Has the Regional Bubble Burst?

[JOEFRIDAY2]

There are only an average of 1200 pilots/yr retiring for the next 27 years. There are no "massive" retirements. ATP alone puts out more than that. Combine that with all the other flight schools and there is nowhere near a shortage.

The only shortage I've seen is places to rent airplanes. The shortage will eventually come from the astronomic cost involved in getting a certificate. A pvt used to cost about 5% ($2000 1985) of an average income, now it is approx 20%. I wouldn't do it now either.

I agree the pilot retirements are so few that it is almost a non issue to include this number as a reason that we are going to need more pilots.

Joe

 

[seaav8tor]

I think the actuality of the situation will combine points of Joe's and Blackhawk's posts. IF (and I'd still call that a big "if") we get revised 121 rest rules, yes, that may result in a need for more staffing to keep the current route system unchanged. But, who says the current route system won't change? The supply and demand here is not inelastic- as Blackhawk pointed out, if the airlines costs go up, subsidies aside, the cost to the consumer will go up (it's needed to go up for at least the past decade anyway), and many people simply won't fly. That puts downward pressure on the airlines supply, so with less flights, we need less aircraft, and thus less staffing.

I'd say the chances of increased government subsidies to this industry are nil, at best. If anything, as the government budget crisis continues, I'd guess on a decline in EAS funding.

Are there a bunch of age 65 retirements coming? Sure. Is the sky falling due to that? Nope. Will the cost of buying an airline ticket go up? Yup (if nothing else due to the cost of fuel). Will work rules change? Maybe. Will entry requirements into the 121 field change? I'd say almost certainly yes.

All of these are pluses and minuses for pilot demand. I think the only thing we can all agree on is that the majors will be relatively unfazed by this, but whatever happens is going to affect the regionals the most.

Agreed,

Going forward pilot demand will modulate due to the factors you state and others issues. Regardless, a true "shortage" defined as an escalation of wages that sticks over time will not happen. As a last resort, if needed you will see the MPL introduced into the United States to prevent pilot pay from making any real gains.

 

[JOEFRIDAY2]

Sorry Joe, I know you put thought into your post but the fact is a shortage, defined as employers bidding up labor will not happen. If it got even close to happening you would see the RAA, ATA, FAA, AIRCON, and University Aviation departments all cry out in unison for a MPL in the United States, program costs paid for of course by the would be airline pilot.

First of all employers can not "BID UP" labor. All of the airlines are subject to a contract with the pilots union. Those contracts have all been "VOTED IN" by the pilots.

For some obscure reason, pilots have always voted in these low poverty wage starting salaries. (Probably because it does not affect them because they have already moved up the ladder.) Also the pilots that these low wages mostly affect have not been hired yet and they don't have a say so in this voting.

The only way for a regional airline to increase the starting pay for the new pilots is for the contract to allow it.

A regional airline can not just start offering more money to new pilots for any reason like a pilot shortage, etc. That would be a violation of the contract.

So while the regional airlines do benefit from this lower labor cost, the regional airlines are required to offer these low wages because of the contract that the pilots agreed to and approved.

If you want to fix the low starting wages in this industry then you need to talk to the pilots that are voting on the contracts.

Joe

 

[seaav8tor]

The employer certainly can and would bid up pilot labor if they had to. The union contract issue is a just a formality that is easily delt with. If a sense of urgency is perceived by management between contracts (rarely if ever happens), they simply contact the union and state they want to raise wages. This happened at Alaska in 2001 when management contacted the union and proposed elimination of the B-scale for FOs. In 1992 Horizon management, operating with a binding pilot working agreement and a quasi in house union decided to raise first year FO pay before the expiration date of the current contract.

 

[Blackhawk]

First of all employers can not "BID UP" labor. All of the airlines are subject to a contract with the pilots union. Those contracts have all been "VOTED IN" by the pilots.

For some obscure reason, pilots have always voted in these low poverty wage starting salaries. (Probably because it does not affect them because they have already moved up the ladder.) Also the pilots that these low wages mostly affect have not been hired yet and they don't have a say so in this voting.

