Alaska Airlines Negatively Affecting The Airline

Alaska Airlines ran its business satisfied with complacency and dependent on customer loyalty and goodwill (Avolio, Patterson, & Baker, 2015). While Alaska Airlines was thinking the business could sustain this practice, many changes were occurring that would have a ripple effect and adversely affect the airline (Avolio, et al., 2015). One executive stated it started as far back to 1999 when the airline was succeeding despite themselves due to fortuitous fuel costs and a good economy” (Avolio, et al., 2015). In the 1990’s, the Airline lacked the motivation to change “it’s ok to be late, as long as we’re nice” way of thinking under the leadership of Ray Vecci, CEO from 1990-1995 (Avolio, et al., 2015).
Analysis and Diagnosis
Analysis and
• Economic impact of the dot.com and post 911 Alaska airlines lost 118.6 million in 2002
• Other major airlines filed for bankruptcy which allowed them to renegotiate contacts allowing them to be operated with lower overhead costs
• Alaska Airlines had a labor cost disadvantage due to the salaries of pilots, flight attendants and ramp workers being the highest in the industry (Avolio, et al., 2015)
Analysis and Diagnosis: Impact
Even with all the problems that have been identified over the years, several were key milestones that prompted the urgency for change, the 2000 crash of the Alaska Airlines jet MD-80 and 911. These events required change within Alaska Airlines, but also with the airline industry itself. While other airlines were filing bankruptcy and restructuring to save their business, Alaska Airlines chose a different route, for management to convince employees of the need for reductions and expected the employees to make the personal financial sacrifice for the company. Executives took it a step further by deciding that binding arbitration was a better route than contract
The voluntary leave package was implemented to reduce the number of managers and improve communication. This cut resulted in between $5 and $10 million to overhead expenses. The FAA at the same time had developed an action plan because of the investigation of flight 261 and management replacements had to be hired. In September 2004, 350 jobs were eliminated because of the closure in Oakland and outsourcing of heavy maintenance checks in Oakland and consolidated maintenance checks in Seattle. The next big change of the outsourcing of the fleet service with the intention to focus on core competencies. What the airline failed to anticipate was how the workforce was going to be affected and not just in the number of employees left. The ripple effect was that employees would not feel safe in their jobs, they were no longer committed to the airline. Employees would leave and just like with the employees who were let go, the knowledge and experience were a great loss to the