Project Management

As the legacy airlines of the United States restructure themselves for the competitive industry environment of the 21st century, traditional ways of doing business are evolving in a manner that permits established air carriers with high operational costs to reduce their operating costs to a level allowing them to compete on a cost basis with upstart low cost airlines. Labor and fuel are the biggest expenses burdening the airline industry. Significant changes in the operational model illustrating how aircraft ground handling and passenger service functions are provided in smaller, non hub cities with few flights and low employee productivity is under development.

Historically, most major legacy air carriers in the United States utilized their own staff in almost every location to which they provided service. Often times these "outstations" have very few flights spaced throughout the day which provided for frequent periods of employee inactivity thus resulting in low productivity levels. Work rule requirements (many established through employee lucrative, old school collective bargaining agreements) for items such as employee scheduling and the ratio of part to full time employees limited scheduling flexibility and potential efficiencies. Many airlines have managed to bargain new agreements with unions that have allowed for changes in the staffing of smaller cities through the increased use of part time employees or the outsourcing of many former union functions in "non hub" locations. This has resulted in the increase usage of vendor companies to provide aircraft ground handling and passenger service functions resulting in labor cost savings due to lower wage rates and higher employee turnover (less expense related to employee longevity).

However, it is a complex process to transition an airline operation to a vendor while maintaining flight schedule integrity, customer service and regulatory standards. The following will illustrate operational management theories and tools necessary for a project manager to successfully coordinate and manage the outsourcing of one a small, non hub airline city ground operation. The operating air carrier will not have the luxury of suspending any operations for the sake of transitioning the operation to a vendor. The project manager will need to develop a means to transition the station from the existing employee group to the vendor with out sacrificing safety, regulatory compliance or customer service. Time is critical in getting the project started as there is pressure to reduce employee costs as quickly as possible. A follow up plan will also need to be a part of this project to monitor the vendor once they are in place in order to avoid costly safety issues, regulatory violations, or decreases in the level of customer service. The project manager will need to communicate expectations with the local vendor manager but will not be responsible to write a vendor contract or to negotiate terms with the vendor (this will be done by a separate department).

The first step in the project will be developing the communication plan. The manager of the city operation will need to be educated on the entire process. Unions representing the employee groups will need to be notified and the Human Resource department will need to be prepared to deal with outgoing employee issues. Additionally, that manager will need to communicate the restructuring process to the employees being affected.

Once notifications have been made, the communication process will focus on maintaining dialogue between various parties involved in the transition. The city manager will be the hub of this communication activity and will be primarily responsible for tracking progress through the use of a Gantt chart (exhibit 1). Any completion indicated on the Gantt chart will be the result of the completion of a series of checklists associated with each area of operation.

In addition to the communication requirements, the Gantt chart will also track the requirements from the supplier. It will be the supplier's responsibility to recruit employees from the current employee group and from other sources. The vendor will be responsible to administer training (within the guidelines and standards provided by the contracting party) and the coordination of any technology support needed for the training (computers).

To help facilitate the actual transition of the operation, an assistance team of subject matter experts will be recruited from elsewhere in the

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