Data Review

Data Review

Employment in the Airline Industry

Airlines report employment levels to the federal government on a monthly basis.1 The release of the employment numbers on the Bureau of Transportation Statistics (BTS) website and through monthly press releases allows tracking of employment trends in the industry resulting from the financial crises experienced by many airlines after the terrorist and recession events of 2001. The employment numbers reflect the resultant reduction in the network carriers' operations and the subsequent growth of low-cost and regional carriers.

BTS makes year-end (December) airline employment data available online.2 These data are supplemented by the monthly press releases, which BTS began reporting in March 2005.3 Using these BTS data, analyses of the changes in the number of airline employees can be performed by business model, revenue size, or individual carrier.

The best representation of the current airline industry structure is a business model definition, which contains three carrier groupings: network, low cost, and regional. Network carriers use a traditional hub-and-spoke system for scheduling flights. Low-cost carriers operate under a generally recognized low-cost business model, which may include a single passenger class of service, standardized aircraft utilization, limited in-flight services, use of smaller and less expensive airports, and lower employee wages and benefits. Regional carriers provide service from small cities and primarily use smaller jets. Regional carriers are also used to support larger network carrier traffic into and out of smaller airports to the network carriers' hub airports.

The BTS online database uses an operating revenue classification system with three major categories: majors, nationals, and regionals.4 Major carriers have annual operating revenues above $1 billion, national carriers have operating revenues between $100 million and $1 billion, and regional carriers have operating revenues less than $100 million. The regional category may not include the same carriers under the revenue size definition and the business model definition.

Using the business model classification, there are seven network carriers (Alaska Airlines, American Airlines, Continental, Delta, Northwest, United, and US Airways) and eight low-cost carriers (Air Tran, America West, ATA, Frontier, Independence, JetBlue, Southwest, and Spirit). December 2004 employment data provided by the airlines shows that American Airlines was the largest employer (71,232 full-time personnel) in the industry (table 1). American became the largest employer in 2001, the year it acquired the assets of Trans World Airlines. United was the second largest network employer in December 2004 with 54,460 full-time employees, followed by Delta (53,394). The remaining network carriers all employed less than 40,000 full-time personnel each.

All network carriers experienced employment growth throughout the 1980s. After a slowdown during the early 1990s, precipitated by the 1991 recession and the Gulf War, the number of network carrier employees began to increase again in 1995. However, immediately following the 2001 terrorist events and the simultaneous mild U.S. recession, employment decreased for the network carrier group.

Between December 2000 and 2004, all the network carriers reduced their numbers of full-time employees; however, certain carriers were particularly hard hit. The total number of US Airways full-time personnel decreased by 44% from December 2000 to 2004, and United experienced a 40% reduction in their full-time work force. The other five major carriers reduced their total number of full-time employees by approximately 20%, except Alaska Airlines, which sustained a 4% loss.

Southwest Airlines employs the most personnel among the low-cost carriers. Its December 2004 employment rolls indicate more than twice the number of full-time employees (30,749) worked for Southwest than the next largest employer, America West (10,129). The remaining low-cost carriers employed less than 10,000 full-time personnel each.

As a demonstration of the growing strength of low-cost carriers, Southwest, America West, and ATA generate sufficient revenues to qualify as major carriers. Furthermore, Southwest employs more people than two of the network carriers (US Airways and Alaska Airlines).

It is difficult to analyze historic trends for the airline industry because of an evolving carrier population and the financial demise of previously qualifying airlines. Among the network airlines operating in 1970, most had their highest employment levels before 2001. From December 2000 to 2004, the number of full-time personnel employed by network carriers decreased 31%5 (table 2). During the same time period, employment among seven low-cost carriers reporting to BTS throughout the entire period (excluding Independence Air) increased 17%.

New BTS monthly employment statistics show that the reduction in the number of network carrier employees has slowed, as has growth among low-cost carriers. In December 2004, January 2005, February 2005, and March 2005, full-time employment among network carriers showed decreases ranging from 3.5% to 5.3% (table 3). (The data comparisons presented here are for the same months in 2003 and 2004 or 2004 and 2005, not a full year of data.) Even low-cost carrier full-time employment experienced negative growth in the most recent period (March) at -0.3%.

Regional carrier data are also available in BTS press releases and online. However, not all of the currently reporting carriers were required to report until 2003, thus only 8 reported in 2000 and 13 reported in 2004, making comparisons over time problematic.

Raw data on airline employment are available on the BTS website (see footnote 2). Certificated Carriers (Full-time and Part-time) provides employment data beginning in 1970, and P10—Annual Employee Statistics by Labor Category, covering 1998 through 2003, provides detailed information for each airline by labor category and geographic groupings. Among the 15 labor categories detailed in the P10 database are pilots and co-pilots, maintenance staff, and cargo handling and other flight personnel. The four geographic groupings in the P10 database are domestic, Atlantic, Latin America, and Pacific. Low-cost carriers are almost exclusively domestic operators.

BTS will continue to issue monthly press releases with the most current data and employment trends. Using these press releases, it is possible to supplement the online databases with monthly data. Finally, the press releases provide documentation of business model changes by carriers, resulting in new groupings.

For further information on this topic, send email to answers@bts.gov or call 1-800-853-1351.

End Notes

1. This includes all carriers that operate at least 1 aircraft with a carrying capacity of 18,000 pounds (passengers, cargo, and fuel). Regional carriers were excluded from reporting until 2003.

2. Available at www.bts.gov/programs/airline_information/number_of_employees/.

3. Available at www.bts.gov/press-releases.

4. This system of classification is based on the pre-deregulation state of the industry.

5. December 2000 and 2001 data include statistics for TWA, which was purchased by American Airlines in 2001.

Review by: Jennifer Brady, Analyst, Bureau of Transportation Statistics, Research and Innovative Technology Administration, U.S. Department of Transportation, 400 7th St. SW, Room 3430, Washington, DC 20590. E-mail address: jennifer.brady@dot.gov