The only way for a regional airline to increase the starting pay for the new pilots is for the contract to allow it.

A regional airline can not just start offering more money to new pilots for any reason like a pilot shortage, etc. That would be a violation of the contract.

So while the regional airlines do benefit from this lower labor cost, the regional airlines are required to offer these low wages because of the contract that the pilots agreed to and approved.

If you want to fix the low starting wages in this industry then you need to talk to the pilots that are voting on the contracts.

Joe

Extremely naive. This is only true in the short term. Long term the airlines are subject to the same supply and demand issues. Unions can demand all the pay and benefits they want, but if there is a supply of pilots without work then eventually another airline will come in with pilots working at lower wages. If the airline with the higher wage costs does not turn a profit then the workers at that airline will have two choices- 1. Lower costs 2. Force the airline into bankruptcy.
This has played out in any number of industries where workers thought they only had to demand more pay/benefits and the gravy train would keep rolling. Eventually costs exceed the company's revenue which normally leads to chapter 11, or worse.

 

[JOEFRIDAY2]

The employer certainly can and would bid up pilot labor if they had to. The union contract issue is a just a formality that is easily delt with. If a sense of urgency is perceived by management between contacts (rarely if ever happens), they simply contact the union and state they want to raise wages. This happened at Alaska in 2001 when management contacted the union and proposed elimination of the B-scale for FOs.

I agree with you that this could possibly happen, but it is not likey and not in the regional airlines best interest.

Funny how it can't go the other way and have the union contact the airline and state they want wages raised.


Joe

 

[wheelsup]

Funny how it can't go the other way and have the union contact the airline and state they want wages raised.


Joe

That can happen with an LOA however both parties have to agree. I doubt any union would turn down a pay increase as long as it was done over all longevity ranges. A bump in first year pay is BS unless you give everyone on property a signing bonus equal to that pay increase.

We rarely have leverage might as well take advantage of it while you can.

 

[JOEFRIDAY2]

A bump in first year pay is BS unless you give everyone on property a signing bonus equal to that pay increase.

We rarely have leverage might as well take advantage of it while you can.

And that my friends is why starting pilot pay in the regional airlines is where it is.

Joe

 

[wheelsup]

It's not just the regionals - its low across the board.

 

[C150J]

Seaav8tor,


What's the takeaway on this post? Fewer jobs? Insolvency? What do you want those who follow in your footsteps to learn from this? I get the sense that you are disappointed in the trajectory of the airline industry, as many of us are. Do you have a solution?


From a young professional's perspective, I can't find greener grass. It seems that this is happening in every industry. Instead of paying primary care physicians more, we are seeing an increase in Nurse Practitioners and Physicians Assistants (similar to your thoughts on MPL). Police departments are furloughing. Over-supply of attorneys has led to wage and QOL degradation. Upper-level academia has even seen cuts, to the point where professors don't have enough teaching assistants. I can't justify doing something else - which I may or may not enjoy - only to run into the same issues the airline industry faces.


Yes, the landscape has invariably changed for the worse in many ways. That's indisputable. I can show you similar posts on a variety of industry-related forums. What's the solution?

J.

 

[seaav8tor]

Paradigm shifts in the economy will always create winners and losers. If you zoom out to a 30 year trend line for airline pilots the following facts become clear:

There are more pilot jobs today but fewer high paying ones. It becomes very sobering when you realize the vast majority of commercial pilots today will in fact look back and acknowledge they never came close to their career goals. Regional flying jobs have grown from next to nothing (30 years ago) to over 50% of the domestic departures.

Pilot pay has trended down (adjusted for inflation) at every level (over the last 30 years). The gains achieved during the good times are erased over time by inflation and taxes. The net result is an insidious erosion that has and will continue unabated. There simply is not and will not be enough pressure to force the issue in the other direction. MPL will be the backstop.

While other careers have experienced long term setbacks, I know of none that have taken the hit and face continued downward pressure as that of commercial flying.

If you are just starting out I propose this. Take the average of all regional CA pay. Cut that number in half. If in 30 years you end up at that economic level, will you be happy with your choice?

Be honest to yourself. If the answer is yes, press on and don't look back.

