew in the survey, also provided no response entry. Like Germany, this may be due to operator (rather than regulatory authority) qualification of cabin crew, but also may suggest that British cabin crews are not all licensed in the UK, and are perhaps not even British nationals. For example,
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LCCs with sizeable UK operational bases, such as easyJet and Ryanair, employ many nonUK nationals on board their aircraft. This is largely due to the open UK labour market, as well as limited language constraints. The lack of response from Poland is therefore unfortunate, given a common perception that Poland is a major source of cabin crew working from bases in other states, most notably the United Kingdom. 3.1.5
Other Specialised Categories of Airline Employees
The last categories of specialised airline employees elicited by the Survey include dispatchers, aircraft mechanics, and any other ground-based professionals that might have formal licences and/or inspection responsibilities in individual states. It should be noted that we do NOT include here employees of organisations other than airlines – Maintenance Repair Organisations would be a good example – which provide, for example, ground-based support services. These are covered in other Sections of this Chapter. Aircraft Dispatchers Employed by Air Transport Operators 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Cyprus 18 18 22 24 27 26 28 28 25 21 Czech Republic 34 31 41 45 49 43 50 50 58 81 Lithuania 87 87 88 88 89 90 90 90 91 91 Malta 15 17 17 18 18 17 17 17 16 14 Poland 50 52 51 55 51 48 64 62 57 65 Slovakia 4 7 7 6 6 7 11 10 11 24 Index (1998=100) 100 108 115 115 117 115 119 123 126 129 Sources: (Q) Questionnaire responses (question 1B.d) Table 10: Number of Aircraft Dispatchers Employed by Air Transport Operators
S: Q Q Q Q Q Q
The number of aircraft dispatchers reported has remained rather stable in the countries that responded to the survey. Dispatcher are a rather broad definition, but are generally considered to be the flight planners on the ground, enabling safe and on-time departure of the aircraft as well as monitoring situations in flight. This occupation requires specialised skills that bear on flight safety and efficiency and such employees are licensed in a number of states in the EU and internationally, including the United States. However, such staff can also be attached to airports or ground handling companies that provide dispatcher services in aircraft operations, and often do not hold a formal qualification, which might explain the low response on the questionnaire. 3.1.5.1.
Licence registries in the maintenance and repair field
Below we report data from states with respect to mechanics licences. Many of these will be employed by airlines directly but others may be employed in organisations considered in other sections of this chapter.
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Aircraft Mechanics / Maintenance Engineers Employed by Air Transport Operators 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Austria 934 1,014 1,142 1,604 1,176 1,136 1,334 1,322 1,322 1,229 Belgium 2,605 2,778 227 306 499 457 528 461 457 469 Bulgaria 999 996 878 818 363 434 532 595 570 330 Cyprus 41 41 49 51 52 53 53 54 51 50 Czech Republic 298 609 701 719 792 910 Denmark 1,636 1,631 1,512 1,712 1,454 1,360 1,382 163 179 191 Estonia 43 45 44 48 Finland 2,338 2,418 2,350 2,375 2,206 2,186 2,075 1,971 2,043 1,860 9,234 9,551 10,042 10,341 10,556 10,175 10,059 9,970 9,810 9,216 France55 Germany 2,420 2,425 2,420 2,040 3,010 4,500 5,550 5,340 6,570 8,020 Greece 1,488 1,334 1,123 1,115 1,102 0 160 161 165 177 Hungary 38 43 42 6 303 305 446 76 13 12 Ireland 315 306 240 310 267 297 331 364 275 306 Italy 3,661 4,061 4,289 4,497 4,244 4,597 4,850 3,330 3,068 1,940 Latvia 52 43 42 43 39 52 60 84 108 122 Lithuania 62 62 62 64 64 64 64 66 67 69 Luxembourg 418 107 455 488 477 488 488 504 517 510 Malta 22 49 51 30 30 33 46 60 59 66 Netherlands 5,162 5,570 5,022 5,399 5,455 4,886 4,895 4,953 5,122 5,192 Poland 440 492 517 474 469 518 573 772 827 832 Portugal 4,940 4,971 1,986 2,159 2,123 2,090 2,057 2,115 2,202 Romania 930 971 923 909 910 900 776 783 770 720 Slovakia 3 5 7 6 4 40 66 73 81 85 Slovenia 140 136 149 149 138 136 146 142 182 228 Spain 4,438 4,917 4,915 4,840 4,679 4,734 4,773 4,833 4,748 4,627 Sweden 1,324 1,456 1,520 1,492 1,492 1,321 1,397 128 200 244 Switzerland 566 598 623 693 1,005 1,502 1,954 2,293 2,476 2,592 United Kingdom 10,033 10,004 10,059 9,435 9,394 8,713 8,401 8,064 7,308 6,631 Total 49,342 55,993 53,674 51,231 51,845 51,619 53,730 49,338 49,895 48,830 Sources: (Q) Questionnaire responses (question 1B.1e); (I) IATA Table 11: Aircraft Mechanics / Maintenance Engineers Employed by Air Transport Operators
The table above shows two trends: one towards disaggregation of staff – which appears to be seen most clearly in the cases of Portugal and Bulgaria where staff numbers have been reduced rapidly. We assume that this is largely caused by a differentiation of functions (where employees are reclassified under different job titles) or outsourcing, rather than substantial changes in the required work, as trends in aircraft fleet changes do not suggest that the overall market requirement for aircraft maintenance is likely to have fluctuated in the same manner as employment of mechanics and maintenance engineers indicated above. Drivers of rapid growth in employed staff numbers in Switzerland and Poland are less clear, but may have to do with the expansion of low cost carrier bases. Moreover, except in the case of Poland - contrary to perceptions and industry reports - a significant shift of
55 We were unable to find figures for France’s maintenance staff in 2007, as Air France only released employment figures in a general category of “Other”. The number given for 2007 is extrapolated and thus there is a margin of error attached to it.
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S: I I IQ Q Q I I I QI Q I I I I I Q I Q I Q Q I Q I I I Q I
operations towards Eastern Europe cannot be concluded from these figures, at least it does not show substantial increases in staff. It should be noted that two of the world’s largest Maintenance, Repair and Overhaul Providers (MRO) are based in Europe, namely Air France Industries/KLM E&M and Lufthansa Technik. The majority of their work is being conducted for third parties, other than the airlines owning them, explaining the relatively high numbers in Germany, France and the Netherlands. The industry reports a clear trend in outsourcing the labour intensive heavy maintenance work (i.e. D Checks) to lower wage locations in Eastern Europe, China and Brazil.56 For example, Air France Industries has entered into a joint venture with Chinese Hangxin which conducts a major part of the heavy duty work, whereas the more specialised and profitable tasks remain located within Europe. The same can be argued in the case of Lufthansa Techniks. However, in the latter case, the numbers seem to contradict this shift; it did not result in a significant decrease of employees. Germany’s growth can be largely explained by the strong figures reported by Lufthansa Techniks in 2006 and 2007, as well as the opening of new facilities. In the case of France, KLM E&M and Air France Industries integrated their maintenance operations in FY2004-2005, dividing aircraft types over bases at Schiphol and CDG. They also embarked on the joint venture with Hangxin for heavy duty work. The rationalisation of its operations might explain the modest drop in maintenance engineers employed in France and the like increase in The Netherlands in 2007. Licensed Aircraft Mechanics 1998 1999 2000 2001 2002 2003 2004 2005 2006 Bulgaria 18 18 15 15 1 1 9 8 8 Cyprus 62 Czech Republic 298 609 701 719 792 Finland 1,095 1,087 1,076 1,057 1,170 1,208 1,112 1,032 France57 1,000 3,000 4,400 6,200 Lithuania 228 231 235 233 235 240 245 250 255 Malta 27 26 26 26 43 57 99 79 Poland 394 429 583 Portugal 2 1 1 2 Slovakia 480 475 466 467 480 470 477 489 492 Spain 2,515 2,846 Sweden 1,446 1,470 1,583 1,844 2,063 2,143 2,071 1,874 1,814 Switzerland 37 370 852 1,258 1,388 1,378 UK 11,403 12,011 12,000 12,016 Trend 100 102 103 105 109 114 114 113 114 Sources: Questionnaire responses (question 1A.13) Table 12: Aircraft Mechanics Licensed under Part 66 (JAR/EASA) or Equivalent
2007 8 71 910 1,056 6,957 260 87 801 420 1,146 1,439 12,281 111
Airline Business, MRO providers shift their priorities. (28 October 2008) France notes that these figures show the number of valid licences, not the number of persons actually in activity ; the increase of figures is due to progressive settlement of the new regulation, not to an effective increase of the concerned population. 56 57
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In the case of licensed mechanics under the JAR/EASA framework, it is again Poland that shows especially rapid growth – more than doubling in four years from its first data point, with similar rapid increases notable in Switzerland and the Czech Republic. Note that mechanics are also employed by independent ground handling organisations, and further discussed further under that heading. Other ground staff employees in any other individually licensed or certificated occupations not already covered by the categories set out above are shown in the table below. The most notable category included in this section are airline ground handling employees, working in ramp handling, passenger services, operations or catering. Other Airline Ground-based Employees 1998 1999 2000 2001 2002 2003 2004 2005 2006 Austria 811 839 843 825 761 812 993 1,077 1,039 Belgium 4,547 4,151 4,240 6 245 208 282 268 226 Bulgaria 335 338 235 37 37 37 Cyprus 743 722 742 737 735 749 675 610 480 Denmark 2,234 2,074 2,164 2,675 2,290 2,225 2,128 159 166 Estonia 97 103 101 92 95 98 98 123 131 Finland 1,448 1,700 1,491 1,680 1,480 1,280 1,190 1,151 1,175 France 12,176 14,452 15,528 15,436 15,440 15,635 15,501 15,825 15,859 Germany 9,395 9,841 10,518 11,006 10,669 488 486 419 524 Greece 1,414 1,377 2,466 2,556 3,809 684 692 748 Hungary 938 1,035 949 870 866 941 875 138 66 Ireland 3,194 2,349 2,318 2,112 1,291 1,083 1,116 957 1,025 Italy 3,647 3,762 5,278 4,884 4,756 5,334 4,656 4,562 4,353 Latvia 47 44 44 45 46 57 61 Luxembourg 1,071 1,117 1,159 1,200 1,162 1,230 1,308 1,377 1,391 Malta 726 604 687 682 721 689 673 637 542 Netherlands 8,102 8,462 8,703 8,574 8,600 7,826 7,587 7,759 7,926 Poland 54 50 50 53 55 56 46 42 34 Portugal 3,251 3,156 3,112 4,581 5,272 5,215 5,216 2,611 1,183 Romania 411 492 474 391 333 371 298 263 208 Slovakia 25 30 20 19 24 22 36 44 34 Slovenia 25 25 25 26 39 32 51 46 44 Spain 10,703 12,092 11,757 11,715 12,133 13,051 14,354 14,373 15,001 Sweden 2,053 2,108 2,389 2,483 2,386 2,147 2,156 112 132 Switzerland 4,211 4,228 4,743 118 300 604 335 286 289 UK 16,150 17,074 17,183 14,413 12,502 10,798 11,699 11,627 11,438 Total 87,808 92,225 97,219 87,217 86,046 70,930 72,442 65,214 64,075 Sources: Questionnaire responses (question 1B.1f); (I) IATA Table 13: Number of Airline Ground Staff Employees in any Other Occupations
2007 1,064 470 471 186 151 821 804 62 1,127 2,539 70 1,490 490 8,035 37 3,402 242 57 51 12,114 164 321 12,402 46,877
It is clear from this table that the number of ground staff directly employed by airlines has been sharply declining in most of the Member States (note: no data for France in 2007). Many airlines have been increasingly outsourcing these functions to independent handlers, sold former handling companies or handling companies joined the airline bankruptcy. In the
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S: I I I I I I I I I I I I I I I I I Q Q I Q I I I I I
former case, many airlines have outsourced part of the handling operators to independent operators such as Menzies, Servisair or Swissport. In the case of Germany, Lufthansa’s ground handling company GlobeGround merged with Servisair and continued as an independent company in 2003, explaining the substantial drop in employees. In the cases of Belgium and Switzerland, the ground handling arms of the airlines followed the parent firm’s bankruptcy. However, in the latter case, Swissport (being one of the world’s largest ground handlers) was successfully spun-off and later sold to Spanish infrastructure conglomerate Grupo Ferrovial (which was an acquirer of the London airports). In the case of Denmark and Sweden, the restructuring of the SAS Group in 2004 separated SAS Ground Services from the airline business and established it as an independent subsidiary. This explains the large drop in employees. A similar explanation is true for Greece, when debt-ridden Olympic Airways was separated by the Greek government into a new airline (Olympic Airlines) and a new operations company, which included Olympic’s ground handling service. It should be noted that these jobs did not just disappear; the IATA figures merely reflect this as a decrease in the airline’s employees. Substantial restructuring of the industry, especially in the outsourcing of ground-based functions such as maintenance, catering, ramp services and passenger handling has occurred and staff formerly employed by airlines still perform those functions – but with different employers. As evidenced by the earlier example of SAS (see Table 4 above), this type of restructuring can have significant impacts on the number of employees reported by airlines, even where much less change has occurred in the industry overall. Limited information on the number of licensed ground-based professionals was gathered in the questionnaire, and this is likely to be largely due to changes in employer which are more difficult to track than airline employment. The responses gathered can be found in the appendix. In the next section, we examine employment at airports, the major source of ground-based employment in the air transport sector.
