Airlines Pricing Strategies & Human Resource Management

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Table of Contents

Introduction
Approaches to HRM Strategies in Airlines with a Budget Business Model
Approaches to HRM Strategies in Large National Air Carriers
Impact of High Personnel Management Costs
Relationship Between Airlines’ Incomes and Employees’ Productivity
Conclusion
References

Introduction

Approaches to human resource management (HRM) are those strategies that allow influencing the operational performance of companies and regulating such employee indicators as dedication, diligence, and productivity. In the aviation industry, maintaining an appropriate human resources control policy is crucial due to the high responsibility for the tasks performed. At the same time, it is believed that the financial background of the company may affect its approaches to personnel management and the introduction of effective interaction techniques.

Theoretically, the pricing strategies of airlines can correlate with the principles of employee-oriented work and influence specific practices promoted by the management, but in general, these impacts are insignificant and cannot be considered a priority. The purpose of this study is to determine the weak relationship between airlines’ pricing policies and their activities concerning HRM and to prove that, regardless of costs, competent control may be effective with different budgets. Such aspects will be examined as HRM approaches in low-cost airlines, relevant practices in large national air carriers, the impact of high personnel management costs and the relationship between companies’ incomes and employees’ productivity. Assessing these criteria may confirm the proposed thesis of a slight correlation between personnel management strategies and airlines’ pricing policies.

Approaches to HRM Strategies in Airlines with a Budget Business Model

The involvement of employees may require specific activities and costs, and airlines promoting budget business models adapt to such conditions. In order for low-cost carriers to be able to provide high-quality services, they need to maintain workers’ high motivation, but such an indicator as commitment does not depend on the final profit of the organisation (Huang, Rundle-Thiele & Chen, 2019). An opportunity to create an effective interaction system between the management and subordinates is achieved not only due to financial incentives but rather an increase in the company’s market credibility and valuable employee retention practices. Typically, low-cost airlines that are recognised by customers base their activities on increased attention to the needs of passengers, which is also reflected in a positive attitude towards service employees (Kalawilapathirage, Omisakin & Zeidan, 2019).

The financial responsibility of such carriers is less stringent, which, in turn, allows the management to focus on internal strengthening and improving the corporate culture (Lange, Geppert, Saka-Helmhout & Becker-Ritterspach, 2015). This, in turn, creates a favourable environment for promoting effective methods of influencing personnel. Regardless of a pricing policy promoted by a particular airline, its resources are sufficient to conduct basic analytical research and determine the degree of subordinates’ productivity and commitment. HRM practices in low-cost airlines are rather a knowledge but not a profit mechanism (Hansen, Güttel & Swart, 2019). As a result, a small number of hierarchy levels helps maintain high organizational productivity due to a close manager-subordinate interaction (Sengpoh, 2018). Thus, approaches to HRM activities in airlines with a budget business model are independent of pricing policies due to the possibility of promoting relevant practices freely and contacting employees.

Approaches to HRM Strategies in Large National Air Carriers

In large national airlines that have big profits, the potential for work with respect to personnel management is higher, but in general, their activity differs slightly from low-cost carriers. The existing practices of changes in corporate culture and customer interactions cannot differ much, and the approaches that are maintained today in the aviation industry are hardly so distinctive that they promote them in companies individually. Moreover, in some cases, passengers are dissatisfied with the service even after introducing certain innovations, which indicates the insufficient quality of management techniques implementation (Mathis & Jackson, 2010). Also, unlike small local companies with a budget business model, large carriers cannot create the conditions for the daily interaction of managers with subordinates (Gittell, von Nordenflycht, Kochan, McKersie & Bamber, 2009).

