The dark side of the pilot shortage.

[SlumTodd_Millionaire]

Addressed? Hardly. You really have no idea where the line is. Anything that increases costs reduces demand, even with something as inelastic as gasoline.

False. If a product is already priced below what would lead to the highest yield, then increasing prices will have no adverse affect, and will actually increase revenue and profits. This is why large airlines utilize yield management software. Party 91 and 135 generally don't, and I think it's quite obvious that they're pricing themselves below the market.

 

[SlumTodd_Millionaire]

This is difficult to argue with - and remember, I think ATN is a Satan-Commie. But he's correct here.

All you motor-oil out there: Market forces dictated your life when I made my motor-oil/employees are a commodity post years ago. Nothing has changed now - market forces dictate your life. It's just that now they are working in your favor.

Still a vile analogy. But the concept is sound.

 

[WacoFan]

Still a vile analogy. But the concept is sound.

My whole goal with that was to give the most malign, management-centric view of labor in order to...wait for it...inform labor types how they are viewed and to attempt to quantify their own worth. Some people (smart ones) got it, yet many of the aggressively, persistently obtuse set their hair on fire and away it went.

 

[stuckingfk]

Semi related, but I've had two good friends get hired at Legacy Airlines as of late. Both were willing to quit their cushy corporate job, went in to quit, both walked out with 100k+ increase in overall pay.

The good companies will survive, and as ATN said, pilot wages are a drop in the bucket in the overall picture.

 

[av8tr1]

The basic math shown above doesn't change either way, because we're dealing with payroll figures and not hourly costs.

That only assumes the pilots are paid on salary. Lots of low end charter companies pay pilots by the hour.

 

[Inverted]

I see both sides of the argument. There is no denying that employee salaries take up a percentage of revenue. Every cent that is spent on an employee above the bare minimum, eats into profit right? That’s the theory, and that’s what management sells, and that’s what pilots (ironically the same ones that dumb the profession down, vote in anti union government leadership, pick up open time then complain about staffing etc.) believe. That is COMPLETELY ignoring the fact that to keep metal moving, you have to pay your pilots, and you have metrics of what pilots are making for a given fleet/seat/segment of the industry, you can then derive industry standards. Then the emotions of what kind of company you work for, effect your relationship with the company and or your productivity with the company. Do you work for Delta or Frontier? Do you work for NetJets or bottom feeder 135?

Companies eek profits out in mysterious ways. Salaried employees don’t make more when they fly more, so salaries are not proportional to the metal moving. To pay fixed costs and variable costs the airplanes have to fly X amount of hours per month (this is all obvious I know) but the point is, employee salaries and happiness are really the #1 driving force in revenue for a given company. It’s not advertising, it’s not management slashing costs etc. Time and time again we have broken that if the employee is happy, they generate more revenue. So we do we still buy the notion that if we are paid what we deserve, the company can’t survive? Delta is a perfect benchmark for this example. They pay the most, and charge the most. Why do people like flying them, and are willing to pay more to do so? The product is good. Delta created its own space in the industry instead of racing to the bottom. It’s like what 135 companies like NetJets and Wheels up have done. How can Whsels Up start an FO at 90k a year with full benefits paid? It isn’t because management is kind, it is because they see the value that those salaries generate in revenue.

Bottom line is, companies will always try to underpay and get the most out of their employee, employees will always try to work less and get paid more. You gotta pay your pilots enough to work hard enough to generate the most revenue, period. It’s why stepping stone jobs exist and why career jobs exist, and its EXACTLY what separates them.