3.2
AIRPORTS
Airports are major centres of employment, be it direct or indirect. Although this report is not concerned with indirect employment, it has been estimated by the Air Transport Action Group (ATAG) in its 2008 report “The Economic and Social Benefits of Air Transport” that indirect and induced employment (not including airlines) off-airport worldwide is some 4.2 million. Within Europe, the Airports Council International estimates that some 1.2 million people are employed – directly or indirectly – on airport premises. This section examines the number of airports and the direct and indirect employment. The table that follows indicates the number of airports in each State to which air transport services are operated. The source of time-series data for this section is questionnaire responses. Where no response was received from States, we have used a variety of industry sources, including information available through ACI, Air Transport Intelligence and airport websites to obtain a figure for 2007. As no time series can be determined in these cases, the indexed growth calculation applies only to those States that supplied data.
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Airports 2001 2002 2003 2004 2005 2006 2007 Austria 6 Belgium 6 6 6 6 6 6 6 6 6 6 Bulgaria 5 5 5 5 5 5 5 5 5 5 Cyprus 2 2 2 2 2 2 2 2 2 2 Czech Republic 8 8 8 8 8 Denmark 35 Estonia 5 Finland 27 27 27 27 27 27 27 27 27 27 France58 141 141 143 144 137 141 139 140 141 138 Germany 61 Greece 39 Hungary 6 6 6 6 6 7 8 8 8 8 Ireland 9 Italy 49 Latvia 5 Lithuania 4 4 4 4 4 4 4 4 4 4 Luxembourg 1 Malta 1 1 1 1 1 1 1 1 1 1 Netherlands 15 Poland 4 4 6 6 6 7 7 12 12 12 Portugal 17 17 17 17 17 Romania 19 Slovakia 6 6 6 6 6 6 6 6 6 6 Slovenia 3 Spain 42 42 42 42 42 44 46 46 46 47 Sweden 56 56 54 55 55 54 53 54 54 Switzerland 13 13 13 13 13 13 13 13 13 13 UK 64 Index (1998=100) 100 100 102 102 99 102 103 105 105 105 Sources: Questionnaire responses (question 1B.3), DG TREN, Airport websites Table 14: Airports Accepting Air Transport Services (ICAO SARPS Licensed for Public Use) 1998
1999
2000
Insofar as the time series data is able to indicate, the number of airports within the EU to which air transport services are operated has remained relatively steady over the period under discussion. However, there has been significant development of intra-regional services – that is, point-to-point services between regional airports rather than “hub and spoke” services via primary airports – particularly by LCCs. Direct employment by airport is set out in the table below. These figures only include employees of the airport operator. It does not include concessionaires or other on-airport direct and indirect employment.
58
Note: France figures include airports in overseas territories on EU soil.
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Austria Belgium Bulgaria Cyprus Czech Republic Denmark Estonia Finland France Germany Greece59 Hungary60 Ireland Italy Latvia61 Lithuania Luxembourg Malta Netherlands Poland Portugal Romania Slovakia Slovenia Spain Sweden Switzerland62 United Kingdom Index (1998=100)
1998 755 925 600 1,928 11,680 29,505
-
1999 725 905 605 1,951 11,917 28,964
Employment at Airports 2000 2001 2002 2003 3,402 752 773 788 787 1,008 1,036 1,047 1,096 608 620 650 700 1,256 1,386 1,538 1,639 850 278 1,978 2,015 1,998 2,133 12,503 12,687 13,080 13,349 30,432 34,097 33,988 34,394
-
-
-
-
2,352 6,776
2004 3,742 750 1,106 700 1,779 985 283 2,288 13,388 34,691
3,453 7,183
2005 4,203 713 1,194 700 2,218 1,132 366 1,883 13,006 34,790
3,620 8,224
2006 4,514 752 1,501 700 2,587 1,226 422 1,776 12,727 34,795
3,657 9,318
846 784 -
831 772 -
792 742 -
789 730 -
751 534 -
787 453 2,231 2,822 1,857
716 389 2,216 2,837 1,861
856 379 2,179 2,891 1,883
883 27 371 2,293 3,125 1,773
551 -
569 -
632 -
629 -
642
656 307 -
819 318 -
908 332 11,149 3,489
986 372 11,489 3,418
14,088 100
14,199 99
14,197 102
13,126 108
13,318 107
13,613 109
13,881 138
14,469 138
15,348 140
2007 4,823 762 1,742 700 2,685 1,403 439 1,756 12,832 35,217 702 2,570 3,163 9,052 735 951 178 368 2,578 2,343 1,722 n/a 1,057 441 12,005 3,413 1,851 16,229 143
Sources: (Q) Questionnaire responses (question 1B.3a); (C) CRI ; (A) annual reports, Air Transport Research Society (ATRS)
Table 15: Direct Employment by Airport
The total number of airport direct employees in our table above is 121,717. In its 2008 Economic Survey, the Airports Council International (ACI) has indicated 165,000 direct employees of the airports in its survey (which themselves are based on 224 airport respondents, accounting for about 81% of passenger traffic in Europe). Our report covers a greater number of airports (720) and although it includes many smaller airports where lower numbers of staff may be expected, this suggests that only a proportion of employees have been captured in our survey. According to a 2008 airport benchmarking report by the Air Transport Research Society, the average number of direct employees of airports in Europe (excluding Frankfurt, which has an exceptionally large number of employees) is 1,525. Incomplete – includes Athens airport only Incomplete – includes Budapest airport only 61 Incomplete – includes Riga airport only 62 Incomplete – includes Geneva and Zurich airports only 59 60
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S: A Q Q Q A A A Q A Q AT AT A A AT Q A Q A A Q
Q A A A AT C
ACI note that, in their survey, airport direct employment has remained similar to 2006, whilst all other areas have grown – thus indicating an increase in productivity. Another useful statistic from the ACI survey report is in the ratio of airport direct employees to total on-site airport employees (i.e. those who work at the airport, but are not employed by the airport). In Europe, the ratio is quite high – with 6 non-direct employees estimated for each employee of the airport (whereas the global ratio is 1:11). The high number of airport direct employees in Europe is attributed to high levels of commercialisation and privatisation, driving airport operators to seek to offer and integrate airport services into their portfolio, resulting in more employees. Put more simply, commercial considerations encourage airport operators in Europe to provide themselves ground handling and other services, rather than outsourcing the work (and profit) to other firms. With the 1:6 ratio described above, ACI estimates the number of employees working on site at European airports (but not employed directly by the airport) to be 1.2 million. If the same ratio were applied to the 184,000 direct employees in our table above, this would indicate total employment on site at European airports to be in the region of 1.3 million. Employee numbers evolution is a factor of both traffic and productivity evolution. An example of employment development at airports is given below, for select UK airports. UK Airports Average Employees
5,000 4,500
Heathrow
+3%
Gatwick
+1%
4,000 3,500 3,000 2,500 2,000
Manchester -3%
1,500
Stansted
+9%
Liverpool
+46%
1,000 500
London City +7% 0 1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Source: Centre for the study of Regulated Industries
Figure 18: Evolution of Employee Numbers at Selected UK Airports
The BAA airports (Heathrow, Gatwick and Stansted) have had a steady increase in employees. The greatest increase is seen in the secondary and regional airports which serve LCCs – Stansted has increased its number of employees at a far greater rate than any of the major airports in the south east, while the number of employees at Liverpool Airport has
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increased dramatically post 1998, slightly to the detriment of employees at Manchester airport. Overall, direct employment shows a steady growth by virtually every airport operator, contradicting the perception that airport operators are reducing staff levels through outsourcing, even as outsourcing of work at airports has also increased. One major trend has been the increase in independent ground handlers, as shown in the table below. The number of independent ground-handling organisations providing services at airports independent from the airline or airport authorised in accordance with Council Directive 96/67 EC and national regulations has shown an increase in most of the responding Member States.
