MMH733

Ethics for Managers

Deakin University - Burwood

Trimester -3
Unit Lecturer – Bruce Mitchell

Assignment Submitted by:

Sagarayaan Khakhaar
Student ID: 215354728
Date of Submission: 6th December 2015
 Abstract

This article purports the various concerns related to ethics in the Airline Industry. It discusses
the obligations that this industry faces and impact of these on the various stakeholders
affiliated with the industry. It demonstrates the importance of safety as an ethical issue and
the public confidence yielded through it. It verifies the regards to safety as a mandatory
practices because of government regulations. The other major concern that has been
addressed is environmental protection that promotes the interest of Civil Society
Organizations. The research extends to other issues and how the industry has benefitted itself
in addressing these ethical issues.
 Introduction
Airline Industry has dealt with various ethical issues in the last few decades. From safety of
the passengers and the crew, to matters related to environment protection. These issues have
been a topic of concern from the beginning of this industry and still continues to be. There
have been major improvements over the last few years to manage the ethics facet of this
industry.

This article discusses the issues and the impact of these issues on the industry, and the various
stakeholders associated with it. The sustainable actions that this industry has adopted to
address these issues have also been highlighted. Lastly, what drives this sector to mandatorily
tackle these issues and the outcomes of managing ethics, covers this article.

The aim of this article is to establish that companies which understand the importance of
managing ethics will strive to grow in the long term. Additionally, it details the importance of
achieving sustainable competency.
Major challenges relating to business ethics in the Airline Industry.

A commercial airline faces many ethical issues. The most critical one being the safety of the
passengers and the employees. This obligation weighs more on this sector than any other
sectors. Most major airlines aim to internalize benefits and neglect the most vital interest of
their stakeholders, i.e, the safety of the crew and the passengers (Freeman 2001). The recent
tragic incidents of Germanwings Flight 9525 crash in March or the Metrojet Flight 9268
crash in October has brought about a major concern regards to the safety.

Another obligation that an airline company must adhere to is the well-being of its employees.
Like the passengers, the safety of their employees is just as crucial. The arduousness work
from controlling air traffic to other airline operations handled by the pilot and crew are all
risk abound. To ensure good quality aircrafts that meet the standards set by the Federal
Aviation Administration (FAA) is utmost important. The ethical issue here is also the distrust
in FAA’s ability to perform the necessary inspections before the take-off of a flight (The
Failures of the Federal Aviation Administration n.d.)

Additionally, the airline companies are faced with the obligation to support the interests of its
corporate shareholders. The ultimate goal of any company is to make profit. But this has to be
done within the legal framework set up by the Government. The ethical issue here relates to
the limitations that airline industry suffers due to the governmental laws and the obligations
towards its employees and passengers.

The final ethical issue that weighs heavily on this sector is the impact of the industry on the
environment. People who live nearby the airport are exposed to unintentional danger or
aircraft mishaps. Huge amount of fuel consumption, potentially harmful environmental noise
and high levels of danger in areas surrounding the airport are all major challenges faced by
the airline sector.

Most companies have a sustainability programme to address their major ethical issues.
‘Focusing on sustainability also raises considerations of intergenerational equity’ (Crane &
Matten 2010, p. 33). In the airline industry, these actions are mainly in regards with the
environmental issues. The industry has begun modernizing their fleets with fuel efficient
aircrafts. New technologies have been employed to reduce emissions. Airlines have also
come up with programs to give passengers the opportunity to purchase emission offset. Funds
raised through this is contributed to NGOs that support environmental projects. Furthermore,
the sector ensures that air congestion is reduced and the aircrafts fly fuel efficient routes at
fuel efficient speeds.

The sustainability actions of this sector are mainly an environmental concept. A very small
percentage of their actions consider the economic and social concepts of sustainability.

Factors driving the sector to manage business ethics more effectively .

There are various factors that influence the airline sector to manage ethics effectively. These
factors ensure that an organization, within the sector, closely watch the practices and the
ethics that cover these.

• Government Regulations: The Government represents an entire society and is mainly

concerned with promoting their interests. They lay down rules and regulations that
govern business behaviour. Their rules usually define the conditions that has to be
accepted to acquire the official license to operate the business. These are laid because
the society wants business to operate without posing danger to the current or the
future generations, contribute to the growth of economy and involve in fair
competition that would ultimately benefit the consumers.

In regards to the Airline Industry, these regulations orbit around the safety and the
environmental protection. For example, managing the impact of aircraft noise, regular
inspection of metal fatigue, liability for injury or damage caused by the aircraft.

• Civil Society Organizations (CSO): The main aim of CSOs is to promote societal
interests and goals. These organizations are usually Non-Government Organizations,
charities or local community groups that address to issues that are aimed at social
welfare and environmental protection. The Airline companies have tie ups with major
NGOs. These NGOs are provided with huge funds for environmental protection. One
way of raising these funds are by allowing the passengers an opportunity to offset
their carbon emissions. Figure 1.1 illustrates the cycle of carbon offsetting in an
Airline Industry.
It is essential that the interests of these organizations are addressed to, in order to
strive in the market. Failing to do so would have a disastrous impact on the reputation
of the brand. CSOs influence corporate action through campaigns, boycotts or
working with the government (Crane & Matten 2010, p. 443)
 Figure 1.1 – Illustration of Carbon Offset Cycle (Aviation Carbon Offset Programmes,
May 2008)

• Competitors: In the current scenario of an on-going zero sum battle within the airline
industry to win customers, companies look for every opportunity to stand out and be
recognized. This, they try to achieve by claiming specific ethical claim before their
competitors do.

