REPORT BY RICHARD PINKHAM IN LONDON
Training budgets are coming under increasing pressure as the effects of the downturn take hold. But, in scrimping on training, airlines may find themselves in a weak position when an upturn arrives
Conventional wisdom suggests that when times get hard, management training and education are among the first spending areas to come under pressure. Since times have never been harder than following the 11 September terrorist attacks, trainers have good cause to feel vulnerable. Despite some early signs that airlines have not been quite so quick to abandon education this time, most training organisations believe that cutbacks are inevitable and many have been busy reassessing the role that they play.
The initial impact has certainly not been as bad as feared, with most training institutions reporting that the expected sharp falls in attendance have yet to materialise. Head of IATA's education arm - the Aviation Training & Develop-ment Institute (ATDI) - Jean-Jacques Bourgeault says his department had "prepared all sorts of arguments on why training is more necessary now than ever, but so far hasn't had to use them".
But Bourgeault and other department heads concede that this may simply be a function of the non-refundable nature of course tuitions, and that the future may not be as kind.
Peter Morrell, head of the Air Transport Group of Cranfield University's College of Aeronautics, agrees that it is too early to gauge the level of future bookings, but he raises concern that the course cancellations made so far have been by airline-sponsored participants. He predicts that whatever funds the carriers maintain for training will be dedicated to operational courses rather than managerial ones.
Indeed, it is probably unrealistic to take too much cheer from these early returns. Lufthansa, which conducts broad-ranging training courses for its management personnel, has said that its level of future training is in doubt as every cost item is being scrutinised.
For instance, since 1996 Lufthansa has collaborated in running the Leadership Programme with Cranfield University's School of Management - a business school run separately from the College of Aeronautics. This three-part training workshop is designed to inculcate general management excellence in selected mid-level staff. This year, however, Lufthansa has reacted to cost pressures by shelving the course for six months and will adopt a wait-and-see approach on the question of whether it will be resumed next year.
Theory versus reality
As strategic consultants are keen to point out, management training should be seen as more crucial, rather than less, during periods of downturn. Staff cuts will result in smaller management teams which are then expected to handle more work. And not only is there greater pressure on the remaining staff to maintain efficiency but also to deal with recovery when it comes.
Yet while there is general agreement on the theory of investing in human capital, in reality there remain questions over the practicality of making such investments in the present climate. Joel Antolini, vice-president with the Airline Planning Group consultancy and a former marketing director at US Airways, says that, at the moment, training is a luxury in which airlines are in no state to indulge themselves.
"In theory," he says, "additional training for management staff is a great use of resources. However, at a time when budgets are under constant attack and everyone's workload has been increased several times over, are you, as a manager, going to spend several thousand dollars on a course and lose a key person for two weeks? Doubtful."
Professor Dale Doreen, head of Concordia University's IATA-affiliated Aviation MBA programme, also concedes that training is one of the first things to be thrown overboard when the financial weather gets rough. He predicts that training will definitely take a hit, especially those courses that depend on airline-sponsored students.
Doreen believes, however, that slashing training budgets is a short-sighted strategy. He recalls that airlines all but abandoned management training during the slump of the early 1990s, and were consequently less able to manage the growth that came with the ensuing upturn. "The airlines should make sure that the people they keep are well trained," he says. "The thing that will get and keep them out of trouble is a well-trained management workforce. Management is the key to running an airline and keeping it profitable."
Professor Roger Wootton agrees. His City University's MSc in Air Transport Management programme does not aim to create front office managers, but to help line staff understand managerial thinking and apply it to their own work. "The airlines have gone into survival decision-making," he says. "However, they do have to look at the long term, and education is about the long term. Airlines must still use their under-utilised resources - pilots, flight crew, ground staff - towards the effective management of their companies."
Doreen, however, is not confident that airlines understand this. He also feels this low prioritisation of management education is symptomatic of what he perceives to be general shortcomings in the industry's leadership. "Airlines are not terribly visionary and one could infer from the fact that they never make money, that they are not terribly well managed," he says.
For her part, Dr Christine Communal, co-director of the Cranfield/Lufthansa Leadership Programme, says she understands the rationale behind suspending the courses, and that the decision to place the Leadership Programme on hold was in fact reached by Lufthansa and Cranfield in tandem. Both parties felt that conducting the course when management at the German flag carrier was preoccupied with recovery and the need to trim costs would not have been a good decision.
In light of this, Air France's approach is perhaps surprising. Chairman Jean Cyril Spinetta has said that the carrier will not repeat its mistakes of the early 1990s, when it shut down almost all of its non-operational or safety training and consequently struggled to compete when air travel boomed a few years later.
Instead, the company will take a longer-term view. While Air France will suspend management training with outside contractors, it will maintain investment levels in its in-house management and commercial institutions.
Knowing that carriers which take a view similar to that of Air France will probably be in the minority, training providers appear to be changing their offerings in an attempt to remain relevant and valuable. Bourgeault at IATA says ATDI plans to insert material on financial management in times of recession, managing a shrinking market and downsizing.
Similarly, Wootton at City University says that his faculty has modified its courses "to place even more emphasis on cost containment in management, as well as the management of decline", something, he states "that is much more difficult to conduct than the management of expansion". In anticipation of the Leadership Programme's resumption, the faculty at Cranfield also is busy designing a module on crisis management.
The benefits provided by training for those who undertake or sponsor it should not be underestimated, and here management training scores well, as both airlines and employees extol its virtues. Even those managers who wonder whether they can afford to send staff for extra training appear unanimous in recognising the value it can add.
And employees know only too well that extra value brought to the performance of their duties can make the difference between keeping and losing their jobs. Thus it is with understandable satisfaction that Wootton says: "I have had 20-30 students contact me recently to say that their MSc has been an invaluable aid in retaining their positions."
Source: Airline Business