3.3
THE INDEPENDENT GROUND HANDLING INDUSTRY AND AIRCRAFT MAINTENANCE ORGANISATIONS IN THE EU
In this Section we describe the development of independent ground handling services; that is, work that the individual airlines and airports no longer perform directly as part of their direct employment structure but which they now contract for. Staff still employed by airlines and airports to provide such services are covered in the preceding Sections 3.1 and 3.2. In this Section we also pay individual attention to aircraft maintenance, which – while formally considered a ground handling function – also possesses significant individual attributes. The term “ground handling” covers a very wide range of diverse and specialised activities (see 3.3.1 below) whose common denominator is that they provide ground-based supporting services to the airline industry. Before the 1990s and the development of the Community air transport market, the various ground handling functions in the EU were almost entirely provided by: •
The airports themselves;
•
The national flag carriers (either directly or through subsidiaries);
•
A few specialist enterprises at the local level; and/or
•
A limited amount of self-handling by other airlines.63
Historically – and not just in Europe but in many other countries worldwide – many if not most ground handling services were integrated in oligopolistic or monopolistic forms of service provision. That is, the flag carrier of the home country might have been not only a direct self-provider of its own ground handling; it may also have enjoyed an exclusive franchise to provide needed ground handling services to its competitors at airports in its national territory. Alternatively airports (almost all of them publically owned) may have enjoyed authority to provide such services exclusively. Under such circumstances so-called
63 The issue of self-handling rights sometimes arose in international negotiations. Countries like the United States, for example, pressed international partners to permit self-handling by US airlines or the right to hire in alternative service providers so as to lower the costs of purchasing from monopoly providers.
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“rents” could accrue to the service providers thereby imposing costs on the travelling public as well as the direct service users. In concert with the Third Package legislation, which opened up opportunities for air transport competition, the Community also adopted legislation, Directive 96/67/EC, focussed on introducing competition in the provision of ground handling services wherever feasible. Thus EU regulatory reform has introduced significant liberalisation and opening up of the ground handling market (see also discussion in Chapter 2 above). Notable changes in provider structure have occurred, including the emergence of firms providing services in a number of different markets. In a recent study on the Impact of Directive 96/67/EC on Ground Handling Services, the Airport Research Center found the following changes in the number of handlers at sampled airports. In this report, self-handling refers to airlines conducting their own services, whilst ‘third parties’ represent both airports and independent ground handling entities. EU-15 (Representative Sample) Third Party Handling Self Handling 1996 2002 2007 1996 Baggage handling 21 33 41 Baggage handling 12 Freight & Mail handling 21 28 34 Freight & Mail handling 10 Ramp handling 21 30 38 Ramp handling 15 Fuel & Oil handling 26 27 28 Fuel & Oil handling 1 New Member States (Representative Sample) Third Party Handling Self Handling 2004 2007 Baggage handling 12 14 Baggage handling Freight & Mail handling 13 18 Freight & Mail handling Ramp handling 11 14 Ramp handling Fuel & Oil handling 12 12 Fuel & Oil handling
2002 15 9 17 1
2007 16 16 19 1
2004 4 5 5 2
2007 5 6 7 2
Source: Airport Research Center, Study on the Impact of Directive 96/67/EC on Ground Handling Services 1996-2007, Feb 2009
Table 16 : Overview of Developments in Number of Handlers (Selected Sectors)
It is apparent from the above table that the number of third party handlers in the market has increased more rapidly than self handling by airlines (reflecting greater competition in these markets). Whilst not strictly indicative of the proportion of the market - and hence employees - that independent handlers comprise, the table does at least serve to illustrate that the independent ground handling industry as described in this section represents only a portion of the total ground handling industry (most of the rest of which remains within airline or airport employment). 3.3.1
The scope and diversity of ground handling services
Before we examine the number of independent ground handling organisations providing services at EU airports, it is useful to first set out the 11 areas (as well as key subareas) of ground handling that are covered by Council Directive 96/67/EC (the Ground Handling Directive). These areas are: •
Ground administration and supervision
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•
•
-
Representation and liaison services with local authorities or any other entity, disbursements on behalf of the airport user and provision of office space for its representatives;
-
Load control, messaging and telecommunications;
-
Handling, storage and administration of unit load devices;
-
Any other supervision services before, during or after the flight and any other administrative service requested by the airport user.
Passenger handling -
Any kind of assistance to arriving, departing, transfer or
-
Transit passengers, including checking tickets and travel documents, registering baggage and carrying it to the sorting area
Baggage handling -
•
•
•
Handling baggage in the sorting area, sorting it, preparing it for departure, loading it on to and unloading it from the devices designed to move it from the aircraft to the sorting area and vice versa, as well as transporting baggage from the sorting area to the reclaim area.
Freight and mail handling -
For freight: physical handling of export, transfer and import freight, handling of related documents, customs procedures and implementation of any security procedure agreed between the parties or required by the circumstances;
-
For mail: physical handling of incoming and outgoing mail, handling of related documents and implementation of any security procedure agreed between the parties or required by the circumstances.
Ramp handling -
Marshalling the aircraft on the ground at arrival and departure;
-
Assistance to aircraft packing and provision of suitable devices;
-
Communication between the aircraft and the air-side supplier of services;
-
The loading and unloading of the aircraft, including the provision and operation of suitable means, as well as the transport of crew and passengers between the aircraft and the terminal, and baggage transport between the aircraft and the terminal;
-
The provision and operation of appropriate units for engine starting;
-
The moving of the aircraft at arrival and departure, as well as the provision and operation of suitable devices;
-
The transport, loading on to and unloading from the aircraft of food and beverages
Aircraft services -
The external and internal cleaning of the aircraft, and the toilet and water services;
-
The cooling and heating of the cabin, the removal of snow and ice, the de-icing of the aircraft;
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•
•
•
•
•
The rearrangement of the cabin with suitable cabin equipment, the storage of this equipment.
Fuel and oil handling -
The organization and execution of fuelling and defuelling operations, including the storage of fuel and the control of the quality and quantity of fuel deliveries;
-
The replenishing of oil and other fluids
Aircraft maintenance -
Routine services performed before flight;
-
Non-routine services requested by the airport user;
-
The provision and administration of spare parts and suitable equipment;
-
The request for or reservation of a suitable parking and/or hangar space
Flight administration and crew administration -
Preparation of the flight at the departure airport or at any other point;
-
In-flight assistance, including re-dispatching if needed;
-
Post-flight activities;
-
Crew administration.
Surface transport -
The organization and execution of crew, passenger, baggage, freight and mail transport between different terminals of the same airport, but excluding the same transport between the aircraft and any other point within the perimeter of the same airport;
-
Any special transport requested by the airport user
Catering services
This report has sought information on ten of the eleven areas of ground handling set out above: the exception being catering services, for which it would be impossible to ascertain the proportion of staff whose employment was directly attributable to air transport. 3.3.2
The structure of independent ground handling services provision
Our questionnaire solicited data on the development of independent ground handling. While responses on this point from the Member States were not complete, information received tends to confirm that availability of independent services may well have doubled in the course of the reporting period and that employment at the supplier firms grew significantly (see tables below). The major providers operating on a pan-European level are Menzies, Servisair and Swissport, although many local operators are also active on airports or with certain airlines.
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Independent Ground Handling Organisations 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Belgium 2 2 2 2 2 2 2 2 2 2 Cyprus 8 8 8 8 8 8 8 8 8 10 Czech Republic 8 9 19 France64 90 104 122 130 133 142 180 187 195 203 Hungary 4 11 16 24 25 Lithuania 2 2 2 3 4 4 4 5 5 5 Malta 2 2 2 2 Poland 19 21 24 22 24 Portugal 12 15 18 22 23 27 29 19 Slovakia 4 5 5 5 8 9 10 11 13 14 Spain 22 26 26 25 19 29 21 15 Sweden 2 2 2 2 2 2 2 3 3 3 Index (1998=100) 100 114 131 139 145 155 191 200 209 219 Sources: Questionnaire responses (question 1B.4) Table 17: Number of Independent Ground Handling Organisations Providing Services at Airports
With a limited number of respondents, it is difficult to draw firm conclusions from the above table. The indicated growth in number of independent handling organisations is very strong, particularly in France, Hungary and Slovakia. In Spain alone, numbers appear to have declined slightly. In proxy data, we were able to identify the number of organisations providing passenger, ramp and cargo handling, fuel, flight support and de-icing services (though we do not have a historical time series). Large firms such as Menzies, Swissport and Servisair are represented in virtually every Member State (and are counted in each State in the figure below). Particularly within the newer Member States there is a tendency of smaller handling companies or handling by the airports (though as indicated by the above sections, some areas of ground handling continue to be provided by airlines and airports throughout the EU). The best examples of pluralistic markets with many players are the UK and Germany.
Note on France: These figures are related to airport services which means air terminal operations, aircraft maintenance operations and airspace control in the vicinity of airports.
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Number of Organisations providing Passenger, Ramp and Cargo Handling,
Fuel, Flight Support and de-icing in the EU27 Austria Belgium Bulgaria Cyprus Czech Republic Denmark Estonia Finland France Germany Greece Hungary Ireland Italy Latvia Lithuania Luxemburg Malta Netherlands Poland Portugal Romania Slovakia Slovenia Spain Sweden Switzerland UK
9 8 4 7 5 5 1 5 19 46 9 3 10 23 5 3 1 3 10 8 5 7 2 2 18 8 8 43
Source: Airline Industry Update, Booz & Company analysis
Figure 19: Number of Organisations providing Ground Handling Services in the EU27
The number of ground-handling employees identified via our questionnaire is given in the table below, although they do not seem very consistent. However, obtaining employee statistics on independent handlers has been difficult. The ECORYS study of 2007 reports an IAHA estimate of 60,000 employees in independent ground handling companies (up from around 13,000 in 1996), the majority of which are in the EU15 countries. It is thus likely that the responses received below represent only about half of total employment by this industry. Nevertheless, the trend in employment is revealing, showing very strong growth across the period 1997-2007. It is likely that some of this growth stems from airline outsourcing (that is, the transfer of staff from airline employer to independent ground handling employer): as indicated previously (see Table 13), airline employment of groundbased staff has declined from some 88,000 in 1998 to around 47,000 in 2007.
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Employees of Independent Ground Handlers 1999 2000 2001 2002 2003 2004 2005 2006 Belgium 4,417 4,637 2,409 3,052 2,904 2,877 2,901 2,785 Cyprus 350 350 350 350 380 380 360 350 France 5,488 8,371 8,514 8,854 8,645 10,687 11,281 11,299 Lithuania 63 57 66 76 88 124 389 474 Malta 50 65 80 Poland 2,650 2,800 3,100 3,225 Portugal -1,935 2,081 2,212 5,250 8,468 9,484 5,913 Slovakia 91 94 110 122 117 139 151 157 Scandinavia* 11,844 11,691 11,822 10,958 10,565 Index (1998=100) 100 117 151 128 139 136 159 169 169 Sources: Questionnaire responses (question 1B.4a) Note: Scandinavia numbers include only those ground support services indicated by SAS, see table 4 above Table 18: Number of Ground-Handling Employees 1998 4,310 350 4,130 59 -83
2007 3,027 350 11,975 485 100 3,600 8,583 165 10,651 179
Considering some of the major ground handling companies, we have examined annual reports for information on employment, with the available time series’ shown below. European Ground Handlers Employees 30,000
Swissport (+16%)
25,000
20,000
Menzies Aviation (+10%)
15,000
10,000
SAS Ground Services (+2%) 5,000
0 1998
Aviance UK (+6%)
1999
2000
2001
2002
2003
2004
2005
2006
2007
Source: Annual Reports; Booz & Company analysis
Figure 20: Employment for Major European Ground Handlers
Employment growth appears steady for the main European ground handlers. The above data was acquired from their annual reports, reporting over the financial years. SAS Ground Services, under SAS Group has increased employees by 2% per annum over 7 years, which contrasts with airline employees of SAS. The strength of this market is even more pronounced when considering Swissport. Under its new ownership by Grupo Ferrovial, it has grown by 16% on average over 9 years. Menzies, a Scottish company which provides ground handling to many airlines, including easyJet, has also experienced healthy growth over the period.
