Cabin staff of the Spanish Iberia Airline went on a 48-hour strike, leading to over 400 flights being cancelled and thousands of passengers being inconvenienced.

Cancelled flights include domestic, European as well as trans-Atlantic flights. Over 440 flights out of 2000 have been grounded. This strike has been called by the unions CTA and SITCPLA, in protest of a four-year pay freeze for around 4,300 cabin staff. Another cause for protest is that other Iberia workers, for example pilots, have seen wages rise in the meantime while their own stay stagnant.

Iberia has expressed its regret that labor unions should demand pay increases, especially in view of the dismal scene in the aviation sector throughout the globe. The strikers have refused to back down, however, and have planned further stoppages for November 10 and 11.

Worst affected was Madrid's Barajas airport, where over 200 flights failed to take off as 600+ workers joined the staff strike. Passengers have been deeply inconvenienced by the strike, and some are greatly enraged at Iberia for refusing to pay for an extra day's hotel stay caused by the strike. However, Iberia has promised to offer alternative flight dates or to refund the tickets.

However, Madrid's inflation rate is extremely high at the moment - the official figure is between 3.6 and 4 per cent, which is one of the highest in all of Europe. This puts the workers in a position where living slowly grows closer to the untenable, especially in view of the jobs being lost in the global recession and added pressure on the earning members of the family.

It is not known yet how this will impact the downward spiral in Spanish tourism. Spain is doing all that it can to revive this failing industry, including a deal with English football club Liverpool giving the Spanish Tourism Board (Turespana) global rights to promoting Spain as a travel destination.

In order to revive its flagging business, Iberia Airlines have also considered other options, among which are:

• A merger with the equally fragile British Airways, which seems to have fallen through as a result of the current airline strike

• A code sharing agreement with GOL, a carrier based in Sao Paulo, Brazil. This is aimed at enhancing access to the Brazilian, Spanish-speaking market. If this is implemented, the two companies will also share Frequent Flyer points, resulting in a stronger loyalty program.

These are all parts of a structural overhaul designed to counter the steeply declining revenues caused by the global recession. Other components of this overhaul include -

• creating a new subsidiary airline by 2011 that will handle its short-haul and medium-haul flights.

• Pay freeze throughout the company for 2010 and 2011, or until the new airline is in operation.

• Laying off cabin staff above the age of 55, amounting to about 200 ground staff.

• Saving up to 37 million euros a year in 2011 and 2012 in overhead costs.

The major positive fallout of Iberia's restructuring and Spain's declining tourism is that this is an extremely lucrative time to travel in Spain. With Spanish hotels and airlines offering packages at all-time low rates, this becomes the best time to capitalize on the opportunity.