Management education and training was one of the first targets for cost-cutting when the airline industry looked for a path to recovery. Now a wind of change has swept through the training sector as airlines, schools and students adapt to the new realities
It has been more than a year since the airline industry descended into crisis. In the aftermath, as companies made cutting costs their priority, one of the sectors most affected was management education and training. Not directly related to income generation and bringing largely unquantifiable benefits, it was an easy target and was among the first cost areas to suffer wholesale cuts. Now, a year later, the sector and its three stakeholders - training organisations, airlines and students - have all reacted to the new landscape by modifying their approach to management education.
If the carriers have needed to adapt to survive, so too have the institutions whose mission is to provide them with management training. Blaise Waguespack, co-ordinator for the USA's Embry Riddle Aeronautical University's MBA in aviation programme, says the university's full- and part-time courses have both been victims of the cuts. The full-time MBA course has seen a fall in matriculating students, while the latest offering of its executive education programme was delayed by four months dut to lack of corporate sponsorship.
Waguespack adds that the shortfall in students for the full-time course is partially a result of potential candidates seeing the financial difficulties faced by the industry, problems that often translate into lay-offs in airline management. "Obviously, entering such a difficult industry is less attractive," he says. "This naturally has an impact on our application levels."
In response to these problems, the university programmes have modified their missions and the way they market themselves to prospective students. Cranfield University's well-established MSc in air transport management, for example, has looked further afield for students to keep its classrooms full. The course's once UK-intensive student body now has a decidedly more global feel.
More indicative of the change in the sector is the recent shift in focus at Concordia University's international aviation MBA course, which used to concentrate on the airline sector, but has begun to spread its focus more broadly across air transport.
Value of training
When interviewed last year, Dale Doreen, director of the Montreal-based programme, expressed doubt that airlines would ever appreciate the value of dedicating resources to training their management staff, a failing he linked with the industry's overall financial performance.
As well as changing the focus of its course to include such areas as air navigation system operations, airport marketing and corporate jet fleet management, Concordia has actively recruited students from those sectors. Its efforts have included offering scholarships to prospective students, as well as initiating formal relations among associations such as the Airports Council International, the National Business Aviation Association and the Civil Air Navigation Service Organisation.
The initiative has achieved its desired results. The IAMBA programme, which has seen applications and enrolment in its full- and part-time programmes increase, has in recent years seen the percentage of its students directly tied to the airline industry drop from 85% to less than 50%.
New focus
Change has also been the key element in how the airlines view and undertake management training. Here, the change is in the form of a new focus on which curriculum adds the most value and which carriers are active in the arena.
Last year, Lufthansa was forced to cut 20% from its training budget, and the funding for its Lufthansa School of Business - a "virtual university" that works with 10 business schools around the world to train the carrier's management staff - is still not back to normal. But programme head Dr Michael Heuser says this continuing shortfall does not mean Lufthansa values management training less, but it is merely a necessary, temporary, cost-saving measure.
"After 11 September, we had to reduce investment in several areas, such as aircraft and information technology. Human capital was one of these areas. When the situation improves, we will be in a position to return to our previous levels of investment."
Heuser also says the changed environment means it is asking for a change in the the focus of the curriculum offered by its business school partners, which include France's INSEAD, the London Business School and the Indian Institute of Management in Bangalore. Lufthansa and its partners had tended to design courses that focus on three areas: leadership development, strategy, and communication and dialogue. For now it is downgrading the importance of curricula related to the first.
"Strategy and communication are the two issues most pressing for the company," says Heuser. "Our leadership is well established - we can delay training in that area for a year. But if we downgraded communication skills at this point, we would be putting ourselves in a bad position."
Air France, for one, has no intention of changing its formula. The French flag carrier was among the few airlines that last year said they would basically leave unchanged the level of support they gave to management training. The company said previous administrations had reacted to downturns by slashing training budgets, leaving its management team unable to orchestrate growth effectively when conditions improved - a mistake the airline vowed not to repeat.
A year later, Air France says it will continue this tack. Although it says the benefits of training managers in such areas as corporate finance, marketing and supply chain management are not easily quantified, it believes they outweigh the costs.