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3.3.3
Independent aircraft maintenance providers
The numbers of aircraft maintenance companies, independent from the airline, airport or groundhandling companies, is set out in the table below and are based on questionnaire responses. The number of independent maintenance providers in Germany seems remarkably high, but is not surprising given the scope and expertise of the German aviation industry. The low level of response might underline the perception that most of the maintenance is conducted by the airlines themselves or are being outsourced to larger providers such as Lufhansa Technik and Air France Industries. Aircraft Maintenance Providers 2000 2001 2002 2003 2004 2005 2006 Belgium 21 Cyprus 3 3 3 3 3 3 3 3 3 Czech Republic 40 42 45 44 43 42 42 43 Germany 482 506 437 437 437 433 433 435 436 France 363 357 350 333 325 321 Hungary 28 Lithuania 3 3 3 4 4 9 8 7 6 Malta 1 1 1 1 1 2 2 2 2 Poland 74 85 90 98 Portugal 31 32 32 35 Slovakia 25 27 27 26 28 25 24 25 27 Spain 110 156 Sweden 58 63 63 61 Index (1998=100) 100 105 92 92 92 92 91 92 92 Sources: Questionnaire responses (question 1B.5) Table 19: Number of Independently Established Providers of Aircraft Maintenance 1998
1999
2007 21 3 43 430 323 30 6 2 107 38 27 181 55 91
Total number of direct employees of independent maintenance organisations is set out below. It is again not surprising to see a high number in Germany. The number of employees in the Czech Republic is remarkably stable. Employees of Aircraft Maintenance Organisations 1999 2000 2001 2002 2003 2004 2005 Belgium Cyprus 5 5 5 5 5 5 5 5 Czech Republic 3,000 3,000 3,000 3,000 3,000 3,000 3,000 Germany 22,100 22,800 23,500 24,400 24,200 24,500 24,900 27,100 Lithuania 500 650 670 710 790 850 870 920 Malta 38 38 40 40 38 110 140 158 Portugal 3,721 3,607 3,496 Index (1998=100) 100 104 107 111 111 112 114 124 Sources: Questionnaire responses (question 1B.5a) Table 20: Direct Employees of Maintenance Organisations 1998
2006 2,469 5 3,000 28,500 980 198 3,571 131
2007 2,136 5 3,000 29,300 1,050 210 3,689 135
The number of mechanics is given below for a limited number of countries. Switzerland and Germany have experienced impressive growth in this area.
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Employed Mechanics 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Cyprus 2 2 2 2 2 2 2 2 2 2 Czech Republic 1,854 1,953 1,980 2,023 1,705 1,825 1,917 1,966 2,078 2,157 Germany 1,210 1,210 1,210 1,020 1,510 2,250 2,780 2,670 3,280 4,010 Hungary 846 870 892 908 921 Lithuania 340 360 360 380 420 495 520 540 590 590 Malta 18 22 25 38 45 Switzerland 566 598 623 693 1,005 1,502 1,954 2,293 2,476 2,592 Index (1998=100) 100 104 105 104 117 153 181 188 212 235 Sources: Questionnaire responses (question 1B.5b) Table 21: Number of Mechanics Employed by these Firms (holding JAR/EUROPS Certifications)
3.4
AIR NAVIGATION SERVICE PROVIDERS
Air navigation services in the European Union are principally provided by the member states, co-operating through EUROCONTROL, the pan-European Organisation for the Safety of Air Navigation. With one exception, every EU country has its own national air navigation service provider and, until recently, air navigation services entailed a monopoly provision of services. Perhaps the most important development in the field of European air traffic management is the Single European Sky (SES) initiative, which aims to harmonise the management and regulation of airspace throughout the European Union. Organising airspace on an international, rather than national, level could increase the efficient utilisation of the airspace and ensure common standards in safety are maintained. Such international organisation of airspace already occurs with EUROCONTROL’s Maastricht Upper Area Control Centre (MUAC), which operates civil aircraft in the upper airspace (above 24,500 feet, or approximately 7,500 metres) of Belgium, the Netherlands, Luxembourg and north west Germany. In some instances, a country’s airspace is controlled by another country’s ANSP. This is the case in Luxembourg where airspace above 4,500 metres is controlled by Belgocontrol, while that above 7,500 metres falls under the jurisdiction of EUROCONTROL’s MUAC. While en route services continue to be controlled by a national or international level service provider, air traffic control in the immediate vicinity of the airport, i.e. the terminal manoeuvring area, may be managed by independent providers. The UK is a case in point, it has embraced a competitive market in terminal control services to a far greater degree than any other European country. In the UK, in addition to the National Air Traffic Services (NATS) which provides all en route navigation in UK airspace and air traffic control at fifteen of the biggest UK airports, there are over forty independent operations65 providing air traffic control of flights in the terminal manoeuvring area (TMA). In contrast, in the continent, in Spain for example, air traffic control – including en route, approach and terminal control services, are provided by the national body, Aena, though air navigation 65 Which is not imply that there are 40 entirely independent providers. Specialist companies compete for franchises at these airports. The procedures can be said to be analogous to the EU-level procedures on groundhandling.
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services are also provided by Meteo (Instituto Nacional de Meteorología) and the Ministry of Defence. In this section, we take ANSP employment to be those employed by the national bodies. Employment in independent tower services for the terminal manoeuvring area, such as found in the UK or Luxembourg, falls under the definition of airport employees, hence Luxembourg is classified as having zero ANSP employees in this section, since their air traffic controllers are employed by Luxembourg airport while their upper airspace is controlled by Belgocontrol and MUAC. Employment by the military and meteorological services is also excluded from this analysis. Total direct employment by ANSPs is set out below. ANSP Total Employment 2001 2002 2003 2004 1,013 977 958 939 1,034 1,041 1,044 1,015 1,460 1,440 1,371 1,329 234 309 221 755 759 752 769 761 760 719 707 100 104 104 103 1,921 1,950 2,054 2,105 8,644 8,898 9,146 9,219 5,137 5,264 5,248 5,169 3,527 3,527 689 718 677 664 538 548 570 677 3,280 3,416 3,351 3,040 137 118 116 218 329 323 324 323 0 0 0 0 193 214 201 183 1,580 1,678 1,705 1,677
2005 2006 Austria 922 934 Belgium 1,001 1,003 Bulgaria 1,353 1,309 Cyprus 269 267 Czech Republic 828 858 Denmark 661 680 Estonia 111 116 Finland 2,129 2,182 France 8,994 8,808 Germany 5,098 4,969 Greece 3,527 3,527 Hungary 662 685 Ireland 650 647 Italy 3,401 3,393 Latvia 249 266 Lithuania 328 334 Luxembourg 0 0 Malta 178 176 Netherlands 1,620 1,652 Poland 2,998 3,020 Portugal 1,084 1,085 1,028 1,020 1,008 1,004 Romania 1,851 1,848 1,885 1,891 1,896 1,877 Slovakia 511 508 493 483 466 450 Slovenia 135 136 133 153 166 178 Spain 3,484 3,636 3,775 3,847 3,810 3,933 Sweden 1,105 1,119 1,095 1,072 1,051 1,030 Switzerland 1,090 1,261 1,289 1,326 1,335 1,351 UK 5,597 5,003 4,931 4,983 5,048 5,165 Index (2001=100) 100 101 101 101 101 101 Sources : Eurocontrol ACE Benchmarking reports; MUAC; Finavia Table 22: Total Direct Employment by ANSPs
Note: All of MUAC’s employees, a growing workforce of 541-576 people, are based in EUROCONTROL’s Maastricht Control Centre in the Netherlands. However, over half of
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them live outside the Netherlands, in Belgium and Germany, commuting over the border into work, and the employees include nationalities of all EU Member States, making it an exceptional example of EU employee mobility. The figures above comprise en route and terminal staff, as well as those employed in other areas but working for the national-level ANSP. The employment rate is generally steady, with Ireland, Latvia and Switzerland exhibiting strong growth in employee numbers in this sector. The pie chart below shows the breakdown in employment in the ANSP sector. The vast majority considered here, over 85%, is en route and terminal staff. Of this, almost a third are licensed Air Traffic Control Officers (ATCOs), with a further 10% of employees being abinitio trainees, on-the-job trainees, or ATC assistants. Employment in the ANSP Sector 2006 Not enroute/terminal 14% ATCOs in OPS 28%
Other 3% Staff for ancillary services
4%
Administration 12% 3% ATCO on other duties 2% 2% Ab-initio trainees On-the-job trainees 6% 22% Technical support staff
3%
ATC assistants
OPS support (non-ATCO)
Sources: EUROCONTROL ACE Benchmarking Reports
Figure 21: Breakdown of Employment in ANSPs by Job Type (2006)
3.4.1
Employment of Controllers
The primary licensed professionals employed are Air Traffic Control Officers (ATCOs). Their duties include: regulating the flow of traffic, communicating with the pilot and issuing instructions regarding height, speed and position, relaying relevant information about weather conditions, sequencing the most efficient order for pilots to take off and land, and clearing pilots for approach to the airport. The number of licensed professionals working for ANSPs is indicated in the table below. The overall trend is one of growth, which is unsurprising given the increase in traffic over the time period considered.