 

[Blackhawk]

Seaav8tor,


What's the takeaway on this post? Fewer jobs? Insolvency? What do you want those who follow in your footsteps to learn from this? I get the sense that you are disappointed in the trajectory of the airline industry, as many of us are. Do you have a solution?


From a young professionals perspective, I can't find greener grass. It seems that this is happening in every industry. Instead of paying primary care physicians more, we are seeing an increase in Nurse Practitioners and Physicians Assistants (similar to your thoughts on MPL). Police departments are furloughing. Over-supply of attorneys has led to wage and QOL degradation. Upper-level academia has even seen cuts, to the point where professors don't have enough teaching assistants. I can't justify doing something else - which I may or may not enjoy - only to run into the same issues the airline industry faces.


Yes, the landscape has invariably changed for the worse in many ways. That's indisputable. I can show you similar posts on a variety of industry-related forums. What's the solution?

J.

Anyone who attempts to predict with certainty what the market will look like in 5, 10, 20 years is fooling them-self. Just 4 years ago everyone wrote that the airlines would be hiring in the foreseeable future, there would be a huge demand of VLJ pilots, etc.
The best thing you can do is choose a profession you love and make the right decisions in your life. Most of the unhappy pilots I have met claim unhappiness due to aviation, but are really unhappy due to the other choices they made- getting divorced four times, not loving their current job, living outside their means.
If you decide aviation is what you love, go that route but have a backup plan that does not involve aviation. Study mathematics, or finance, or accounting. Something where you can make a living.
Good luck.

 

[C150J]

Paradigm shifts in the economy will always create winners and losers. If you zoom out to a 30 year trend line for airline pilots the following facts become clear:

There are more pilot jobs today but fewer high paying ones. It becomes very sobering when you realize the vast majority of commercial pilots today will in fact look back and acknowledge they never came close to their career goals. Regional flying jobs have grown from next to nothing (30 years ago) to over 50% of the domestic departures.

Pilot pay has trended down (adjusted for inflation) at every level (over the last 30 years). The gains achieved during the good times are erased over time by inflation and taxes. The net result is an insidious erosion that has and will continue unabated. There simply is not and will not be enough pressure to force the issue in the other direction. MPL will be the backstop.

While other careers have experienced long term setbacks, I know of none that have taken the hit and face continued downward pressure as that of commercial flying.

If you are just starting out I propose this. Take the average of all regional CA pay. Cut that number in half. If in 30 years you end up at that economic level, will you be happy with your choice?

Be honest to yourself. If the answer is yes, press on and don't look back.

Do you think that this trend is accurate in every facet of professional aviation (non-121)?


Personally, I have had a very positive 121 experience thus far. I have been at my airline for 3.5 years, and have grossed over $48,000 every year I've been here except for year 1. This year I am projected to gross $52,000 as an FO, and have roughly 15 days off a month based on the schedules I've been awarded. Admittedly, I would not be happy making $50,000 in the left seat, so I'm not trying to lessen your point. I'm just trying to find solutions so a new generation of pilots can navigate their careers accordingly.

From what I've experienced, to be successful in any field, you must differentiate yourself from the pack, and that's not necessarily easy to do in the airlines. It can be done, though, and I still believe that hard work will yield results. Not as many will have the opportunities that those had in the past, and like professional athletics, not all will reach their desired goal (and that goal for some is certainly unrealistic). However, I still think a decent living is out there for those with the right combination of aptitude, experience, and ambition.

Agree/disagree?
J.

 

[JOEFRIDAY2]

The takeaway in the aviation industry is that there will be more jobs in the future. The population is growing. Freight has to move. People have to travel. The question is how much will these airline jobs will pay.

Hint:

If you raise the first year airline pay pilot to a reasonable level--the following years will probably fall in line for everyone else.

As long as the pilots keep voting to allow first year airline pay to be below poverty level wages, this madness is bound to continue.

I invite all pilots to step back and think about this instead of the "whats in in for me" attitude that prevails in this industry. You have the power to change this starting pay at the next contract. Will you or won't you?

You might believe that first year starting pay does not affect you. But it does affect your future pay year after year. The lower the starting pay--the lower the ending pay.

