The terrorist attacks on the USA on 11 September 2001 hit Norwegian civil aviation hard. The period from September 2001 to early summer 2002 have seen significant reductions in passenger numbers and a dramatic loss of income for most airlines, with substantial redundancies. The crisis was also instrumental in bringing about the controversial takeover by SAS, the largest airline in Norway, of Braathens, the second-largest.
As with most other European countries, the terrorist attacks on the USA on 11 September 2001 hit Norwegian civil aviation hard, resulting in significant reductions in passenger numbers and a dramatic loss of income for most airlines. Although the industry was already under severe pressure as a result of falling demand and poor investments prior to the attacks on the USA, these had a knock-on effect that exacerbated the situation for most airlines and related industries. Since then, significant redundancies have been announced and carried out, and there has also been a slashing of routes, in particular domestic routes. The crisis was also instrumental in bringing about a controversial takeover by the largest airline in Norway, Scandinavian Airline Systems (SAS), of the second-largest, Braathen ASA. The effects are that almost 1,000 jobs at Braathens are now at stake, and that SAS has a virtual monopoly in domestic aviation, which many fear will further undermine political ambitions to bring prices down and improve the service and coverage of air transport in Norway.
Civil aviation and industrial relations
Norwegian civil aviation has traditionally been dominated by a small number of actors. In domestic aviation, the domination of SAS was for a long time challenged by Braathens, which at times controlled almost 50% of the domestic market. Following its takeover of Braathens, SAS - which also owns Norway's third-largest airline, Widerøe- now operates more than 95% of passenger flights and almost 100% of domestic airfreight transport in the Norwegian market. The industry, including airport-related activities, airline companies and air traffic control, employs around 14,000 people. Indirectly, more than 26,000 jobs are affected by developments in this industry.
In industrial relations terms, the civil aviation sector is characterised by a high trade union density rate, a significant number of unions and a relatively blurred bargaining structure, with a myriad of collective agreements. Affiliates of three of the four main union confederations - the Norwegian Confederation of Trade Union (Landsorganisasjonen i Norge, LO), the Confederation of Vocational Unions (Yrkesorganisasjonenes Sentralforbund, YS) and the Federation of Norwegian Professional Associations (Akademikerne) - are represented in the sector, in addition to a number of smaller independent unions. The employer side, on the other hand, is marked by a high degree of coordination, as the Air Carriers' Association (Flyselskapenes Landsforening, FL) is party to most of the collective agreements in the sector. In addition to the larger branch-level collective agreements, there are also a number of company-level agreements. A recent study carried out by the FAFO Institute of Applied Social Sciences found that the fragmented union and collective agreement structure poses great challenges for coordination and cooperation among trade unions in this sector in Norway (Collective agreements in Scandinavian aviation, Bjørn Andersen, FAFO, 2001).
SAS/Braathens merger
Following the 11 September attacks, the market conditions for both SAS and Braathens worsened and both companies suffered substantial financial losses as a result of a dramatic fall in passenger numbers. A process of 'downsizing' was initiated in both companies, with a number of employees being made redundant. On the basis of these developments, the Norwegian Competition Authority (Konkurransetilsynet) reversed its previous rejection of SAS's bid to take over Braathens in May 2001 (NO0106134N), and in October the takeover was given the go-ahead (NO0111125N). SAS formally acquired Braathens on 31 December 2001.
In spring 2002, the two airlines started the process of harmonising their activities. The merger of the two companies is expected to generate significant financial 'synergies' through a coordination of flight schedules and a better utilisation of resources in their overlapping business areas. Prior to these negotiations, the management of Braathens stated its intentions to enter into a dialogue with its employees over workforce reductions, which according to both sides seemed inevitable. However, in late May 2002 it became evident that part of the deal between the two companies was that Braathens had to outsource parts of its ground service activities, and close down the remainder. As a consequence, over 1,000 Braathens employees will be made redundant.
The one-sided nature of the deal came very much as a surprise to the trade unions at Braathens, which state that they feel betrayed both by Braathens management and by the unions at SAS. The SAS unions, some of which are also members of the same confederations as the unions at Braathens, supported the deal, and there were even speculations in the media that SAS unions had been contributors to the agreement that was entered into by the management of the two companies. However, the Braathens employees have warned that job cuts taking place without the participation of the employees concerned will be fought with all means available.
Legal measures will also be taken. The Norwegian Union of Employees in Commerce and Offices (Handel og Kontor, HK), which organises a substantial proportion of the employees affected by the redundancies, argues that the decision to shut down Braathens ground activity is in breach of the intentions of the Act relating to Worker Protection and Working Environment (AML), and its Chapter XII A concerning the rights of employees in the event of change of ownership of enterprises. The takeover is, according to HK, a transfer of ownership under the terms of AML, which demands equal treatment of all employees affected in the event of redundancies. Furthermore, the closing down of its ground activity is not at all, according to the unions, a necessity for the continued operation of Braathens, which is an additional requirement of the AML, and is therefore also a breach of the legal framework. Within this context, LO regards the company's decision regarding outsourcing as an important matter of principle, which may have consequences beyond the aviation industry .
Commentary
The SAS/Braathens merger illustrates the difficulties of coordinating trade union activity in the civil aviation industry in Norway. The fragmentation of union interests makes it hard for trade unions to coordinate their strategies vis-à-vis the employer, and thereby counter companies' restructuring and redundancy measures. One may argue that the merger and the redundancies were inevitable, and that job cuts would have been effected regardless of whether the two companies merged or not. However, it is clear that in this case the various unions at Braathens and SAS did not communicate during the merger process, and that a significant share of the employees affected by the merger were thus largely ignored. Although attempts have been made to achieve coordination in the past, among others by LO, they have largely failed. One reason for this is the fact that the nature of civil aviation means that the industry lends itself to individual action, and this has allowed unions, especially those representing key personnel, to use their positions to acquire substantial gains and favours.
As is common in Norway during processes of workforce reduction, the management of SAS has pledged that most of the redundancies will be accomplished through voluntary measures, and as such no employees will lose their jobs in the first round of cuts. However, at the end of the process it is estimated that around 300-400 employees will have to be made involuntarily redundant. Braathens is also cooperating with the Labour Market Administration (Aetat) to help those who are made redundant.
The monopoly that SAS has now obtained is controversial and consumer organisations, in particular, have reservations about its effects on the situation in the Norwegian aviation industry. Many commentators believe that the drop witnessed recently in passenger numbers is not just a result of a general slump in international aviation, but also the fact that it is too expensive to travel by plane in Norway. Some indications suggest that ticket prices have increased considerably over the last couple of years. In order to bring prices down, there are calls from many quarters for political measures to encourage increased competition from low-price airlines, as well as measures to reduce taxes and duties. One important move the government has taken in this direction is to impose a general ban on airline bonus schemes, but the effects of this measure remains to be seen, taking into consideration the fact that foreign companies are allowed to maintain their schemes. It may, however, encourage foreign companies to invest and establish themselves on domestic routes in Norway. (Håvard Lismoen, FAFO Institute of Applied Social Sciences)