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Employed ATCOs 2001 2002 2003 253 268 285 247 253 285 355 357 343 56 65 171 170 161 284 312 306 34 31 32 277 267 277 2,566 2,621 2,651 1,698 1,765 1,665 667 182 192 196 273 267 249 1,522 1,561 1,661 59 70 65 88 85 87 0 0 0 40 53 54 388 393 403
2004 2005 2006 Austria 284 286 283 Belgium 296 286 292 Bulgaria 333 307 301 Cyprus 64 68 69 Czech Republic 163 166 174 Denmark 311 319 316 Estonia 33 33 34 Finland 269 271 242 France 2,749 2,875 2,941 Germany 1,708 1,766 1,799 Greece 667 667 569 Hungary 194 193 198 Ireland 255 255 252 Italy 1,468 1,657 1,601 Latvia 56 52 55 Lithuania 87 91 89 Luxembourg 0 0 0 Malta 57 57 57 Netherlands 415 451 451 Poland 355 370 Portugal 216 243 260 258 249 250 Romania 568 585 528 549 584 581 Slovakia 133 137 118 130 129 126 Slovenia 75 77 73 72 76 75 Spain 1,757 1,857 1,985 2,068 2,030 2,078 Sweden 647 557 643 650 656 633 Switzerland 356 347 339 346 340 334 UK 1,759 1,578 1,566 1,592 1,616 1,655 Index (2001=100) 100 101 102 103 106 106 Sources: Eurocontrol ACE Benchmarking reports; MUAC Table 23: Licensed ATCO Professionals Employed by (National) ANSPs
The above figures also include licensed ATCOs employed in non-operational work. It is notable that the number of ATCOs have modestly increased in most countries, for example, Spain, France and Belgium, but in the UK the number has gone down. This is likely to be the effect of competition in the UK, where many airports have taken the most labourintensive ATC work that is terminal control, in-house, thus the numbers given above understate the total number of ATCOs employed. Rising numbers of ATCOs in many countries may also reflect the limited ability of providers to increase the productivity of controllers (hours worked, etc), hence the need for new technologies, new organisational forms and more integration/cooperation – which are explicitly goals of single sky. Measurement of productivity in ATM is a complex subject and beyond the scope of this report. Productivity changes are, however, just as relevant to employment of ATCOs as increasing air traffic. It is appropriate, therefore, to consider how productivity in each
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country’s ANSP has changed. The table below is drawn from Eurocontrol ACE Benchmarking reports and indicates the change in ATCO-hour productivity66 between 2001 – 2006. Note that not all ANSPs are represented as there have been institutional changes in that time period: the figure below includes only those ANSPs for which directly comparable figures were available. Change in ATCO-hour Productivity (gate to gate) Change in Composite flight-hours per ATCO-hour
2001 - 2006
0.7
0.63
0.6 0.5 0.4
0.34
0.3 0.2 0.1
0.23 0.22 0.13 0.1 0.11
0.17
0.12 0
0.0
0.25
0.23
0.01
0.06
0.02
0
0.2
0.16
0.15
0.11 0
-0.1
-0.07
-0.06 -0.08
-0.2 -0.3 -0.32
-0.4 Austria
Czech Republic
Finland
Hungary
Latvia
Norway
Slovakia
Sweden
Belgium
Denmark
France
Ireland
Lithuania
Portugal
Slovenia
Switzerland
Bulgaria
Estonia
Germany
Italy
Netherlands
Romania
Spain
UK
MUAC
Figure 22 : Change in Composite flight-hour per ATCO-hour (Productivity) 2001 – 2006
As shown, it is apparent that some productivity gains in terms of flight-hours per ATCOhour have been made over the 2001-2006 period, which suggests that increases in the overall number of ATCOs is mainly attributable to increases in air traffic. 3.4.1.1.
Licence registry of ATCOs
It would have been useful to compare the numbers employed with the number of ATC licences issued. Unfortunately, we did not receive responses from all regulatory authorise on the number of ATC licences issued, and a number of key States are missing. Nonetheless, the responses received are given in the table below.
66 Refer to Eurocontrol ACE Benchmarking reports for methodology in productivity calculation, available on the Eurocontrol website www.eurocontrol.be.
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1998
1999
ATCO Licences Issued 2000 2001 2002 2003 276 275 50 59 57 202 206 186 192 343 383 329 323 3,914 4,019 4,111 4,232 1,579 1,601 1,623 1,637 292 292 292 309 88 88 89 90 46 46 56 59 348 305 329 350 335 345 338 136 135 140 140 1,456 1,545 1,561 1,663 744 774 779 764
2004 2005 2006 Bulgaria 250 273 204 Cyprus 57 64 64 Czech Republic 223 196 196 201 230 Finland67 336 326 337 350 France68 3,716 3,824 4,328 4,384 4,345 Germany 1,388 1,584 1,668 1,739 1,780 Hungary 280 291 318 318 334 Lithuania 87 87 90 90 91 Malta 43 46 60 58 59 Poland 259 259 372 401 420 Portugal 339 322 316 Slovakia 137 138 130 130 130 Spain 1,302 1,368 1,738 1,812 1,864 Sweden 679 705 753 740 725 Switzerland 440 450 Index (1998=100) 100 105 109 111 113 116 119 122 123 Sources: Questionnaire responses (question 1A.6) Table 24: Licences Issued for Air Traffic Controllers (ATCO or equivalent qualification)
2007 405 69 259 359 4,351 1,768 348 91 54 438 314 135 2,266 724 480 129
France appears to have significantly more reported qualifications issued in comparison with the number of ATCOs employed. However this may be due to a difference definitions of the terms (see footnote below on licences; the number of ATCOs employed are as per EUROCONTROL definitions). In contrast, Germany has more ATCOs employed than licences issued, which implies that they may be importing air traffic control staff – it is known that Austrian firms supply some of Germany’s (tower) air navigation services and this may account for the shortfall in German licences. There is tremendous growth in the number of licences issued for Spain, though like Germany there is a slight shortfall compared with the number of ATCOs employed, again suggesting that Spain imports some of its air traffic controllers. The ATCOs working in Operations (OPS) may work in approach and tower control, or in en route. The graph below shows the split between these two types of work from 2001 to 2006. The number of ATCOs working in OPS has increased by 3.2%, with those working in approach and tower control increasing at a slightly faster rate, reflecting the more labourintensive nature of the work.
For years 1999-2001, Finland’s numbers include FISO licences issued. This explains the sudden decrease in licences issued in 2002. 68 France’s high numbers are for what is known in French as an ‘air traffic controller title’, which may be a broader definition of air traffic controller than is used in other countries. 67
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Role of ATCOs in OPS 2001
2002
41%
41%
59%
11,802
59%
12,342
2003
43%
57%
13,092
2004
42%
58%
13,082
2005
40%
60%
13,881
2006
43%
57%
13,855
APPs+TWRs ATCOs in OPS
ACC ATCOs in OPS
Source: EUROCONTROL ACE Benchmarking Reports APPs+TWRs ATCOs = Approach & Tower Air Traffic Control Officers ACC ATCOs = Area Control Centre (i.e. enroute) Air Traffic Control Officers
Figure 23: Work Area for ATCOs
3.4.2
Air Traffic Control Assistants
Air Traffic Control Assistants (ATCAs) work alongside fully qualified ATCOs, generally with a view to gaining experience and later undergoing training to become a fully licensed ATCO. There is a clear downward trend in the number of ATC Assistants employed, with the exception of a few countries: Czech Republic, Switzerland, the Netherlands and Slovenia.
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Employed ATC Assistants 2001 2002 2003 2004 19 19 19 20 59 70 64 54 84 84 78 78 0 78 77 45 79 79 69 67 113 83 89 74 11 11 2 2 55 55 39 39 85 85 85 452 442 425 422
2005 2006 Austria 20 20 Belgium 49 43 Bulgaria 59 56 Cyprus 41 41 Czech Republic 85 92 Denmark 68 71 Estonia 2 2 Finland 34 29 France 84 84 Germany 439 408 Greece Hungary 109 115 112 102 92 101 Ireland 57 51 31 26 25 25 Italy 878 940 799 655 614 332 Latvia 8 Lithuania 15 2 1 1 1 Luxembourg 0 0 0 0 0 0 Malta 33 24 21 21 21 21 Netherlands 122 130 125 110 165 148 Poland 45 70 Portugal 154 152 136 137 139 138 Romania 38 Slovakia 58 63 66 59 55 52 Slovenia 11 10 10 10 12 16 Spain 213 200 181 173 169 184 Sweden 97 89 85 86 68 49 Switzerland 52 77 79 86 81 74 UK 1118 913 920 878 884 883 Index (2001=100) 100 98 91 84 84 75 Sources: Eurocontrol ACE Benchmarking reports Table 25: ATC Assistants Employed by (National) ANSPs
3.4.2.1.
Licence registry of ATCAs
Licences issued for ATC Assistants are given below. It should be noted that some countries, including the Czech Republic, do not issue licences for ATC Assistants.
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1998
ATC Assistant Licences Issued 2000 2001 2002 2003 84 78 83 83 81 39 433 433 437 429 399 126 135 135 135 135 43 41 42 34 24
1999
2004 2005 Bulgaria 78 59 Cyprus 88 80 Finland 39 34 Germany 373 380 399 Hungary 123 135 135 Malta 44 22 22 Poland 33 Portugal 28 28 28 28 24 Slovakia 20 19 20 20 19 17 15 12 Switzerland 75 Index (1998=100) 100 111 112 113 110 103 99 101 Sources: Questionnaire responses (question 1A.7) Table 26: Licences Issued for Air Traffic Control Assistants
2006 56 80 29 285 135 22 56 25 11 75 81
2007 43 71 24 244 118 22 38 25 11 75 71
The low response rate makes it difficult to draw reliable conclusions from data on ATC assistant numbers. The reduction by Germany looks to be more associated with phasing the category out, ahead of productivity increases. 3.4.3
Other ATM Professional Categories
Information was also requested on licences issued for other ATC categories: Flight Information service officers (FISO or equivalent qualification); Air/Ground communication service operators; ATC engineers/technicians and Any other professional ATC categories. Response rate was low with only partial information received (see Appendix 2 for details). Since different grades are used in different countries, the usefulness of these comparisons at an individual class level is limited. Considering now the other types of workers employed by ANSPs, technical support staff account for the next major tranche of employment. Employment in this area is steady overall, with some countries (e.g. France, the Netherlands, Romania and the UK) decreasing their employment, while others have increased the numbers employed (e.g. Germany, Spain and the Czech Republic).
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3.4.3.1.
Technical support staff Technical Support Staff at ANSPs 2001 2002 2003 2004 2005
2006
% of Total 2006 22.2% 22.1% 40.9% 0.7% 17.2% 17.9% 19.8% 5.8% 40.2% 23.4% 10.8% 16.4% 8.3% 8.9% 42.1% 29.9%
Austria 217 229 231 220 210 207 Belgium 221 217 225 211 214 222 Bulgaria 612 610 560 548 550 536 Cyprus 0 0 67 3 3 2 Czech Republic 102 106 108 111 141 148 Denmark 131 130 137 122 122 122 Estonia 27 23 24 24 23 23 Finland 133 120 103 103 127 126 France 4082 4107 4147 4085 3768 3539 Germany 973 1084 1097 1119 1161 1161 Greece 380 380 380 380 Hungary 125 124 110 107 107 112 Ireland 66 57 63 60 58 54 Italy 291 299 213 348 274 302 Latvia 4 4 4 95 111 112 Lithuania 137 109 106 102 99 100 Luxembourg 0 0 0 0 0 0 Malta 68 88 83 78 73 71 40.3% Netherlands 523 563 534 504 419 394 23.8% Poland 0 0 0 0 330 326 10.8% Portugal 127 138 122 119 120 122 12.2% Romania 660 638 480 477 470 469 25.0% Slovakia 142 142 142 128 130 118 26.2% Slovenia 19 19 19 25 29 25 14.0% Spain 633 699 696 693 674 857 21.8% Sweden 68 75 60 70 70 95 9.2% Switzerland 249 284 293 301 314 326 24.1% UK 1281 1236 1192 1224 1197 1152 22.3% Index (2001=100) 100 102 100 102 98 97 Sources: Eurocontrol ACE Benchmarking reports Table 27: Technical Support Staff Employed by (National) ANSPs
3.4.3.2.
