You may have clicked this article because you have never heard this term before. As you go through it, you will realize you understand it more than you thought. So what is a “credible adjustment”? In the airline industry and in the aviation industry as a whole, there is a lot of weight on how countries are responding or doing in economic circumstances.
If the price of fuel is high, ticket prices tend to be higher. This is more or less basic economics. What a lot of people don’t understand fully is when the economy in general is in turmoil, it effects the aviation industry in ways you never imagined. Good examples would be war, natural disaster, acts of terrorism and our newest dilemma the pandemic of 2020. If you are going to work in aviation as a career it would be wise to understand how each of these affects the company in which you may be working for.
So what is Credible Adjustment? The answer is a two part answer. Part one is defined as an event of our world or country that is serious enough to alter growth and profits. of an airline or aviation company. Now here is where it gets interesting. Part two is because of the part one, companies can radically change the way they do business and make serious alterations to their business plans without wall street or the general public blinking an eye.
If one were to ask why this is so, the answer would be quite simple, because of the (fill in the blank) Credible adjustment could also be a fancy way of saying a good excuse. The more intense the scenario the more credibility to changing the way a company does business to answer the crisis. So lets take a look at how our most recent pandemic will play into this theory and then you can make some credible adjustments yourself.
The pandemic virus of 2020 has certainly been all over the news and has completely altered most or our lives for the year. You basically cannot go to the places you like to go, eat where you want to eat, hang out with people you enjoy or work a job in the same fashion that you generally do. There is not much you can do about it and how its handled or the length of time is irrelevant in this scenario. The truth is, the pandemic is affecting our airline industry in a very serious way.
Airlines are getting crushed by the fact that people stopped flying. Less people means less revenue, no one would argue with that. Many CEO’s of airlines have publicly stated that airlines are going to take a long time to recover from this pandemic and they may look different in recovery than we are use to seeing. This is a hint of credible adjustment, we are just so busy or traumatized that we do not recognize it. Airlines will go out of business and some already have.
The government has responded by printing a bunch of money to save the day, but that will not last forever. Sooner or later nature will sieve out who the strongest companies are and they will be the ones that survive to fly another day. So what does that mean to you?
Behind the closed doors
In each company headquarters around the globe there are meetings taking place, serious meetings that are about how to creatively save the day and keep a company alive. This most likely is very tense and very unnerving at the same time. The what if scenario will change course at least a dozen times before a solid plan is formed. Because the economy is fluid and dependent on the perception of so many different groups, you have to have more than one plan. Plan B and C and D are all on the board as possible scenarios for recovery.
This is smart strategy and happens every day in most competitive landscapes. So what does this mean for the average pilot or flight attendant or customer service agent? In order to explain that we need a few rules of engagement to understand. These so called rules will help employees understand just what is at large and will give you a means to process what could happen.
Rule #1 When it comes to survival, just about every rule, agreement, contract, letter of agreement and understanding can be thrown out the window. Nothing is untouchable and off limits. The only exception would be the general law and federal regulations, other than that, everything is negotiable.
A good example would be the snacks that are served onboard. If a company was known for serving unlimited snacks and a generous portion of refreshments were to suddenly stop or be limited, in the name of cost savings, no one will blink an eye. Not even if this type of service is part of the brand of the company. You might hear, “due to Covid 19, we have eliminated our onboard refreshments”. There will be no riots or protests (except maybe online) because it is a credible excuse. But it goes much deeper than this and often times can be applied to the second most expensive cost that an airline has and that is labor in the form of employees and management.
The obvious game plan when there is less revenue is to reduce costs. companies will ask or offer for early retirements or leaves of absences first. (plan A) Then when the smoke clears from that, they will start dangling the furlough or reduction plan out there.
Bear in mind, I truly believe they do not enjoy this, and this is not an article of about the oppressed verses the oppressor’s. This is about logic, if you cannot reduce costs such as fuel, the next shoulder to tap is labor. If you are in this industry, this cannot surprise you. Yet thousands of airline employees are discouraged about losing their jobs and rightfully so. But think about this statement for a minute.
If a company had an excess of senior or high end salary employees and were able to cut those employees, wouldn’t it make the company more streamlines and give it the ability to operate more profitably? The answer is YES and that should not surprise you either. When airlines make it through this problem, they have the authority or the go ahead to do what is necessary to survive. this is fanned into a mighty flame from the media and the more that it is the center of the media mainstream the more credible cost cutting becomes.
Rule #2 This is not personal. No matter what company you work for, no matter what type of culture they live by, this is not personal. A company may say they care but in the end the business comes first. This is a dog eat dog world. We have to get over this, and more importantly we have to know this rule before we even start our aviation careers. Contracts mean nothing, agreements mean nothing and the new shiny airplanes on order can be canceled in a heartbeat. New routes can be terminated and all events aimed at keeping moral high as well.
This can be depressing, but if you change to a strategy mindset it wont be surprising. I have always been a big believer in a Plan B in the airline business. If you are not figuring out a way to keep food on the table during a crisis in the aviation business then its time to start. You are not the focus, you are labor. And the labor force can be increased or decreased at any given time according to a companies needs.
Rule #3 If a company needed to make a major change, a crisis or event may be the perfect opportunity to do so. Companies will use the credible adjustment theory to their advantage every time, it is the perfect reason for change. This results in the way a company looks AFTER its over.
Rule #4 Someone will get a bonus. Make no mistake about it, after the crisis is over, someone will be congratulated on how they “handled” the situation. Management teams will be glorified for their sensitive response and devotion to the company in making a recovery possible. There will be bonuses and they will all sound legit. Is it right? In my opinion, no. Does it matter what you or I think? Nope. It is consistent though, so it makes for amusing conversation when it happens.
Rule #5 The real problem is a disguise. Chances are there were serious financial problems before the crisis, you have to look under the hood. One of the biggest problems at the end of 2019 and in the beginning of 2020 was that of air quality issues in aircraft. They are called fume events and they are being hushed by all major companies and manufacturers. There is a real problem with air quality on aircraft, it is making some people sick. The key word here is some, not all.
Some passengers, some flight attendants and some pilots. So how many people have to get sick to fix it? The problem is bigger than anyone can really know because its about aircraft environmental designs that causes the problem. There is only one aircraft that has substantially changed their systems and has had no issues with cabin air quality. That is the B-787 and that is great for Boeing.
The real issue is that if the cat got out of the bag at how bad the air quality is for you, the public would be outraged and eventually when the media and lawyers were done stirring everyone up into a frothy lather, the planes would be grounded. This would halt air travel and cripple our economy. You cannot just redesign a planes system overnight, these things take time and have to go through the ultra slow process of the federal government. So this is a real problem and one of the great solutions has been a shift in focus from air quality to the current pandemic of Covid 19.
The Pandemic gets all the attention and all the air time on tv. The real question is anyone fixing the air quality problem while the pandemic is raging? Is there money in it? Probably not. Is it going to cost a fortune? You bet. Meanwhile the 787 is not flying all that much since its a large aircraft and most large aircraft have been grounded due to Covid 19. It just does not make sense to fly such big planes when demand is next to nothing. Get it?
So am I just stirring the pot? Is this only about the pandemic? Am I trying to get future pilots and airline crews to wake up and see how their industry is really operating? Yes I like that better. You can take the red pill and reveal the unpleasant truth or take the blue pill and remain in blissful ignorance. The Red pill opens your eyes. This is how many of our larger businesses run and are perceived. The sooner we figure it out, the better.