soon2bfo

Had an interesting conversation the other day.

I was told that a certain major airline has been going to the regional airlines with their accountants and looking at the books, or as much of the books as they can, to determine the margin that the company has been operating at. Then they have a conversation about how much they are paying that company and tell them that they should only get the margin that the major gets, that is 2%. And that based on the books and the margin that company is operating at, they are paying too much.

It seems reasonable to assume that two similar businesses run in the hyper-regulated aviation industry would have similar margins barring some major inequality in expenses (SWA's fuel hedge comes to mind). Cost-per-seat (jet efficiency) can be ignored because the revenue is not based on load factor. Therefore the only controllable expenditure is labor.

Operating with this mind-set the major airline sees it fair that your regional airline would have only a 2% margin. They ignore the huge inequality in business scale and ignore the huge difference in the bottom-line figure completely calling your airline's 50 million dollar profit unreasonable compared with their 800 million because it represents a higher margin.

Add to this Machiavellian mindset the pay scale that some pilot groups accepted to save their jobs and you can see that the major(s) are squeezing the regionals like grapes, squashing us one at a time.

I am sick of all of the talk and the rumors about concessions. Regional FO's have a hard time stretching their pay and covering their costs. It is fine if you are single, but many of us are married and have school debt. While it was our choice to take on debt in order to pay the exorbitant training expenses of becoming pilots it is still true that at least some level of school debt is almost universal among FO's. If you hired any pilots from ERAU they are likely in six figures of debt.

So much talk in congress after Buffalo was based on the stresses of fatigue and the mental strain of the job. Sully decried substandard piloting, what a joke. Why don't they talk about the reason why the FO was commuting in the first place? Why would any woman want to live in a crash pad? I'm a big guy and hated taking the train and walking to my crashpads. It would be totally unreasonable to expect a woman to put up with that situation due to the risks that it imposes. Commuting to an airport where you are safe, and then flying the trip was her only option. She couldn't spring for a hotel. This lifestyle is imposed by the pay scale. We all see it as a necessary situation because there is no other choice. Major captains like to look down over their aquiline noses and call us "entitled" when the reality is these impositions, like the current major squeeze, drive QOL down and raise stress and dissatisfaction.

What management team likes to have a rule of a forced margin imposed on them? This is jackbooted wrangling. If you like the product, buy it. Businesses, especially public companies, have huge pressure to increase their size of the black number at the bottom of the ledger every year. If there is a limit to the income that an airline can receive the only way to increase that number is to cut costs on the inside, i.e. wages. The reason that every regional airline is beating the concession drum is that they have to increase profit by cutting their highest controllable expense.

With a 2% margin imposition majors completely ignore quality and run entirely on cost. If you like where you are watch out because it is going to change fast and you have your next employer to thank for it.