Administrative support staff
In the case of administrative staff, the pattern is mostly downward, with some countries, e.g. Germany, substantially decreasing the number employed. The total trend, as shown below, represents a fifteen percent decrease over the time period studied.
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Administrative Staff Employed by ANSPs 2001 2002 2003 2004 2005 2006 Austria 149 148 105 102 97 97 Belgium 154 148 197 197 172 168 Bulgaria 111 111 109 114 121 118 Cyprus 20 20 27 27 23 Czech Republic 273 294 288 281 268 265 Denmark 156 160 129 122 102 112 Estonia 17 24 22 23 26 25 Finland 13 25 22 22 22 22 France 1057 1113 1145 1127 1074 1056 Germany 990 815 424 438 447 453 Greece 60 60 60 60 Hungary 128 127 135 124 127 128 Ireland 109 122 89 94 88 74 Italy 420 485 490 514 552 484 Latvia 23 18 23 29 31 34 Lithuania 78 84 85 88 87 89 Luxembourg 0 0 0 0 0 0 Malta 6 15 16 18 18 18 Netherlands 288 302 241 255 171 225 Poland 71 192 Portugal 197 192 181 185 182 185 Romania 374 396 430 441 438 430 Slovakia 138 132 132 130 109 111 Slovenia 5 5 7 12 16 Spain 499 446 430 417 397 411 Sweden 141 141 109 99 95 99 Switzerland 81 212 83 93 101 100 UK 1045 829 802 816 862 918 Index (2001=100) 100 98 87 87 85 86 Sources: Eurocontrol ACE Benchmarking reports Table 28: Administrative Staff Employed by (National) ANSPs
3.4.4
Observations on ANSP Employment Structure
Growth in employment has largely been driven by the increase in licensed ATCOs, particularly those employed in operations. This is shown clearly in the following table, which calculates a staff support ratio by taking the total number of staff employed (in en route and terminal) and dividing it by the number of ATCOs working in OPS:
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2001 3.75 4.16 5.31
Support Staff Ratio 2002 2003 2004 3.49 3.25 3.18 4.09 4.30 4.31 5.22 4.99 4.90 4.33 5.24 3.74 4.63 4.90 4.90 3.51 3.24 3.14 3.35 3.36 3.57 2.50 2.56 2.63 3.66 3.72 3.67 3.26 3.26 3.14 1.86 1.86 4.08 3.66 3.65 2.39 2.13 2.05 2.48 2.32 2.43 1.90 1.90 4.11 4.52 4.50 4.42
2005 2006 % change Austria 3.12 3.18 -15% Belgium 4.21 4.20 1% Bulgaria 5.37 5.48 3% Cyprus 2.98 2.98 Czech Republic 4.75 5.18 5.07 7% Denmark 3.86 2.87 2.98 -23% Estonia 2.94 3.79 3.79 29% Finland 2.41 2.81 2.73 13% France 3.63 3.47 3.33 -8% Germany 3.31 2.95 2.80 -16% Greece 1.86 3.18 Hungary 4.01 3.62 3.62 -10% Ireland 2.30 1.98 1.96 -15% Italy 2.45 2.41 2.47 1% Latvia 2.93 4.88 4.93 68% Lithuania 4.51 4.23 4.31 -4% Luxembourg Malta 5.08 4.28 3.94 3.33 3.24 3.20 -37% Netherlands 4.61 4.73 4.72 4.40 3.83 4.00 -13% Poland 3.27 3.15 Portugal 4.77 4.21 3.57 3.56 3.71 3.69 -23% Romania 3.51 3.40 3.90 3.75 3.53 3.52 0% Slovakia 4.15 4.03 4.61 3.91 4.02 3.98 -4% Slovenia 1.96 1.89 1.96 2.55 2.59 2.74 40% Spain 2.32 2.27 2.15 2.11 2.02 2.03 -12% Sweden 2.61 1.91 1.96 1.88 1.84 1.88 -28% Switzerland 3.37 3.73 4.02 4.17 4.15 4.30 28% UK 4.05 3.68 3.64 3.70 3.56 3.63 -10% Overall Ratio 3.36 3.27 3.17 3.15 3.04 3.08 -9% Sources: Eurocontrol ACE Benchmarking reports Table 29: Support Staff Ratios (Total Staff / ATCOs in OPS)
As the table above illustrates, the vast majority of European ANSPs have reduced the proportion of support staff in the total workforce relative to the number of ATCOs in OPS. Overall, employment in ANSPs appears to be modestly increasing, with some of the growth obscured by the use of private operators (in general, the airports themselves) to provide the air traffic control within the terminal movement area. There is some evidence for the increasing professionalisation of the workforce, with a larger proportion of employees having ATCO licences, as well as some evidence of increased productivity, with the support staff ratio decreasing in most EU countries. As with pilots, there appears to be convergence of licensing on a smaller number of common ranks, potentially, again, facilitating a market for skills within the Community.
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3.5
EDUCATION AND FLIGHT TRAINING ORGANISATIONS
Training of pilots is an essential function within the air transport industry, and one that occurs with substantial variation between Member States. Ongoing training is required throughout pilots’ careers (and airlines maintain training staff for this purpose), but this section is concerned with the training of pilots from ab initio through to commercial/ATPL licence level – that is, the production of qualified personnel available for employment by air transport operators. Prior to presentation of data relating to flight training organisations, we give a high level overview of some of the ways in which flight crew are trained69. The career paths of all pilots commence with ab initio training, through private pilot licence (usually obtained after circa 50-80 flight hours), to commercial pilot licence (after at least 200 flight hours) – with various rating qualifications along the way (e.g. instrument rating, aircraft type ratings, etc). A commercial pilot licence (CPL) is the minimum qualification required to pilot aircraft commercially, and hence for the purpose of air transport. A further qualification is that of air transport pilot licence (ATPL), which qualifies a pilot to command (but is not necessarily required to co-pilot) large aircraft types, and which has substantial experience requirements. Air transport operators are thus likely to employ pilots with ATPL qualifications, but also those with CPL qualifications (whose further career development will be contingent upon gaining a full ATPL licence). The institutions that train pilots vary considerably in their scope. These include: •
Military training
•
In-house, or contracted airline training programmes
•
Flying schools and colleges
•
Universities
•
Flying clubs
As noted above, the minimum experience level required to obtain a CPL qualification is 200 flight hours. This level of experience, however, is rarely sufficient for pilots to secure employment in an airline. A flight instructor rating, however, can be obtained at a similar experience level as a CPL licence. One way for newly qualified commercial licence holders then, to obtain the flight experience necessary to later secure employment in an airline, is to become a flight instructor. Although it is not the purpose of this report to examine the various career paths that individuals may take, the fact is that personnel may simultaneously hold multiple licences and ratings that do not necessarily reflect their job purpose. Data on instructor ratings in particular may not reflect the true number of individuals employed in this category. Below, we examine development of flight training organisations (FTOs), and employment therein. Here we rely solely on information provided by the regulatory authorities of each
69 Other air transport industry also undergo professional training (e.g. ATCOs, maintenance engineers, etc), but to a greater extent these are either conducted in-house or by non-dedicated institutions.
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Member State, as we have been unable to find any comprehensive source of proxy data that indicates the number of employees these organisations may have. The Survey asked a number of questions concerning structure of education for aviation and air transport professionalisation (many of which are qualitative and for which Survey responses are presented in Chapter 5). We were, however, able to obtain a limited quantitative response (see below) that makes clear that flight training for pilots, for example, relies to a considerable degree on decentralised services that in many cases importantly begin with private flying training schools. The table below sets out the number of FTOs as listed by Member States who responded to this query in the Survey. Reporting was incomplete, data were fragmented and show considerable differences among the Member States. 1998 Belgium Bulgaria Cyprus Czech Republic Finland France Hungary Lithuania Malta Poland Portugal Slovakia Spain Sweden UK Index (1998=100)
1 3 0 33 15 2 1 100
1999 2 3 2 0 36 14 2 1 109
Flight Training Organisations 2000 2001 2002 2003 2 7 10 2 2 2 3 3 3 3 3 10 12 12 18 3 6 7 7 65 61 66 62 18 16 16 16 2 2 2 2 1 1 2 2 4 1 1 1 2 184 176 185 193
2004 10 3 2 20 7 65 19 2 3 68 4 2 815 205
2005 10 5 2 20 5 65 20 2 3 70 4 2 32 211
2006 10 6 2 20 5 77 23 2 3 65 5 2 240
2007 11 6 2 20 4 75 17 2 3 64 6 2 35 16 867 225
Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
Sources: Questionnaire responses (question 1B.2) Note: In the case of France, the only training organisations taken into account here are the "flight training organisations" and "type rating training organisations" in the sense defined by JAR FCL1 and JAR FCL2; considering the relatively low numbers in most Member States, we can assume that this is the case for all respondents, with the UK as a notable exception. In the latter case, all FTOs (including flight schools) may have been included in the figures provided.
Table 30: Number of Flight Training Organisations (FTOs)
As discussed earlier, the sorts of organisations that provide training for pilots can vary substantially – from dedicated colleges, airline programmes and universities, through to flying clubs that exist – equally if not primarily – for the purpose of providing recreational flying opportunities and training, as they may for providing training to commercial levels. Variation in the latter tendency is one factor likely to be at least partially responsible for the considerable variation of FTOs reported by respondents. Regulatory authorities were then asked to indicate direct employment by FTOs. To this question, a very limited number of responses were received. As far as information is
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available, these figures appear broadly consistent with the number of FTOs set out in the table above. Employees of Flight Training Organisations 1998 1999 2000 2001 2002 2003 2004 Belgium 15 67 92 105 Cyprus 19 19 19 19 19 19 12 Czech Republic 4 20 24 24 38 42 Hungary 60 58 57 58 59 63 61 Lithuania 16 15 13 14 11 15 18 Malta 4 20 31 33 43 43 Portugal 77 66 Slovakia 11 10 11 12 13 14 14 Index (1998=100) 100 100 113 120 119 141 139 Sources: Questionnaire responses (question 1B.2a) Table 31: FTO Direct Employment
2005 127 12 44 59 19 43 71 14 140
2006 140 12 44 67 22 39 79 14 150
2007 150 12 48 61 25 39 84 15 152
Q Q Q Q Q Q Q Q
The number of flight training instructors employed by FTOs holding at least a CPL has grown substantially, as is shown below. Employed Flight Instructors 2000 2001 2002 2003 2004 2005 Belgium 6 32 45 50 60 Cyprus 12 12 12 12 12 12 9 9 Czech Republic 6 50 56 56 67 83 86 Hungary 178 197 198 196 176 199 215 219 Lithuania 16 15 13 14 11 13 16 17 Malta 0 1 4 15 19 27 27 27 Poland 582 Slovakia 20 20 21 20 21 20 22 23 Index (1998=100) 100 111 130 132 122 138 153 157 Sources: Questionnaire responses (question 1B.2b) Table 32: Flight Training Instructors Employed by FTOs 1998
1999
2006 70 9 86 241 19 24 514 24 168
2007 75 9 89 234 21 24 712 25 167
The total number of flight instructors with at least as CPL, regardless of employing organisation, is set out below. In many cases, most notably Poland and France, the figures appear exceptionally high. The French authorities have pointed out that the number reflects the number of licenses issued includes ratings to instruct only private licenses, or minor type ratings. In other instances, e.g. Malta, the number of flight instructors indicated at this question matches that above (employed by FTOs).