If you don't make the decision to fix the starting pay, you are inviting Congress to fix the starting pay issue. Yes they are looking at it. Will they do anything about it? Who knows? Are you willing to take your chances?

All I know is that it really does not look good with a Colgan F/O flying 50 passengers around making $22,000 a year and not having money for a hotel room or a home near their base.

You can blame the public for wanting lower fares, but we all know that is not the cause of the problem. It's simply an excuse that they use at the moment. When the fares were higher these F/O's made even less.

This is like a big chess game and you have been getting rooked. You have a very weak foundation (first year starting pay) that follows you throughout your career.

The military is not where most of the pilots are going to come from in the future simply because the military does not train as many pilots as they did in the 40's, 50's, 60's, 70's and 80's.

The military spends several million dollars to train each pilot. I believe everyone agrees that the military training is superior to any other flight training. The problem is that is costs a lot of money that the taxpayers have been paying.

In the past there has been a surplus of military pilots. This is no longer the case.

Individuals are not going to be able to come up with that kind of money and the airlines are not going to come up with that kind of money.

So your training will be on your own. It will probably cost a student close to $300,000 to get to the 1500 hours the airlines might require in the future.

That is a lot of money for a $20,000 a year job. You can make 2-3 times that working at McDonalds and not have to spend $300,000 to get there.

Joe

 

[Rocketman99]

The lower starting pay has absolutely nothing to do whatsoever with the final or highest pay bracket. Never has, never will.

Also there was never really a surplus of military pilots unless you go back to the 60s or so. They still train a ton of pilots but now more stay on for better pay and job security than you get at almost any airline.

 

[JOEFRIDAY2]

The lower starting pay has absolutely nothing to do whatsoever with the final or highest pay bracket. Never has, never will.

Also there was never really a surplus of military pilots unless you go back to the 60s or so. They still train a ton of pilots but now more stay on for better pay and job security than you get at almost any airline.

First year starting pay has everything to do with it. Which airline pay rates would you like to look at?

Joe

 

[phoenix 23684]

The lower starting pay has absolutely nothing to do whatsoever with the final or highest pay bracket. Never has, never will.

Also there was never really a surplus of military pilots unless you go back to the 60s or so. They still train a ton of pilots but now more stay on for better pay and job security than you get at almost any airline.

Spoken like a true cut throat Captain. Yes the starting pay has always dictated the end pay. Basic business 101 and I do have an MBA. I remember in 2007 when companies wanted to increase starting pay and of course it was turned down by the pilots because they wanted their pay increase first.

 

[derg]

Aroo?!

 

[wheelsup]

So your training will be on your own. It will probably cost a student close to $300,000 to get to the 1500 hours the airlines might require in the future.

That is a lot of money for a $20,000 a year job. You can make 2-3 times that working at McDonalds and not have to spend $300,000 to get there.

Joe

Well when I got hired at my commuter I had 1900 TT and ATP mins. My flight training cost around $45k and that was at Humpty-Diddle Academy (expensive by all measures and included a $10k B1900 course and $8k 737 course) PPL-MEI.

I'm on track to make around $90k this year as a junior CA on a 50 seater. Yes I'm working a lot for it. But work I'm not scared of.

Better than McD's wages considering most of the month is spent sleeping in a lazy-boy for the majority of my duty time!

 

[Rocketman99]

Spoken like a true cut throat Captain. Yes the starting pay has always dictated the end pay. Basic business 101 and I do have an MBA. I remember in 2007 when companies wanted to increase starting pay and of course it was turned down by the pilots because they wanted their pay increase first.

Since when do normal business models and rules of thumb apply to the airlines? I will say it again, year one pay at the airlines has not affected end pay. I don't buy it. Show me speciifically how it applies to the airlines, not business theory from classes which more and more seem to have no relation to reality.

Call me what you want, if my company wants to raise new hire pay without a corresponding pay increase of some sort to the other employess you're damn right I'm going to shoot it down. I'm not saying it has to be the same percentage but you can't just arbitraily decide to pay one particular year and type of employee more money. Who in their right mind would agree to that?