Originally Posted by
tom11011
I think your analysis is accurate. Without low cost labor to balance out the higher cost labor, the cost per employee becomes non competitive. When pilots leave the company from the bottom up, it creates a real cost problem. My guess is a merger is in Envoy's future. There is just no other way to solve the problem without shuttering the company.
The problem with closing up the company though is there is a percentage of pilots who won't or can't ever come back and be able to afford to live. Those pilots are lost forever in a time where pilots are really needed but hard to find. But-- you are never going to get airline management to care about such things long term because they can only see the current quarter. That's all that matters, is the current quarter. Publicly traded companies are all myopic like that.
In my view, I think pilot unions really should consider flattening out the pay scales at the regional level. From a pilot perspective, you are probably saying "what the hell is he talking about!!" But bear with me and think about this. If new FO's were paid much higher wages, the company would have to treat the pilot group better because look how much easier it would be to start over at another airline.
I've mentioned the following on this forum several times, my guess is everyone is probably sick of hearing/seeing it but I'm convinced its the right direction for the regional industry if it must continue to exist. There are 2 questions to answer.
Should regional airlines (B scale) continue to exist?
If no, problem is basically solved.
If yes, should one expect he/she can make a career at a regional airline?
If no, then FO pay and Captain pay should be the same, flattened. Only longevity pays higher. You are forced to move up to a major or out. Hopefully there is a flow through program and the better airlines will have this. You want ALPA representing your interests.
If yes, then Captains continue to make more at the expense of FO’s, but all FO’s have a shot at making a livable career at the regional. Hopefully you can get your hands on a bigger pot of money from the major airline. You don’t want ALPA under this situation, you need an organization which truly represents your interests as a regional (B scale) pilot.
I think many folks who entered this industry more than a decade ago can and do see a potential career at the regional level. The assumption is pay rates consistent with the "older" regional carriers (i.e., 15-20 year captains with rates of approximately $100/hr). This, combined with very good QOL, reflects pay that might be considered "competitive". I'm NOT saying that is what these senior pilots "deserve" but simply what has been negotiated.
The more pertinent question(s) are:
1. What are the costs of entry? (today a flight student will spend no less than $120K-$200K --- assumption of a 4 year college degree, ratings, current aircraft costs of no less than $150/hr, etc.)
2. Current pay rates for competitive professions. This is fluid as many college graduates are having difficulty finding employment. However, professional degrees (engineering, etc.) or military equivalent pilots pay $50K minimum to start and can pay in the $70-90K range for equivalent cost of education
3. Pay expectations and Return on Investment. Today's college college graduates are "tending" to not to want be willing to embark on a long term development and are wanting more "immediate" return on investment.
So, the more pertinent question to ask ISN'T related to B-scale, 1500 hour rules, etc. but rather the current draw of students into this profession. The lack of pilots (even by ALPA's admission) reflects that our profession is NOT adequately drawing new entrants and those entrants (according to ALPA) are either flying overseas (at higher rates) or are leaving the profession.
WE do not have to fight this battle. This is a problem wholly unto management. Enlightened carriers are BEGINNING to try to address this with flow schemes (and Envoy/AE is not a flow program created by management --- it was created by the disadvantage/CBA process). The teaming between Majors (see Europe and USA), Regionals, and flight schools reflects the beginning of this process. At this point, the Endeavor-to-Delta may be the earliest instantiation, although NOT mature instantiation. This is primarily because right now the Major airlines are NOT experiencing a hiring shortage (10,000 apps for the current retirements). However, Delta is probably leading the wave toward identifying, hiring, and somehow locking in future Major airline pilots during students' college years by offering a path (and I believe, eventually, a seniority number) to these "assets" very early in their careers (READ - to entice students to enter the profession).
IF projections are as planned and IF we don't see another economic downturn or industry changing event (A BIG IF -- we will see a stock market change for the worse in the next 5-7 years), then retirements alone will absorb many of the current non-Major pilot pool who are willing to move. As this happens, I believe Majors will lock in their "assets" (pilots) early and long term. Right now, they don't have to...yet.
The current projections are based solely on retirements. All of the majors have learned through hard experience that the only way to earn money is to very carefully manage growth (unlike their historical actions). All three are only predicting 1-2% growth. I believe they will implement this "growth" not through more airframes but through LARGER and more fuel efficient solutions (the 37-40-50 seat market is dead; the 70 seat market is the old 37-50 seat minimum; in the end a 90-135 seat market will predominate (just look at what manufacturers are producing!!).
What does this mean ---
-- Larger airframes will end up on Major airline certificates
-- Pay at Majors for E-jets will represent FO rates at regionals ($45-55/hr)
-- As the pool of regional pilots dries up, the regionals will close
-- ALPA will hasten this if possible (let's face it, the regional model took
flying from mainlines 30 years ago)
-- Majors will eventually NOT be able to negotiate terms with regionals that
make economic sense at which point the managements of regionals will
be seen as a cost that can be shed (resulting in consolidation).
The issue will be timing. Companies today look quarter to quarter. Profits MUST be realized quarterly. They will NOT do anything until they experience a loss. This is beginning to happen in the regional markets (parked jets, insufficient pilots, etc.). The Majors are adapting their schedules and shifting flying to mainline (see DOT stats). Eventually, regionals will not be able to maintain their agreements at which time Majors will begin consolidation. I think Richard Anderson at Delta is the leader in seeing this and Delta has been long well run and is beginning to demonstrate a lead in this area. The others will follow (and if history is repeated AA will be last --- it always has tended to lag in this area).
If the 1500 hour rule is changed (I doubt it), this may extend the transition for some period of time. However, the inherent high cost of flight training today is what will prevent this! I do not see a return to the low time hiring of the early 2000s UNLESS you see a wholesale movement toward ab initio (which is beginning in Europe) programs (akin to military flight training). Even so, those programs are not based in regionals but rather Majors (who can afford them and who develop the greatest benefit).
Why we shouldn't keep addressing B-scale regional wages: 1). this is managements' problem! NOT OURS!!, 2) regional labor has no "bound" cohesiveness (how can we, we don't control our flying, we don't own flying, we are whip sawed, and we have to vote for what benefits each of our groups (and we as individuals) most, 3). we shouldn't "waste" labor capital on an issue management is going to have to solve itself anyway.
For the same reason (IMHO) that we at Envoy should NOT be negotiating for jets that management has to place here anyway. Moreover, those jets do not reflect growth in wages or growth in opportunity as they are simply replacements for less efficient jets that will be sold.
Instead, I think we should be addressing integrated bargaining with our brothers at Major MECs (AA for us) to hasten the integration.
This will work out. If you're in your 20-30s, you WILL see a Major and Major Pay
If you are in your 55-65 (especially as a captain), maintain your position and retire at $100+ an hour WITH NO CONCESSIONS.
If you're in the middle group, be very proactive! If Envoy is closing, MOVE early. Get as much experience as you can. Be ready to move! Be ready to take a short term pay cut at a Major. Consider the LCCs if you feel vulnerable.
IMHO, today it makes NO SENSE to concede!! Supply and demand suggest wholly otherwise!! Our labor leaders need to be strengthening our current agreement and must be willing to fight to closure to do so! Now is not the time to be meek of heart!! Now IS the time for each regional MEC leadership to be working with their related Major MEC leadership toward coordinated bargaining toward consolidation!!