01.22.2014 « A Race to the Bottom »
I shouldn’t have been surprised to read that the Air Line Pilots Association (ALPA) has joined forces with several U.S. carriers in fighting a foreign carrier permit for Norwegian Air. After all, in ALPA’s view, the Ireland-based carrier is in a “race to the bottom” in establishing wage rates and working conditions for its workers.
This blog isn’t, however, about Norwegian. It’s about the race to the bottom that has been a part of the network carriers’ DNA for decades. It is about the relationship between mainline and regional carriers. It is about the fact that low labor rates at regional carriers cross-subsidize the higher rates paid at the mainline, and what that could mean to hundreds of communities.
I need more than fingers and toes to count the number of smaller airports that are deeply concerned about their future as a dot on the airline network grid. Many of these communities have strong underlying economics that suggest that their place on that map is safe. But as the industry evolves, that is not necessarily the case. The real question is whether the network carriers will actually need all of the feed from their regional partners to fill those mainline tubes as they serve only bigger and bigger markets? At risk is service to smaller communities as airlines gravitate to only the largest markets in a network map that could look much like it did when deregulation began with the primary difference being a map that is hub-centric.
In my opinion, the industry went too far during restructuring in its use of third-party providers in the out stations. It made sense when the industry was trying to bank every possible nickel and, perhaps, makes some economic sense today. But the fact is that no third-party provider really cares about an airline’s customers the way an in-house employee does. As airlines compete more on service, this has to change.
I fear that, in investing in this industry, the focus on the mainline ignores the critical piece of the network served exclusively by regional carriers. When it comes to regional lift, business still goes to the lowest bidder. And one result is that regional pilots get whipsawed despite the fact that there is a real live pilot shortage that will impact the industry well beyond the regionals.
Part of the blame goes to Congress which, in its infinite wisdom, now requires 1500 hours of flying to qualify for a commercial pilot license. And while Congress mulls more hearings, the regional carriers are suffering the consequences, intended or otherwise.
New flight and duty time rules only compound the problem. With the day’s last inbound flight often canceled, the first departure in the morning is also affected. And in small communities, these are the flights that allow business to be conducted in a day. This is not the fault of the airlines any more than it is the fault of employees who are “timed out” for the day. The customers, however, pay the price, as do the small communities so reliant on reliable air service.
Meanwhile airfares for service to those small communities continue to rise even as larger markets gain the benefit of more competition. Those customers are not, however, getting more for their money.
Don’t get me wrong. I am a fervent believer in the direction the mainline airlines are going. Recent investments in the fleets, cabins, services and people of the mainline carriers are making for a much better product– domestically and internationally. But I am disgusted with the price the regional carriers and their people are paying, be it through the whipsaw or the general neglect of a critical component of our domestic air service.
When a market doesn’t fit, it’s time to attrite. So let’s start trimming back that service now rather than delaying the inevitable. Let’s begin to build a pool of pilots to service the 250 or so markets that will make the cut – a pool big enough to meet the demand driven by Washington’s arbitrary regulations. ALPA advocated for consolidation for all of the right reasons, first and foremost a stable industry. So why is it only the mainline pilots who should enjoy that benefit?
ALPA cannot make its race to the bottom case against Norwegian without first addressing the race to the bottom here at home – a downward plunge the union itself created. The economics of the regional market are distorted, influenced by middlemen and unresponsive to consumer demand. Now is the time for the industry to work with ALPA to fix the problem – and that probably involves bringing some, if not all, of the work back in-house.
Reader Comments (5)
A very interesting article. While I agree with the analysis of the state of the industry; I duspute the author's conclusion regarding the causal factors. There is no actual shortage of pilots. There is only a shortage of pilots willing to work for the wages and working conditions offered by regional airlines. That is not a result of a 1500 hour minimum experience requirement, it's a result of corporate greed and whipsawing one labor group against another, until the job is no longer attractive. This is evidenced by the closing of numerous Aviation Colleges across the nation.
People just are not going into aviation as a career in significant numbers any more. Why should a young person go into education debt of $200k for an aviation education to obtain a career where your compensation for the first 4 years qualifys you to receive government aid and food stampts? The same education can make you a medical doctor or a lawyer with a much brighter career earning potential; while also allowing you to be home with your family on a daily basis rather than of living out of a suitcase.
Currently there is not shortage of licensed ATP pilots, a simple check of the FAA database proves this. They just don't won't accept these below minimum wage law jobs. Since airlines come under the Railway Labor Act, and not the Fair Labor Standards Act, the standards on compensation are not the same. A new pilot will spend over 300 hours away from home each month living out of a suitcase, to earn less than $20,000 per year.
This problem began through deregulation in the late 70's. The Federal Government deregulated the Airline Industry; but left the Airline labor pools locked in under the Railway Labor Act. This allowed the individual airlines to compete against eachother; while prohibiting labor from using any effective means of self help. Currently, Republic Airlines Pilots have been without a labor contract for over 7 years. In what other industry would a labor group be forced to work without a contract for that length of time, while being denied the right to strike, or limit service to the employer that is refusing to bargain with them.
Blaming the 1500 hour rule, or the new Flight Time Duty Rules is the argument put forth by the corporate airline CEO's. The same ones who steal the lunch money (per diem) from pilots, then reward themselves with huge bonus checks. Profit is not a dirty word, and each pilot wants their airline to be profitable and succeed. However, greed is a dirty word, and that is what is running our corporations today. It isn't the newer Govt rules; it's the decades long slow slide down the income and benefits scales to where they have removed all incentives to becoming a professional airline pilot. The companies have done this to themselves, and the government has facilitated it by forcing labor to operate under ancient labor laws. As we have recently seen, Fast food workers at McDonalds have more self help labor rights than airline employees.