 

[ppragman]

A misleading statement that management always loves to use. Don't fall for it. An example:

Let's say payroll is your largest expense at 25% of total costs (pretty typical for a scheduled airline). At a typical airline, about half of that would be crew costs (both pilot and FA). So now we're down to 12.5% of total costs represent pilot and FA. FA wages don't have the same upward pressures on them right now that pilot wages do, so we can take them out of the equation and look primarily at pilot wages, so we'll bump that down to an estimated 10% of total costs going towards pilot payroll. And let's now say that we need a significant bump in pilot payroll to stem the tide. A 20% increase is generally considered a huge increase to total payroll (remember that only about 70% of payroll is wages, so to get to a 20% increase, you need really big pay rate increases). So by bumping up pilot payroll by 20%, we're impacting the total costs on the airline by...2%. That's it.

If your airline is collapsing because you can't find pilots, and you can't find a way to make a 2% increase in total expenditures work in order to save your airline, then you're a horrible manager, and you deserve to be out of business.

He was literally management. I have also “seen the books” and even in the charter world labor was more than a “single digit expense.”

 

[wheelsup]

False. If a product is already priced below what would lead to the highest yield, then increasing prices will have no adverse affect, and will actually increase revenue and profits. This is why large airlines utilize yield management software. Party 91 and 135 generally don't, and I think it's quite obvious that they're pricing themselves below the market.

"I think"

Yuuuup.

 

[av8tr1]

I laugh anytime a company talks about culture(my present employer included). Good luck paying your mortgage in culture.

I had a business partner once who always used to go around repeating the mantra "Culture eats Strategy for breakfast". He was in the final stage of his MBA. I always used to shake my head at the ridiculousness of that statement. But he was drinking the kool-aid of his MBA program and no amount of me pointing to the many Dot.bombs from the 2000s that failed because they had an awesome culture of foosball and table tennis but no real strategy for making money.

REALLY smart guy and I had a lot of respect for him (he didn't for me but that's cause I fly helicopters) but when it came to real world a lot of his MBA classroom stuff just did not carry over to the real world the way he thought it would.

 

[wheelsup]

He was literally management. I have also “seen the books” and even in the charter world labor was more than a “single digit expense.”

It's often the most flexible. Pretty much everyone has similar costs to operate - fuel costs everyone the same, same as engine overhauls, parking at FBOs is the same, etc.

Charter is a high margin low volume business. Tough to make a buck in that type of environment without scale.

 

[dustoff17]

I’m not gonna shed a single tear for the plight of 91 and 135 companies. I hope they completely revamp or cease to exist. Bottom feeder 135s will get the bottom of the barrel crap pilots with a child porn charge and a DUI because that’s the bed they made, and I couldn’t be happier about it.

I think back to just a short time ago at my first 135 carrier making 28k, being told that if I don’t kiss their shoes for the opportunity to fly a crappy turboprops, they would happily kick my butt to the curb and find somebody else. Now, watching how the only way, literally the only way they get people through the door, is with a 500 hour FO program that locks them in until they can fly as a captain, or captains with shady records, makes me so happy.

Call it the dark side all you want, but those subsets of the industry created the problem they are in. The entire industry relies on economic downturns to create a frenzy of qualified pilots on the market to feed the companies that would otherwise be desperate for pilots. And that isn’t unique to 91 and 135, 121 feels it as well. Hell the only reason the regionals have stepped it up as dramatically as they have, is because the economy is good and they can’t staff. Just wait until it dips and there are pilots on the street, the benefits, hiring bonuses and smiling faces by recruiters will stop overnight, and we will be back to Envoy kicking 10,000 hour airline captains out of the interview because they were off by .1 in their logbook.

So are we to feel sorry for companies that undercut just to grab that Navajo charter for 6? Is it that they can’t keep up with paying pilots enough to keep and attract, or is it that they kept pay so low for so long because they could, that they created their own false economy?

There has to be a balance, but. These companies and CEOs were running to the bank with money coming out of their ears for so long that I cannot and will not feel sorry for operators that can’t operate in this industry properly.

My first jet charter company told me that they couldn’t survive unless they kept us on call 24/7. Am I supposed to feel bad for them because they can’t find pilots because it’s the only way they can sell charter in their crappy 1980s Lear 55s?

