On October 7th the AWAC TA was voted down by its pilot group. The TA was pitched as an “industry leading” contract in the 50 seat market. So how could such a TA be voted down?

First, the TA was largely the same as the existing pilot contract. Those eligible to vote have been on property for at least one year and its those pilots would have seen little change under the TA.

Second, if the TA had been accepted, it would have been in force for nearly two years before becoming eligible for renegotiation. But, one has to add another five years or so for those same negotiations to conclude, so we would have effectively been voting for, not a two year contract, but a 7 year contract. Locking in a long term agreement just when the market for pilots is showing strain was not a good deal; and a terrible deal given the TA had virtually no improvement over the existing agreement.

Third, the AWAC TA had been negotiated over the last five years. Many portions of that agreement were forged in years past and well prior to the “current pilot shortage”. By rejecting the TA we exercised our rightful option to reconsider the entire TA, and based on the current market conditions, which have moved considerably in the pilot’s favor in recent months.

Fourth, the airline industry as a whole is experiencing record profits. Mainline pilots are receiving raises, even those pilots enjoying industry leading contracts. The AWAC TA’s pay scale completely ignored it pilots, other than first year FO pay.

Fifth, many AWAC pilots have been bitten the Company’s sometimes torturous interpretation of the existing contract as well as the interpretation of FAR 117. A new TA, with new, less then clear language, would open up new areas for the Company to exploit.

So, the TA got voted down, for these and other reasons. What’s next? Actually, a quick resolution. Here’s my prediction:

With the TA rejected the Company recognizes that it’s ability to attract new pilots is now severely hampered. AWAC’s existing contract is no longer competitive with the new FO pay at other regionals. It’s flying future is also uncertain beyond two years along with its Captain upgrade times. There is no flow though agreement to Mainline. And, of course, there will be an ongoing dispute between the Company and it’s pilots. As FO candidates choose other regionals for their higher pay, greater opportunity and a more certain future, AWAC line-holding pilots will, not long from now, find themselves back on reserve (or junior manned) to fill in those gaps. After time, the declining quality of life will prompt the existing pilots to flee AWAC, much like what happened to carriers such as Endeavor. AWAC will then be at risk of disgruntling its remaining pilot group and incurring all the problems that would bring. The compounding effect of no new hires, fleeing pilots, poor pilot cooperation and parked airplanes would result in a death spiral that would be very expensive for AWAC to correct, assuming it could be correctable. A quick settlement is very much in the Company’s interest.

Absent a quick settlement, AWAC’s FO’s can simply make a lateral move to another regional like Endeavor. Their pay will improve immediately and they will likely fly larger airplanes. They will lose their seniority, but that means absolutely zero at a shirking regional. AWAC will quickly lose, or has already lost, all of its leverage in retaining it’s FO’s. Again, a settlement is very much in the interest of the Company.

So, I envision the Company quickly coming to terms with with a revised TA. I’d guess that a 10 to 15% immediate increase in pay above the TA’s rates, while retaining its existing terms and conditions, could settle the TA quickly. To put this in perspective, a raise of that amount adds less than $1.00 to the cost of a passenger’s fare on a typical flight. It is not known if AWAC could recover this added cost under its FFD contract, but regardless, this illustrates how little of an impact such a pay increase has on it’s operation.

Stepping back and taking a broader and longer term view of the industry as a whole, a career as a airline pilot has become much more difficult to economically justify. New pilots need a four year degree to be competitive at the majors. So a new pilot can expect to accumulate close to $200,000 in eduction costs and then work as a flight instructor for another 3 years at poverty wages. Once hired at a regional airline that pilot might make about $40,0000 a year for the first three years. Attempting to live on this sort of borrowing and subsequent income stream anchors one on a path to decades of debt and the very real threat of personal bankruptcy. Many banks have acknowledged this by either not funding, or not fully funding, a student’s education costs. It should be no surprise it is getting harder to find people willing to enter a career that take this sort of economic path.

And let’s not forget that your health must remain good enough to retain a Class A medical for decades, that you have no arrests on your record, certainly no DUI’s, and a lifelong social media record that won’t embarrass a potential employer. You need to be squeaky clean to be a candidate in this career.

But there’s more. The final obstacles in a pilot’s career are events entirely out of their control, such as recessions in the economy, company downsizing and/or bankruptcy, or a 911 type of event. Starting over at a new airline once you are already established at another will cost a pilot an absurd amount of money in the form of lost income.

If allowed to dream, I’d like to see AWAC position itself as a real industry leader. A regional airline with strong compensation package that actually reflects the costs and risks of pursuing a career as an airline pilot. If pilots and pilot candidates acted like investors on Wall Street they would demand, and receive, a compensation package that takes into account not only their own personal sacrifices, but the costs to those who did not make it in this career as well. In a rational market the cost of failures are supported by those products that make it to market.

Will AWAC offer its pilots such a dream contract? No. But a stronger TA than what was just rejected will help move both AWAC and the industry in that direction and help draw just a few more people into piloting as a career.