Regional pay

Box hauler

Box hauler

Well-Known Member
I hate to start ( this ) thread but I'm just curious on what people's perspective is on what seems to be a crazy bubble happening in the regionals these days. If you look back just 3 years or so it seemed to be business as usual as far as pay and upgrades go and then it just exploded. I mean at some operators the first year pay basically tripled :eek2: and now many regionals pay in the ballpark or more than places like Spirit, JB, Frontier and Virgin-AK for new hires. Pay can't keep going up at the regional level so how and when does the expanding bubble burst?
 
Box hauler said:
I hate to start ( this ) thread but I'm just curious on what people's perspective is on what seems to be a crazy bubble happening in the regionals these days. If you look back just 3 years or so it seemed to be business as usual as far as pay and upgrades go and then it just exploded. I mean at some operators the first year pay basically tripled :eek2: and now many regionals pay in the ballpark or more than places like Spirit, JB, Frontier and Virgin-AK for new hires. Pay can't keep going up at the regional level so how and when does the expanding bubble burst?
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FO Pay seems to have gone up to about $60,000/ year at the best paying regionals. For a while it seems there was a "bidding war" of sorts between a few of them to have the highest starting pay but no one has raised it above $60,000, so that may be the most a regional can afford to pay and still make a profit (or in the case of wholly-owned regionals, still have the operation be profitable for the mainline partner).

I don't think the higher pay will last much longer. It's been nearly 8 years since the last recession, so we are just about due for another one. Also, oil is abnormally cheap right now but that won't last forever. The fact that we are at an economic crest and oil is so cheap is why most of the airlines are earning record profits. Once the economy enters a recession and/or oil prices revert to the mean the party will be over. The majors will stop hiring, meaning not many people will be leaving the regionals, and regional pilot recruitment and retention will become much easier.

Much of the higher regional pay is through non-contractual bonuses, which can be revoked when needed. As always the regionals will have to battle each other to offer the lowest prices to mainline, so some of them may declare bankruptcy to force a bankruptcy contract with pay at pre-2015 levels for their pilots. For the Regionals that aren't able to cut their costs, mainline partners will drop them (they may declare bankruptcy to get out of the CPAs if they have to). The highest-paying regional right now is wholly owned by Delta, and I believe the retention bonuses are contractually mandated through LOAs. They may well meet the same fate as Comair once it is no longer necessary for Delta to spend that kind of money to keep their regional feed properly staffed.
 
Box hauler said:
I hate to start ( this ) thread but I'm just curious on what people's perspective is on what seems to be a crazy bubble happening in the regionals these days. If you look back just 3 years or so it seemed to be business as usual as far as pay and upgrades go and then it just exploded. I mean at some operators the first year pay basically tripled :eek2: and now many regionals pay in the ballpark or more than places like Spirit, JB, Frontier and Virgin-AK for new hires. Pay can't keep going up at the regional level so how and when does the expanding bubble burst?
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When there is once again a surplus of pilots applying at the regional level.
 
alaskadrifter said:
When there is once again a surplus of pilots applying at the regional level.
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Exactly.

I suspect that this will happen next recession, when hiring will slow significantly if it doesn't stop altogether. Going more than a decade without a recession would be unprecedented, so if I had to guess I would say the bubble will burst no later than 2019.
 
Box hauler said:
I hate to start ( this ) thread but I'm just curious on what people's perspective is on what seems to be a crazy bubble happening in the regionals these days. If you look back just 3 years or so it seemed to be business as usual as far as pay and upgrades go and then it just exploded. I mean at some operators the first year pay basically tripled :eek2: and now many regionals pay in the ballpark or more than places like Spirit, JB, Frontier and Virgin-AK for new hires. Pay can't keep going up at the regional level so how and when does the expanding bubble burst?
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1st year pay at AS/VX is about to be in the mid 80s soon.
 
Acrofox said:
BONUSES ARE NOT PAY INCREASES.
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Bonuses are generally designed to be easier to rescind than greater pay rates, but I don't see how they are not pay increases at all. My employer doesn't pay retention bonuses but airlines that do have raised FO pay to nearly twice what ours is...seems like an increase to me.
 
thevideographer said:
Hmm, I'm guessing you don't get a $5000 check direct deposited in your account every ~4 months? Money is money, as long as it's contractual (which it is) and not something they can change at will.
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Yes, and I believe most of the bonuses being offered by Regional airlines right now are contractual, although I believe Horizon at least was paying sign-on bonuses out of contract.
 
Acrofox said:
BONUSES ARE NOT PAY INCREASES.
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Hmmm, actually they are. I agree that a bonus is not as good as a real pay increase but if someone offers me a 30k bonus I'm going to treat it like I have increased how much money I made this year. Hell per diem is also not a pay increase but if someone offered me $20 per hour in per diem I would take it as a pay bump.
 
Box hauler said:
Hmmm, actually they are. I agree that a bonus is not as good as a real pay increase but if someone offers me a 30k bonus I'm going to treat it like I have increased how much money I made this year. Hell per diem is also not a pay increase but if someone offered me $20 per hour in per diem I would take it as a pay bump.
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As nice as a bonus is, can I count on that bonus to be there to help pay the bills I have in 5-10 years? Not likely. Can an actual pay rate increase help me plan for the future? Yep.
 
JordanD said:
As nice as a bonus is, can I count on that bonus to be there to help pay the bills I have in 5-10 years? Not likely. Can an actual pay rate increase help me plan for the future? Yep.
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You are totally correct sir, a bonus is only good for today and making plans for the future based on one would be foolish. The only thing I meant was that it is money and therefore income.
 
JordanD said:
As nice as a bonus is, can I count on that bonus to be there to help pay the bills I have in 5-10 years? Not likely. Can an actual pay rate increase help me plan for the future? Yep.
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Well if the retention bonus is contractually required to be there in 5 years you can. Of course I believe most of the bonuses that are contractual in the first place are shorter than that- unless it's been extended, Endeavor's retention bonus expires at the end of 2018.

So you can count on higher pay rates much more reliably. Of course you can't really count on a Regional airline even being there in 5-10 years, given how unstable and volatile the regional airline industry is. 6 years ago, Comair's employees may have been counting on being able to pay the bills today; and 10 years ago, Skyway pilots may have done the same, but look how that turned out...
 
Pay and compensation are not the same thing. Bonuses are part of total compensation, but your hourly rate is your base pay. Everyone would be better off seeing those bonus dollars blended into higher pay rates across the board, but that doesn't have the recruiting pizzaz of "it's my money, and I want it now!!"
 
milleR said:
Pay and compensation are not the same thing. Bonuses are part of total compensation, but your hourly rate is your base pay. Everyone would be better off seeing those bonus dollars blended into higher pay rates across the board, but that doesn't have the recruiting pizzaz of "it's my money, and I want it now!!"
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Is that really the reason for sign-on bonuses as opposed to higher rates? I always thought it was to attract applicants with something that can be cancelled, assuming it is not contractually mandated, once market conditions change; and also to ensure that the extra compensation spent trying to recruit more pilots goes exclusively to the pilots that they are recruiting (and none is "wasted" on pilots who are already there and hopefully won't want to leave and start all over again at the bottom of another seniority list).

Another reason for sign-on bonuses is that, if they are paid before the employee starts and as thought they were a 1099 independent contractor, the company can save money on payroll taxes since in that case the employee will be responsible for all of the Social Security and Medicare taxes instead of just half. However my employer is the only one I know of that pays the sign-on bonus "1099", and the common misconception that bonuses are taxed at a higher rate than base pay most certainly is not true.
 
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