Cost of living and inflation can’t keep going up with salaries remaining the same. The gap is nowhere near closed. I hate to see honest mom and pop companies go out but as a business you have to adapt to the times or die. Aviation shouldn’t have to rest on the backs of pilots.

This is humourous to me because it appears to me that you fail to recognize that (based on what you have posted) YOU are a major part of the problem in the aviation industry.

The reason you can "..think back to just a short time ago at my first 135 carrier making 28k, being told that if I don’t kiss their shoes for the opportunity to fly a crappy turboprops, they would happily kick my butt to the curb and find somebody else." is because YOU allowed it! And the reason you were told by your first charter company that "they couldn’t survive unless they kept us on call 24/7." is because you kept showing up 24/7!!
You seem to be the guy that used fly for free, would ferry a plane for half of what anyone else would, or would undercut all of the other instructors just to log time. AND the time you logged got you to a 121 operator. Sitting higher on the ladder sure makes it easier to spit on the lower rungs, huh?

NOW, and only now that you've used these operators JUST LIKE THEY USED YOU, you want to start flinging crap at them. You want to blast the very operations (and operators) that helped you get to where you are!

Ok, I find it funny.

I'm glad you are where you want to be and are seemingly moving the direction you want to be but the truth is these crappy operators exist because pilots desperate for hours help them exist. These pilots are trying to use them as a stepping stone to move on and operators know it. They are unwilling to provide pay and benefits comensurate with a pilot willing to stay and help them. For the most part, the pilots they have are there for one reason and one reason only.......

We state it here often, the pilot that works for free or for peanuts screw all the other pilots trying to make a living.

 

[SlumTodd_Millionaire]

That only assumes the pilots are paid on salary. Lots of low end charter companies pay pilots by the hour.

No it doesn't. The math works the same either way.

 

[SlumTodd_Millionaire]

"I think"

Yuuuup.

We're both talking about what we "think," my friend. Seeing as how neither theory can be tested by either of us under controlled circumstances, we're both dealing in conjecture.

 

[Cptnchia]

That only assumes the pilots are paid on salary. Lots of low end charter companies pay pilots by the hour.

I can’t think of a single airline that doesn’t pay by the hour. The math still holds, regardless of hour/salary or charter/scheduled.

 

[av8tr1]

I see both sides of the argument. There is no denying that employee salaries take up a percentage of revenue. Every cent that is spent on an employee above the bare minimum, eats into profit right? That’s the theory, and that’s what management sells, and that’s what pilots (ironically the same ones that dumb the profession down, vote in anti union government leadership, pick up open time then complain about staffing etc.) believe. That is COMPLETELY ignoring the fact that to keep metal moving, you have to pay your pilots, and you have metrics of what pilots are making for a given fleet/seat/segment of the industry, you can then derive industry standards. Then the emotions of what kind of company you work for, effect your relationship with the company and or your productivity with the company. Do you work for Delta or Frontier? Do you work for NetJets or bottom feeder 135?

Companies eek profits out in mysterious ways. Salaried employees don’t make more when they fly more, so salaries are not proportional to the metal moving. To pay fixed costs and variable costs the airplanes have to fly X amount of hours per month (this is all obvious I know) but the point is, employee salaries and happiness are really the #1 driving force in revenue for a given company. It’s not advertising, it’s not management slashing costs etc. Time and time again we have broken that if the employee is happy, they generate more revenue. So we do we still buy the notion that if we are paid what we deserve, the company can’t survive? Delta is a perfect benchmark for this example. They pay the most, and charge the most. Why do people like flying them, and are willing to pay more to do so? The product is good. Delta created its own space in the industry instead of racing to the bottom. It’s like what 135 companies like NetJets and Wheels up have done. How can Whsels Up start an FO at 90k a year with full benefits paid? It isn’t because management is kind, it is because they see the value that those salaries generate in revenue.