Airline companies, initially took the advantage of the carbon offsetting from the
environment protection aspect and highlighted this an exclusive measure adopted by
them. NatureAir was the first airline to take up this program and help protect over 500
acres of tropical forests in Costa Rica (NatureAir n.d, para. 1). However, these
measures became a common thing overtime. Other such similar measure includes the
recycling of waste produced by aircrafts. Such niche specialized sustainability actions
allow companies to leap out and get noticed through existing competition.

How managing business ethics has helped Airline Industry.

Attention to Business ethics is important and crucial for the success and survival of a firm.
Managing ethics program has proven to be valuable not only to the participating stakeholders
but also to the organization. From the view point of an organization, ethics has helped control
behaviour of various stakeholders, gain public confidence and build strong public relations.

In the case of Airlines, managing the ethical issue of safety, has helped the sector gain the
much required confidence in people. This is vital since the primary concern of any passenger
travelling by an aircraft, is safety. This issue is also addressed, to grant the airline companies
a licence to operate. The safety factor is so vital that some airline companies advertised this
through their slogans. For Example, “Light is faster, but we are Safer – Global Airlines”,
“We’ll take more care of you – British Airline”, “For Safety Comfort and Speed– Imperial
Airways” (Travel Insider 2009).

Figure 1.2: Poster showing the slogan used by Imperial Airways.

Managing ethics is also beneficial in aligning the employees’ behaviour with the beliefs and
the operating ethical values established by the company. This helps maintain the integrity of
the system and supports several other programs ‘including quality management, strategic
planning and diversity management’ (Parkhe 2014). Any employee, before joining an Airline
company must accept and follow the code of conduct provided to them. These are all the
preferred ethical values that must reflect on their behaviour. For instance, American Airlines,
in their code of conduct, clearly specify that employees should not disclose any company
trade secrets or other confidential information to anyone outside the company. The code is
stated as follows:
 Many employees have access to highly confidential proprietary information. This information is known as trade
secrets -- formulas, patterns, devices, or compilations of information that are used in one’s business and that give one an
opportunity to obtain an advantage over competitors who do not know or use them. When you joined the company, you
agreed not to use for your personal benefit, or to disclose to others, company trade secrets or other confidential information.
Your obligation is a permanent one that continues even after your employment with the company ends. Family members,
friends, and, most importantly, future employers are among those with whom you cannot share company trade secrets and
other confidential information. (American Airlines 2010, p.7)

This way of managing ethics also helps to detect any kind of violation and hence avoid a
criminal act from taking place. An organization will eventually build honour and integrity on
the grounds of the principles they follow.

Another aspect through which Airline Industry derive benefits from the ethics program is by
gaining respect from local communities and NGOs. The industry has contributed vastly by
raising funds for environmental protection. The carbon emission offsetting and the 3Rs
(Reduce, Recycle & Reuse) programs have been channels for promoting society interests.
Such practices portray a positive intent, help companies position themselves and attain
sustainable competency in the current scenario of a zero-sum battle.

Conclusion
This study has analysed the various issues related to ethics in an Airline Industry. In addition, the study
verified how these issues affect the various stakeholders involved. It also covers the plan of action in
coping with these issues. The study gives examples of various airline companies and their plan of action.
It also extends its research to the consequences of managing ethics effectively in the industry.
The main limitation of this study is that, the study does not include all the issues that is addressed by an
airline industry. It only blankets the issues that is vital for the industry. Also, the study is specific to the
industry. This means, that some of the issues discussed in this article, may not be an obligation to some
companies in the industry.
Despite the limitations, the study brings up concerns faced by either all or majority of the companies in
this industry, hence providing meaningful insights of how ethics is managed by this sector.

Reference List

American Airlines 2010, Standards of Business Conduct, American Airlines, retrieved 3

December 2015, <
https://www.aa.com/content/images/amrcorp/StandardsofBusinessConduct.pdf >.
Crane, A & Matten, D 2010, Business Ethics Managing Corporate Citizenship and
Sustainability in the age of Globalization, 3rd edn, Oxford: Oxford University Press, UK, p.
33.

Freeman, R Edward, “Stakeholder Theory of the Modern Corporation”, Perspectives in

Business Ethics Sie, Volume 3, pp 38-48.1

IATA 2008, Aviation Carbon Offset Programmes, IATA, retrieved 3 December 2015, <
https://www.iata.org/whatwedo/environment/Documents/carbon-offset-guidelines-
may2008.pdf>.

NatureAir n.d., Carbon Neutral, NatureAir, retrieved 3 December 2015, <

http://www.natureair.com/carbonneutral/ >.

Parkhe 2014, Managing Ethics and Top 10 Benefits, LinkedIn, retrieved 3 December 2015,
<https://www.linkedin.com/pulse/20140711112839-671295--108-managing-ethics-and-top-
10-benefits>.

The Travel Insider 2013, A comprehensive list of Airline Slogans, The Travel Insider,
retrieved 3 December 2015, < http://thetravelinsider.info/airlines/airlineslogansa.htm >.

123 HelpMe n.d., The failures of the Federal Aviation Administration (FAA), 123 HelpMe,
retrieved 3 December 2015, <http://www.123helpme.com/view.asp?id=43891>.