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Q Q Q Q Q Q Q Q
Flight Instructors Holding CPL 2000 2001 2002 2003 2004 2005 2006 2007 Bulgaria 15 23 54 109 Cyprus 20 57 65 75 65 16 13 10 23 23 Czech Republic 359 France 2,798 3,425 2,823 2,712 3,653 4,396 4,808 5,109 5,727 5,488 Finland 127 Hungary 172 176 192 191 195 199 178 214 251 234 Lithuania 24 24 27 28 30 30 31 31 36 40 Malta 1 4 15 19 27 27 27 24 24 Poland 564 601 658 715 769 812 1418 1504 1554 1601 Portugal 213 226 254 271 277 297 306 365 399 423 Slovakia 45 45 48 48 46 45 49 49 50 55 Spain 1 1 2 3 1 Sweden 30 26 22 19 15 11 9 8 8 Switzerland 1,080 1,067 1,111 1,197 1,037 985 1,022 1,090 1,086 1,083 UK 599 108 93 62 Index (1998=100) 100 115 105 106 123 138 160 170 186 189 Sources: Questionnaire responses (question 1A.4) Note : In the case of France - these figures show the number of total valid instructor ratings included in a licence which level is at least the CPL ; they do not show the number of instructors holding at least a CPL; and include all kinds of instructor ratings, including instructor ratings for private licences and for "little" type or class ratings. Table 33: Flight Training Instructors (holding at least a CPL) 1998
1999
Data on flight training instructors was only supplied by thirteen states. In many states the qualification appears either to have been superseded or fragmented to qualifications for particular types, without a general instructor qualification.
3.6
COMPARISON OF EMPLOYMENT TRENDS IN OTHER STATES
To provide some comparison of employment trends with other large aviation markets, we have collected data on the United States and Australia. Both of these countries are geographically vast and have a much dispersed population in comparison to Europe. Air travel and road transport are the predominant modes of transport, with little competition from rail. The United States has a tradition of a strong domestic market with many active players since airline deregulation took off in 1978. Competition has been extremely sharp involving high levels of entry into and exit from the market. With the notable exceptions of Southwest Airlines in the passenger field and Federal Express and UPS in the cargo and express fields few airlines have been consistently profitable. The Australian market shows some similarities with the American one. Distances are vast, with little road or rail competition as viable alternatives. Until deregulation in the 1980’s, Australia had a regulated duopoly of Qantas and Ansett Australia, with both providing the same domestic services. Qantas was also in control of the main international markets. Competition was limited and often unsuccessful. In 2000, Air New Zealand – already owning 50% of Ansett – took over the remaining shares. Shortly thereafter, the Australian
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government deregulated the domestic market, allowing foreign airlines to operate domestic routes. Virgin Blue successfully challenged the Ansett and Qantas duopoly. Ansett was already in trouble by then and was put into administration, ceasing operations in 2002. Currently, Virgin Blue and Qantas have a market share of 30% and 70% respectively, although this being challenged by more players, amongst them Singapore Airline’s LCC Tiger Airways. Virgin has also commenced a long-haul operation – vAustralia – in order to challenge Qantas on the international market. The chart below shows a comparison of trends in airline employment in the US, EU27 and Australia, reflecting the various evolutions set out above (Note: airline employment volumes in the US and the EU are of similar scale, whereas Australia’s market is substantially smaller). Airline Employment Trends Comparison (CAGR in brackets) 560,000 540,000 520,000 -3%
500,000 480,000 460,000
United States (-1%) 440,000 420,000
Europe
(+1%)
Australia*
(-2%)
20,000 0 1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
*Note: Only IATA members and Virgin Blue employees included Source:IATA, RATI, Annual Reports; Booz & Company analysis
Figure 24: Comparison of Airline Employment in the EU27, US and Australia
In the US in particular, significant decline in airline employees since 2000 is evident (following a period of very strong growth in the two years prior). The compound growth rate for the US is only -1% across the full ten year period, but is -3% in the 2000-2007 period. Airline employment in the EU, conversely, declined much less sharply and later. The decline in Australia can be traced to the demise of Ansett in 2001, after which the CAGR is +1%. In the next subsections, we examine further detail of employment in airlines in the US and Australia. 3.5.1.1.
United States
The next section describes employment trends in the various employment sectors within airlines, based on our survey of US government data.
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Data from the Research and Innovative Technology Administration (RITA) is the primary source of employment data given below. From this source, airline employment statistics for the 2005 – 2009 (years to March) period indicates employment by airline type as shown in the figure below: Trends in US Airline Employment 2005 - 2009 440
-2%
420 400
All Passenger Airlines
280 Network
260
80 Low-Cost
60
Regional
40 20 0 2005
2006
2007
2008
2009
Source: RITA
Figure 25 : US Airline Employment, 2005-2009 (March years)
Here we can see that the trends in employment across all airline groups is similar. For total airline employment, and that in network carriers, the average annual decline in employment is 2% across the period. For regional carriers, overall employment declined by an average rate of 3%, and for the LCC sector, employment levels were static. From the same statistics source, we have been able to source airline employee data by occupational group. Note that totals do not match the figures given above, thus some employment groups appear to be excluded (for example, management). US Airline Employment 1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Cabin Crew
66,571
78,205
83,685
75,553
73,507
73,272
71,997
68,444
72,409
71,989
Pax Handling
59,273
69,847
74,483
68,208
76,293
78,026
67,924
59,860
79,199
85,176
Pilots & Co-pilots
47,862
55,158
57,474
55,119
53,797
57,137
59,854
59,605
60,408
58,633
Maintenance
53,124
58,045
58,356
49,872
50,259
49,832
46,536
40,342
39,113
40,619
Cargo Handling Gen. Aircraft & Traffic Handling Aircraft Control Trainees & Instructor
49,124
51,063
55,477
52,498
41,416
38,343
33,073
32,541
28,192
29,346
36,949 4,323
43,314 4,093
41,616 4,404
37,763 4,514
32,943 8,428
35,241 3,873
51,704 4,806
49,011 3,052
33,953 3,042
30,607 3,389
2,760
3,314
4,121
3,190
3,221
3,288
3,337
2,771
2,761
3,690
6,065
7,679
4,939
4,199
2,045
1,389
1,293
1,157
1,093
1,128
Other Flight
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US Airline Employment 1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Personnel Aircraft & Traffic Handling Group 472 1,026 267 274 254 559 997 Sources: RITA ; Booz & Company analysis Table 34: US Airline Employment 1998 - 2007
749
2,889
350
Some features of the table are set out in the charts below, where particularly the fluctuation of passenger handlers is a notable development. Overall, many airline employment sectors fell into sharp decline after September 11 2001, with some of the largest carriers entering Chapter 11 to protect them against creditors until they could restructure their operations. Airline Employment in the United States Shown by Occupation Thousand
Thousand 60
90 Passenger Handling +4%
55
80
50 Cabin Crew +1%
70
45 Maintenance -3%
40 60
Pilots & Co-pilots +2%
35 Gen Acft & Traffic handling -2%
50 0 1998
30 2000
2002
2004
2006
0 1998
2008
Cargo Handling +4% 2000
2002
2004
2006
10
3.0
8
2.5 2.0
6
1.5
Acft & Traffic Handling (Group 1*) -3%
Trainees & Instructor +3%
4
Aircraft Control -3% 2 0 1998
2008
Thousand
Thousand
2000
2002
2004
2006
1.0
0.5 Other Flight Personnel -17% 0.0 2008 1998
2000
2002
2004
2006
2008
*Note: Group I refers to carriers with or less than $100m annual operating revenue Source: RITA; Booz & Company analysis
Figure 26: Airline Employment Developments by Occupation
Productivity in the United States since deregulation has risen as companies have been under strong competitive pressure. In the most recent years, however, data suggest that its rate of increase may have slowed. Output per employee, however, remains higher than in the EU. Most airports in the United States are generally operated by state or municipal entities. Employment levels in the occupational groupings detailed above have fluctuated, with a net increase of about 2% during the survey period.
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Airports in the US Total Employment 70,000 +2% 65,000
60,000
0 1998 1999 2000 2001 2002 2003 2004 2005 2006 Source: U.S. Census Bureau; Booz & Company analysis
Figure 27: Employment at US Airports
Although it is difficult to find information on employment in the US disaggregated by employer type (other than airlines and airports above), the US Department of Labor does provide statistics on occupational groupings. The below table shows that employment over the 1999-2007 period (of which, the above airline and airport employment is a subset). US Employment in Transportation and Transportation-Related Occupations Occupation
1999 2000 2001 2002 2003 2004 Vehicle operators, pipeline operators, and primary support
2005
2006
Airline pilots, co-pilots, and flight engineers 88,040 94,820 88,800 78,810 76,940 78,490 76,240 75,810 Commercial pilots 18,780 18,040 18,380 19,570 19,940 21,370 24,860 27,120 Air traffic controllers 22,620 23,350 22,990 23,410 22,610 22,260 21,590 23,240 Airfield operations specialists 4,510 4,580 5,390 5,910 4,670 4,810 4,510 4,760 Transportation equipment manufacturing and maintenance occupations Avionics technicians 15,560 15,360 16,340 21,710 21,020 22,310 22,490 15,360 Aircraft mechanics and service technicians 125,970 135,730 135,250 125,850 113,470 112,830 115,120 118,210 Secondary Support Service Occupations Flight attendants 123,310 126,380 115,750 104,360 99,910 101,980 99,590 96,760 Transportation attendants 22,780 23,550 25,910 26,580 28,440 27,730 24,810 20,790 Reservation and ticket agents and travel clerks 222,340 199,700 183,280 174,170 156,140 159,910 160,120 157,650 Other Aircraft cargo handling supervisors 8,090 9,960 9,070 8,920 8,580 7,460 6,210 5,620 U.S. Department of Labor, Bureau of Labor Statistics available at http://www.bls.gov/oes/current/oes_nat.htm
2007
78,250 29,180 24,180 6,210 16,300 118,780 97,010 20,690 167,390
4,690
Figure 28 : US Transport and Transport-related Employment, 1999-2007
From this table, a number of trends are discernible. In the case of “airline pilots, co-pilots and flight engineers” the trend shown is downward. This is an apparent contradiction of the upward trend shown in Table 34, but includes the flight engineer category which has generally become obsolete. Trends in employment of Air Traffic Controllers are shown in the figure below.