Bottom line is, companies will always try to underpay and get the most out of their employee, employees will always try to work less and get paid more. You gotta pay your pilots enough to work hard enough to generate the most revenue, period. It’s why stepping stone jobs exist and why career jobs exist, and its EXACTLY what separates them.

Your assumption is that the customer will pay a infinite amount for that seat. The average customer will rarely chose the most expensive. Not saying all will not, I am saying most won't. Your Delta analogy is spot on but there is room for only one Delta. They can take less than 15% of the market for people who are willing to pay any amount for 1st class service.

I represent the other 85%. They will pay market rates. That is whatever the cheapest in the class of service they want is. So if company A is selling tickets at $150, and company B is selling them at $160 and the perceived value is the same (A-B air travel) the 85% is going to go with company A.

So now we know there is a finite amount available for profit. It's the average of the competition rates. So if everyone averages out $150 a seat then the company needs to make their profit in that $150. If the shared cost of the operation is $140 for that flight then there is $10 available to play with.

Anecdotally, every Southwest flight experience I have taken has beaten every single Delta flight I have ever flown. Both offer roughly the same result A-B air travel. I wouldn't ever pay for a first class seat, ever period dot. Some people are willing to pay for that perceived better seat most won't. Delta doesn't attract every passenger. I won't ever willingly chose Delta over Southwest if I had my choice. Not saying Delta offers bad service. But my wallet can handle Southwest, it can't handle Delta. And really the customer service at Southwest has been head over heels better at Southwest than Delta. Delta tends to attract the snobbish. The guys who complain about spending 2K for a 1st class seat and have to sit next to a deadheading pilot who got lucky enough to sit in the 2nd row with mr. big pants who thinks he makes 10x what our poor wayward deadhead makes.

 

[av8tr1]

I can’t think of a single airline that doesn’t pay by the hour. The math still holds, regardless of hour/salary or charter/scheduled.

I'm salary at my airline. I make the same (less per diem or extra work riders like 6 day pay) every pay period regardless of what I fly. All of the charter companies save 1 up in Alaska paid me a salary, regardless of the number of hours I flew. One month I might only fly 30 hours. Another month I might fly 70. Both months I made roughly the same amount. But the cost to operate changed significantly because the airplane didn't move. Sure the cost of the airplane lease for it to sit there didn't change but most of the hourly operating costs did.

 

[SlumTodd_Millionaire]

Anecdotally, every Southwest flight experience I have taken has beaten every single Delta flight I have ever flown. Both offer roughly the same result A-B air travel.

 

[SlumTodd_Millionaire]

I'm salary at my airline. I make the same (less per diem or extra work riders like 6 day pay) every pay period regardless of what I fly. All of the charter companies save 1 up in Alaska paid me a salary, regardless of the number of hours I flew. One month I might only fly 30 hours. Another month I might fly 70. Both months I made roughly the same amount. But the cost to operate changed significantly because the airplane didn't move. Sure the cost of the airplane lease for it to sit there didn't change but most of the hourly operating costs did.

Which has nothing to do with the math above.

 

[Cptnchia]

I'm salary at my airline. I make the same (less per diem or extra work riders like 6 day pay) every pay period regardless of what I fly. All of the charter companies save 1 up in Alaska paid me a salary, regardless of the number of hours I flew. One month I might only fly 30 hours. Another month I might fly 70. Both months I made roughly the same amount. But the cost to operate changed significantly because the airplane didn't move. Sure the cost of the airplane lease for it to sit there didn't change but most of the hourly operating costs did.

If you don’t mind, who do you work for? PM if you want to keep it QT.

 

[av8tr1]

Ok enlighten me, what's the difference? The type of leather for the seats? Coke instead of Pepsi? Shorter skirts for the FAs?

And I say this as a hometown boy from Atlanta. I love Delta. As a kid all my parents friends in aviation worked for Delta. Still don't see a difference in the product other than one has better marketing.