Head of the Air France training institute Beatrice Gosset says the carrier will also continue its policy of outsourcing almost 90% of its education services. It does this not only for cost reasons, but also because it recognises the value of managers learning management techniques used by other organisations and in other sectors of the economy.
Low-cost interest
An interesting trend in Europe also comes from the type of airline that are now seeking management education. Roger Wootton, head of City University's MSc in air transport management programme, points to growing interest from the regoin's fast-expanding low-cost carriers. "Although they are known to be very lean on costs, as they grow, they seem to be taking a longer-term view than in the past, saying that they don't want to find themselves in a state where their strategic management relies on just a few people," says Wootton.
EasyJet, now Europe's largest low-cost group, is a prime example. The company says that for two years it has made enhancing manager qualification a key corporate priority, and this became even more vital after its recent acquisition of Go. "As we got bigger, we realised we would have to take steps to ensure we didn't get too big to be able to operate efficiently," says easyJet. "Management education is a key component of that process."
EasyJet has Luton University and Cranfield both as near neighbours to its Luton base. The carrier works closely with these colleges, as well as the Open University (the UK's distance learning institution) to provide specialist training and it supports managers who elect to pursue part-time MBAs. Change management, not surprisingly among the key courses on offer. The carrier says its strategy is based on the belief that "you have to promote and facilitate the development of your people if they are to stay happy in their jobs". This notion is emerging across the industry as one of the biggest rationales for funding management education.
Susan Thompson, principal consultant of the air transport practice at executive search firm Odgers Ray & Berndtson, says airlines are focusing on training to achieve two vital ends. First, with the costs of employee turnover becoming better understood, carriers are focusing on education to keep their most talented managers satisfied at work. Second, they are realising it can be more cost-effective to enhance the skills of existing employees rather than recruit new staff to fill holes.
As airlines and educational institutions have changed the way they view the training process, so too have the students who undertake aviation-focused degree programmes. Although the programmes used to be viewed as a reliable path into middle management with an airline, the current employment picture at most carriers makes this idea impractical at best and perhaps even undesirable. But air transport continues to exert a curious pull that makes people want to work in the sector.
One MBA student, trying to explain the attraction of a frequently troubled industry that offers lower compensation than many others, suggests that perhaps there is, after all something addictive about the smell of kerosene. This apparently inexplicable pull may still persist, but students are discovering they can get their kerosene fix by working for other segments of the aviation industry. Like the educational institutions themselves students are looking more broadly at the market for graduates with air transport qualification.
Cranfield programme head Fariba Alamdari says that the percentage of graduates who will work for the airlines has fallen by half, with the rest heading to other segments of the aviation industry. Indeed, Alamdari says part of the reason Cranfield has not lost applicants or students is that its degree qualifies students "not only to work for airlines, but also with other areas of the industry, such as consulting firms or investment banks". This experience is echoed at other institutions.
Waguespack at Embry Riddle says that traditionally, about 80% of MBA students have joined a carrier after graduation, but now that figure is closer to 60%. Correspondingly, the 10% that used to enter the airport sector has grown to 25-30%.
Dire position
Given the dire position of airline recruitment, some students are also taking a different route when selecting their graduate course. One area on which aviation enthusiasts are focusing is courses that prepare them to enter industries that work closely with the airlines, but are not prone to the same cyclical swings. The UK's University of Surrey offers an MSc in e-tourism, and has used its long-standing presence in the hospitality sector to develop a strong focus on flight catering management. Surrey even established the world's first chair in the subject, backed by the International Flight Catering Association. Graduating students, some of whom have come from the airline industry, routinely go on to work for LSG SkyChefs and other in-flight caterers.
But students have not turned their back on the airline industry altogether. A good number of graduate students go to school aiming to continue in the airline industry in spite of - perhaps even because of - its current difficulties.
Catrin Drawer, an aviation MBA student at Danube University in Krem, Austria, admits some of her colleagues in the programme are using their education to help them get out of the airlines and into one of the more reliable and lucrative parts of the airline industry. However, others - including herself - still have the carriers as their top priority.
"I want to be the best qualified when the decision about who to lay off is made," she says. "I will use my education to be prepared to meet the challenges facing the airlines and to stay in the industry."
REPORT BY RICHARD PINKHAM IN LONDON
Source: Airline Business