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US Air Traffic Controllers 1999-2007
25,000
+1%
24,000 23,000 22,000 21,000 20,000 19,000 18,000 17,000 16,000 15,000 1999
2000
2001
2002
2003
2004
2005
2006
2007
Source: U.S. Department of Labor, Bureau of Labor Statistics
Figure 29 : US Air Traffic Controllers 1999-2007
The main provider of air navigation services in the US airspace is the Federal Aviation Administration (FAA), a state entity. The sector has been stable with few striking developments in staffing during the period considered. By the late 1990s, the size of the controller work force had essentially recovered to the levels prevailing before the PATCO strike in 1981 (which was deemed illegal and led then to widespread terminations). Whilst a small decline in Controller numbers is evident from 2002, followed by an increase since 2005, the overall change in the 1999-2007 period is just 1% per annum average growth (note scale of chart). Direct comparison with the number of controllers in Europe is of little value, but we can compare the trends or changes in numbers over time. The figure below shows the indexed change in employment between 2001-2006 for each group. Comparison of Indexed Trends - EU versus US Air Traffic Controllers 2001 = 100
108
US
107 106
EU27
105 104 103 102 101 100 99 98 2001
2002
2003
2004
2005
2006
Source: Eurocontrol, U.S. Department of Labor, Bureau of Labor Statistics, Booz & Co analysis
Figure 30 : Indexed Changes in Employed ATCOS, EU27 versus US, 2001-2006
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Note that the indexed figure above is not a representation of absolute numbers, but rather one of trends. The base year is 2001, and changes shown are a percentage deviation from that year. In the case of ATCOs in the EU, employment growth is relatively steady, increasing at a slightly more rapid rate in 2004, but thereafter remaining quite static. Conversely, employment of ATCOs in the US shows more volatility with negative growth from 2002, followed by rapid recovery from 2004. The overall rise in ATCO employment numbers in this period is slightly greater for the US. As in the EU, productivity of air traffic control in the US has increased – suggesting that small increases in air traffic controller numbers is due to increased air traffic. The figure below indicates the average annual increase in each of air traffic controllers, air traffic movements, and passengers over the period 1999-2007. As shown, whilst air traffic controllers have increased by an average rate of 1%, aircraft movements have increased at 4% and passenger numbers by 2%. Trends in US Air Traffic Controllers and Air Traffic 1999-2007 +2%
+1%
+4%
1999
2000
2001
2002
Source: U.S. Department of Labor, Bureau of Labor Statistics, FAA
2003
2004
2005
2006
2007
Air traffic controllers Revenue Aircraft Departures Revenue Passenger Enplanements
Figure 31 : Trends in Air Traffic and Air Traffic Controller Numbers in the US, 1999-2007
The occupational group “Airfield Operations Specialists” are those whose duties include “coordination between air-traffic control and maintenance personnel; dispatching; using airfield landing and navigational aids; implementing airfield safety procedures; monitoring and maintaining flight records; and applying knowledge of weather information”. As such, there appears to be some cross-over with the duties of ATC Assistants in the EU, although direct comparisons are difficult to make. In the following chart, the indexed trend in employment for this group and for other identifiable ground-based occupations is shown.
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Comparison of Indexed Trends US Occupational Groups 1999 = 100
135 130 125 120 115 110 105 100 95 90 85 80 75 1999
2000
2001
2002
2003
Source: U.S. Department of Labor, Bureau of Labor Statistics, Booz & Co analysis
2004
2005
2006
2007
Airfield operations specialists Aircraft cargo handling supervisors Aircraft mechanics and service technicians
Figure 32 : Indexed Trends in US Employment, Ground-based Occupations
For these groupings of employees there is little homogeneity of trends. Airfield Operations Specialist numbers have fluctuated considerable, whilst Cargo Handling Supervisors have declined quite consistently (except for a brief surge in numbers in 2000). Aircraft Mechanics and Service Technicians have remained relatively static. Without a directly comparable occupational grouping, it is difficult to draw comparisons with EU industry employment. The single occupational group that appears directly comparable is Aircraft Mechanics. The figure below shows the indexed trends in employment of these staff in the EU27 versus the US. Note that the trends indicated do not depict absolute employment numbers, but rather the rate of change. Comparison of Indexed Trends EU27 versus US Aircraft Mechanics 1999 = 100
240 220 200 180 160 140 120 100 80 1999
2000
2001
2002
Sources: Questionnaire responses, U.S. Department of Labor, Bureau of Labor Statistics, Booz & Co analysis
2003
2004
2005
2006
2007
2008
EU Airlines EU Maintenance Firms US
Figure 33 : Indexed Trends in Aircraft Mechanic Employment, EU27 versus US
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As illustrated by the above figure, there has been relatively little change in the numbers of aircraft mechanics employed in the US and by EU airlines. Significant growth is apparent in the number of mechanics employed by independent maintenance firms in the EU (refer to Table 21) however it should be noted that the actual number of employees reported is small and not all States responded to this question in the Questionnaire. 3.5.1.2.
Australia
Airline employment figures for Australia look slightly different: although declining steeply in 2001 with the collapse of Ansett, overall employment has regained ground since (respective CAGRs -2% and +1% respectively). Airline Employment in Australia Shown by Occupation 40,000 35,000
9,000 +1% Total -2%
30,000
8,000
25,000
7,000
20,000 15,000
Cabin +4%
6,000
10,000
Handling -5% 5,000 0
5,000 0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
4,500
2,500
4,000
2,000
3,500
1,500
Other +3%
3,000
Maintenance -5%
Ticketing -4%
1,000 500
2,500 Pilot -3%
Cockpit
0
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Note: Occupations is only inclusive of International Carriers, so indicative only Source: IATA; Booz & Company analysis
Figure 34: Employment by Occupation in Australia
As in Europe, ground handling functions in Australia are carried out by both airlines and independent ground handling companies. We were able to identify at least 13 independent ground handling companies in Australia, but were not able to obtain employment data for these. Some firms, such as Menzies, are international firms present in many countries around the world. With regard to ANSPs, employment has declined by 4%. Australian air traffic control is conducted by Air Services Australia, which is a government entity. It is likely that the number of employees has declined due to technological efficiency gains, rather than a substantial decrease in the number of flights.
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Air Traffic Control Employment Air Services Australia 5,000 4,000 3,000
-4%
2,000 1,000 0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Source: Air Services Australia Annual Reports
Figure 35: ANSP Employment in Australia
In sum, developments in the United States and Australia have shown significant differences compared to Europe. Employee volumes in the United States are higher than in Europe, and appear more greatly affected by industry turbulence. The US domestic market is, however, more mature than the more recently liberalised internal market of the EU (with Australian deregulation occurring even later). Importantly, the US and Australian markets are more dependent on air traffic for long distance travel than the EU, where alternatives such as cars and trains are more viable. The latter point might indicate that the EU market should have been more greatly impacted by industry turbulence, however, the reverse appears to be the case.
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4.
TRENDS IN BUSINESS AND EMPLOYMENT STRUCTURE
Drawing on analyses provided by Member State Administrations (in the form of Survey results) as well as inputs from stakeholders and our independent analysis, this chapter attempts to identify trends in business development -- looking beyond the immediate global financial and economic crisis. With respect to the internal market, it focuses particularly on the issue of enterprise and employee mobility. The chapter commences with a presentation of the national views and concerns on the current state and future direction of the industry and the strategic implications for employment. We then follow with a description and analysis of structural trends in business organisation and employment structure that have followed the adoption of Community legislation to establish a competitive air transport market across the EU and the enlargement of the EU, with reference to selected examples and case studies including a specific review of the impact of Community membership on the structure of service provision in the Czech Republic and Slovakia. Here it is useful to recall the 18 States that responded to the Questionnaire, and whose inputs are included in this chapter: Countries that Responded to the Questionnaire EU15 (count = 9)
Belgium Finland France Germany Netherlands Portugal Spain Sweden United Kingdom
Newer EU States (count =8)
Bulgaria Cyprus Czech Republic Hungary Lithuania Malta Poland Slovakia
Other
Switzerland Total: 17 EU27 Member States + Switzerland Figure 36: Questionnaire Respondents
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4.1.1
Issues to Consider in Evaluating Responses
The views of regulatory authorities, although qualitative, are of particular value in this survey as the regulators are uniquely placed in terms of industry overview and direct observation of trends. Such qualitative survey is not without issues, however. A key issue is the problem of “short memories”: thus, a number of respondents referred, in comments on developments over the past ten years, in considerable detail to the economic downturn of the last year, which may not fully represent the trends that have seen European air passenger kilometres grow by 48% 1995 to 2004, and freight tonne km by 31% 1995 to 2005, according to Eurostat, and as demonstrated in Section 2.1.1 above. Not surprisingly, respondents are also more conscious of changes and impacts in their own national markets. Our analysis of survey responses suggests that this is likely to result in a general underestimation of changes in other markets that national carriers have expanded operations into (we identified a clear gap between perceptions of market penetration by foreign carriers, and that of respondents own national carriers in other markets). Such variance in perceptions is a natural consequence of the focus of national authorities on their own national markets.
4.2
OBSERVATIONS OF REGULATORY AUTHORITIES
Our questionnaire included a range of more general factual and analytical questions aimed at eliciting the views of experts in the national administrations and aeronautical authorities regarding the past and likely future direction of the industry and regarding the impacts on employment as influenced by Community policy as well as by market developments. These opinions are particularly valuable, as the regulatory organisations of each state are well placed to assess both general as well as individual development trends in the industry. The questions related to the air transport industry in the state as a whole, rather than to prospects for individual operators. In most cases respondents were asked to choose among a range of alternatives and provide choice and an importance ranking (usually across a 1-5 scale) as well as being given opportunity to insert comments or suggest alternatives to the choice of answers provided. The Survey was conducted on the understanding that results published would not name individual positions. 4.2.1.1.
Number of Operators Holding Licences for the Provision of Air Transport Services
Regulatory authorities were asked how the number of operators holding “AOCs for the provision of air transport services” has changed since 199770. To this question, 18 responses were received. New states have generally reported stronger growth in the number of operators registered in their state, than EU-15 states. Factors underlying are likely to include the pre-existing, relatively consolidated, structure of the market in the nine new Member States formerly associated within the Council for Mutual Economic Assistance (COMECON) and the more rapid economic growth enabled by Community convergence.
As noted in Chapter 2, our formulation in the Survey should have (more accurately) called for holders of Operating Licenses for transport services as opposed to “AOC holders.” Whilst all holders of Operating Licenses also hold AOC’s there are some AOC holders that do not offer transport services.
70
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Growth of Operators over Previous Ten Years Qn 2A.1a: How has the number of operators holding AOCs for provision of air transport services in your national registry changed during the 10 years since 1997? Please select one description. Grown Substantially (>25%)
3
Grown moderately or a little (25%)
1
Grow moderately or a little (20-25%)
1 5
Increased a little (