Captain Raymond Igou
Local Council 121 Chairman, New York
Airline Pilots Association, International
American Eagle Master Executive Council
"But I am disgusted with the price the regional carriers and their people are paying, be it through the whipsaw or the general neglect of a critical component of our domestic air service."
I'm sure the families of Colgan 3407 where disgusted to learn how their loved ones were killed by regional greed. Lets be clear, those pax didn't die... they were killed.
This blog says: "heck it won't happen again, trust us. Sure we can find skilled pilots willing to work for $18/hr."
MIT deserves something better than a simple paid shill.
Mr. Igou,
I understand you frustration, particularly with all the sacrifices asked of airline employees over the last decade - however, the comment on greed is going a step too far. Keep in mind that even with $1.9 billion in profit that a combined American/US Air generated in 2014, that only builds a 5% margin on $40 billion revenue base - less than $10 per passenger. If fuel goes up over 10-15% this year then that profit disappears. To put that into perspective - the medical device and pharma industries average a 20% margin, with little chance for the kind of shock that oil prices bring. It's not entirely an apples-to-apples comparison, but if we're honest, neither is the fast food employee to the pilot.
Keep in mind that the average 737 pilot also makes somewhere north of $175,000/yr at most carriers. That's not a criticism of what they make, I believe that they earn every penny - but that is more money than the vast majority of professions can touch. Pragmatically, for any industry that has not made it's cost of capital in it's entire existence, it's employees are remarkably well paid.
All that being said, you guys do a great job, and I have a tremendous amount of respect for American Eagle's pilots. I whole-heartedly believe that you guys do not make the compensation that you deserve, but I believe that, that is because your mainline union breathren have compensated themselves at your expense - the cost side of the equation at any airline can only rise so quickly, and the pool must be divided up. The answer is not to expect the airlines to somehow find more money to compensate you when they're profitable for the first time in a decade - it's to understand that the money that doesn't go to you, goes to the mainline pilots.
William-
You can hardly hide your disdain for union airline pilots, and unfortunately it clouds your musings on this blog. Unfortunately, it's you and your peers' contempt for the profession that is killing it. Not ALPA. Not mainline pilots. Not the "1500" hour rule (a misnomer by the way). Not any of those things.
How you could possibly blame ALPA and/or mainline pilots for the pinch the regional airlines are feeling is beyond me. Airline management has spent the past decade and a half destroying the career expectations of ALL US airline pilots. Using the 1113c process as a hammer, airlines significantly cut airline pilot pay, furloughed them off by the 1000s, outsourced good paying mainline jobs to the regionals, and took their pensions away. This was devastating to many, many airline pilots.
Pilot pay cuts are like crack cocaine to airline managers, and it's addiction that continues RIGHT NOW in the regional airline industry when just the opposite should be happening. Maybe Captain Igou could come back to this thread and tell you what his Eagle.....Eh.....Envoy pilots are going through as I type? I'm sure Eagle/AMR management's threats to "shrink the airline until it is small enough to liquidate" because they recently voted down a concessionary contract offer just PULLS young people into this profession like a tractor beam, doesn't it? And it's not just Eagle- that's just an example that's going on RIGHT NOW. It's also JUST happened at other regional airlines like PSA, ExpressJet, and Endeavor- never mind Comair....take these pay cuts or we'll shut you down.
I mean, think about that for a second. Small communities are losing service for lack of pilots. Roger Cohen of the RAA is jumping up and down in the press talking about a "pilot shortage" and has been for years. The entire industry is worried about having enough pilots to staff their respective airlines......and despite all of this airlines like Eagle are threatening to liquidate the airline if their pilots don't eat a concessionary contract? That's ALPA's fault? That's my fault as a mainline pilot? You're seriously trying to tell your readers that if only I had agreed to a lower pay rate during the last contract cycle, that those dollars would have flowed to regional airline pilots' pockets and the regional pilot shortage would be solved? You're kidding, right?
Airline management is reaping what they have sown over the past decade. It's not ALPA's or any mainline pilot's job to help pay for an airline's business expenses, whether the margins are 5% or 20%, whether Jet A is $1 per gallon or $4. It's not ALPA's or any mainline pilot's job to "fix" this pilot shortage. The mainline airlines and their regional partners can continue to treat their regional airline pilots poorly and watch pilots either flee the profession or not enter it in the first place, they can continue to whine in the press about the 750/1000/1250/1500 hour rule or FAR 117, they can complain about ALPA or overpaid mainline pilots to whoever will listen, or they can accept reality and take positive, concrete steps to provide the proper incentives to lure young people and career changers back into their cockpits.....their choice. Until then, they're going to be setting the parking brakes on some very expensive capital.
This children is what happens to your brain when you don't change the water on your bong.
Well Bill I don't know why I stop by here to check in but it is like looking at the crash on the other side of the highway. You try not to look but you do.
The local rag had one of your quotes up and I thought, "Surly ole Bill couldn't have said that." but woe is me you did.
If flying planes is so easy why didn't you ante up and shoot for a job up in the pointy end vs. bouncing around in the back on a CV-580? That's right Bill you could be a senior Captain on a B767 based in ATL using rolled up $100 bill as starter rolls in your fireplace by now.
Come on in the water is fine, just pay the guy at the door $100k for that $22k a year job.