Switching to Cargo Flying
Why some passenger pilots switch to flying cargo
COREY DADE
June 2, 2006
The Wall Street Journal
Kevin Smith saw his pilot friends at Delta Air Lines rattled when it filed for bankruptcy last September. So when the pilot union at Mr. Smith's employer, AMR Corp.'s American Airlines, started cost-cutting talks several weeks later, he decided it was time to look for a new job.
In December, the 42-year-old Mr. Smith landed in the cockpit at United Parcel Service Inc., where he flies cargo planes packed with boxes - and is paid 74 percent less than the $100,000 a year he made at American. Even though it will take Mr. Smith four years to work his way back to his old paycheck, he is willing to endure it in hopes of holding on to the things that used to make being an airline pilot so alluring: job security, advancement and steadily rising wages.
''Guys who flew commercially (once) looked down on guys who flew freight,'' Mr. Smith says. Now, though, ''I've got my buddies at Delta, Northwest and United calling me.''
The turbulence that has led to $38 billion in combined losses since the start of 2001 for the six largest hub-and-spoke passenger airlines in the U.S. is causing their pilots to flood major cargo airlines with job applications - even as contract negotiations are heating up between pilots and cargo airline management. FedEx Corp. had 14,000 applicants for the 420 pilot slots it filled last year, while UPS picked the 233 new pilots it hired from 10,000 applications, including 8,000 from passenger pilots.
FedEx and UPS did 28 percent of all pilot hiring at major U.S. airlines last year, up from 8 percent in 2004, according to AIR Inc., a pilot-placement firm in Atlanta. Smaller cargo carriers also are expanding, including Kalitta Air of Ypsilanti, Mich., which flies 14 planes, up from three in 2000.
Pay concessions at passenger carriers, including Northwest Airlines last month, have pushed annual base pay for their pilots with five years on the job down by 7.5 percent since 2000 to about $81,500. The most-experienced senior captains have seen their pay shrink 12 percent to about $180,744 a year. In contrast, five-year cargo pilots now make an average of $108,330 a year, while top captains are paid $194,566.
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The reversal in the pilot pecking order reflects surging global freight demand that is filling cargo planes with everything from computers to toys to flowers. FedEx and UPS, which operate the world's two largest cargo airlines, made about $22 billion in combined profit since the start of 2001, and more growth is expected as they expand their delivery networks in China.
But the diverging fortunes of the two pilot groups are fueling labor strife at several unionized cargo carriers, where management insists that pay levels should reflect the downturn in pilot wages and employment at passenger airlines. Union leaders claim that FedEx, UPS and other growing cargo carriers are trying to use the financial crisis at passenger airlines to deprive cargo pilots of well-deserved increases in pay and benefits.
Thriving cargo airlines such as FedEx's ''not only have the ability to pay, but the ability to pay very easily,'' says David Webb, a FedEx captain who is chairman of the Air Line Pilots Association unit at the Memphis, Tenn., company. FedEx and the union are in their eighth month of federally mediated contract talks after 17 months of negotiations on their own failed to yield an agreement.
So far, it looks like the cargo carriers have much more leverage than their pilots. Last September, pilots at Atlas Worldwide Holdings Inc., which is merging the crews of subsidiaries Atlas Air and Polar Air Cargo, went on strike - but returned to work two weeks later after agreeing to a raise in line with the Purchase, N.Y., company's original offer.
Atlanta-based UPS and the union representing its 2,700 pilots started contract talks four years ago. Efforts to reach a deal on a new contract hit a snag again last month when union board members rejected a recommendation from their own negotiating committee, causing an indefinite recess in the talks. The union's board ''is in a state of dysfunction,'' Tom Nicholson, president of the Independent Pilots Association, told UPS pilots in a recorded message. The split centers on a proposed pay scale as well as retirement bonuses for pilots hired when UPS launched its airline in 1988 and who now are approaching retirement age, according to people familiar with the situation.
Mr. Nicholson told members last week that the union and UPS are ''working together in good faith'' in informal discussions at the direction of the mediator. However, UPS spokesman Mark Giuffre said this week that ''we've not been instructed or directed by the National Mediation Board to conduct any formal or informal negotiations with the union at this point.''
UPS and union officials declined to comment on the specifics of the talks, citing a media blackout imposed by the mediator. The pilot union has said it wants pay raises that are consistent with recent revenue growth rates at UPS, without disclosing specifics. In the first quarter, UPS's revenue rose 17 percent to $11.52 billion.
UPS says its pilots make an average of more than $175,000 a year, while the union says pilot pay is about $168,000 annually. The union has said the two sides are about $40 million a year apart in their contract talks.
Meanwhile, four-year contract proposals by FedEx and its pilots differ by about $100 million, according to union official Wes Reed, who is coordinating pilot demonstrations outside Kinko's shops owned by FedEx. FedEx spokesman Maury Lane says the company has offered more than $500 million in raises and signing bonuses that would boost average yearly base pay 14 percent to $208,000 from $182,428. FedEx's current pilot pay is among the highest of any U.S. airline.
Except for seats and flight attendants, cargo and passenger planes are basically identical. But cargo pilots pass through different security checkpoints than passenger pilots and board planes parked at out-of-the-way hangars. Most freight moves at night, meaning cargo pilots can make outbound and return flights on a shift entirely in the dark.
Flying at night is ''not one of my favorite things to do,'' says Steve Hunter, who started flying at Atlanta-based UPS last year after 20 years at US Airways Group Inc. He recently bid for a seat on routes to Asia and Europe with more daytime flying.
Mr. Hunter, 50, took a $104,000-a-year pay cut to join UPS. ''We burned through a tremendous amount of savings'' before his annual pay was bumped up to about $75,000 - still less than half his peak earnings at US Airways. He says the sacrifice was worth it because he isn't worried anymore that his job could vanish before he reaches retirement age. ''Now we're plugging along,'' he says, ''working my way back up.''