As a result, HR specialists need to adapt to an appropriate mode, which slows down the progress of work. There is an opinion that the workforce is homogeneous in any organization specializing in one area of activity, and a single strategy can solve personnel management issues (Sarina & Lansbury, 2013). Nevertheless, when taking into account the specifics of large air carriers’ activities, one can note increased tension and requirements for employees. Accordingly, as a reasonable argument, a proposal to implement diverse strategies may be appropriate in such a work environment (Sarina & Wright, 2015). Thus, despite the high revenues of large airlines, it is easier for low-cost carriers to implement and maintain a stable system of control over subordinates (Hunter, 2006). Therefore, the connection between the pricing strategies of large organizations and their HR practices is insignificant.

Impact of High Personnel Management Costs

Those airlines that spend significant funds on promotion can implement effective personnel management and control strategies, but this does not mean that their pricing policies will contribute to consistently high-profit growth. Loyalty programs, market recognition, and other aspects of authoritative activity maybe those factors that will enable price levels to influence supply and demand (Wehner, López-Bonilla, López-Bonilla & Santos, 2018). However, the costs of analytical activities will be directly proportional to the expenses on maintaining the status. Modern competition in the aviation industry among low-cost and national carriers is an incentive to search for cost-cutting methods and create alternative promotional techniques (Berman, 2015).

At the same time, focusing solely on one work area, for instance, human resources management, may be fraught with losses due to the lack of funds to control other areas of activities. The opinion that investing in HRM practices is essential is supported by many scholars because without appropriate analytics and intervention techniques, performance criteria will fall (Gittell & Bamber, 2010; Foster, Rasmussen, Murrie & Laird, 2011). Nevertheless, too high costs in this sphere will not have a positive effect on other areas of work since comprehensive support is crucial. Excessive investment in HRM in the airline industry may not be justified due to additional internal expenses caused by control gaps (Santana, Valle Cabrera & Galán González, 2019). Therefore, despite maintaining a high market level, pricing policies do not always address key roles in achieving consistently high HRM outcomes.

Relationship Between Airlines’ Incomes and Employees’ Productivity

The possibility of sufficient investment in HRM is achieved due to an airline’s incomes, which, in turn, can support different pricing strategies and, at the same time, earn both at high tariffs and customer loyalty. In those companies that have sufficient financial resources to provide employees with the necessary conditions for productive activities, the degree of subordinates’ loyalty, along with the managers’ authority, is high (Cullinane & Dundon, 2015). Such a parameter as service behavior is an important element of the corporate culture of the aviation industry, and its level may reflect how effective personnel policies are (Lee & Hyun, 2016). Consequently, the involvement of subordinates in active work requires appropriate motivation.

Airline profits often do not depend on a specific region or a target group of passengers, but available assets may be distributed to meet the needs of both employees and clients (Lopes, Ferraz & Rodrigues, 2016). A large influx of customers provides the need to improve the professionalism of subordinates, and a significant part of the funds received from both local and international transport can be used for this purpose. According to the aforementioned conclusions, the diversity of HRM practices is not the value that affects the quality of training of aircraft personnel. As a result, companies with large revenues can advance human resources management successfully, but the role of capital will not be key (Abbott, 2006). Moreover, profit is divided economically because regardless of the amount of capital, additional costs are constraints (Lee & Moon, 2018). Therefore, airline revenue is not the main factor contributing to the promotion of innovative and potentially effective HRM strategies due to additional significant criteria, for instance, customer loyalty and recognition.

Conclusion

Airline pricing strategies have little relationship with companies’ approaches to HRM practices, and organizations’ revenues are not the key factor in interacting with subordinates and stimulating their effective work. The introduction of appropriate techniques for increasing employees’ motivation is possible both in large and small companies, and low-cost carriers can also implement the tasks of staff training successfully. The impact of high costs on human resources management cannot be regarded as a priority criterion for success because, in addition to the financial aspect, various factors affect employee commitment. Also, large airline revenues are not a determining component of the success of HRM practices since costs grow in direct proportion to incomes, and the share of investments does not determine the quality of control. Personnel-oriented activities and leadership interest in training professional employees are the crucial characteristics of any HRM practice.

References

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