I have to agree with this statement.

I do not completely agree with this statement, however. Deregulation occurred in 1978. The airline industry (and it's associated problems) as we currently know it began around 2001 - 23 years since deregulation. During that time, many airlines were flourishing, salaries were growing, and jobs were somewhat available. Pan Am shut down in 1991, 13 years after deregulation. And there is some speculation that a large amount of politics was involved in that demise as well.

I will agree that many carriers have ceased operations since 1978. I will also submit that the regional airline system (as we know it today) is not the same "commuter" system it was prior to deregulation either. Scope, regional jets, code-sharing, and a large supply of pilots have also contributed to a drastic reshaping of the industry.

Would government regulation make things better? I don't think it would.

 

Even a regulated industry doesn't work well. I may be wrong, but I think the airlines were somewhat subsidized during regulation.

The big question that needs to be asked is whether or not the industry itself can ever be profitable just by the very nature of its existence. If you add up all of the years that the airline industry has been in existence and compare revenues to expenses, one will find that the historical data shows an overall loss for the industry.

On paper and according to the principles of the free market it should. However, three variables could negatively affect an otherwise perfect system.

First, expenses vary and drastically affect the bottom line. Fuel prices and salaries come to mind.

Second, demand. You need to fill seats and thus necessitates the need for people to purchase those seats. Business professionals still need to travel, but many choose alternate methods of meetings - i.e., teleconferencing. People still like to fly for vacations, but when money is tight many choose not too.

Third, you need good management to run the airline profitably. All other variables could be perfect, but poor management can run the best company into bankruptcy. Good talent in knowing how to successfully manage the store is absolutely critical.

 

The difference depends on two variables: the financial health of the company and how well their contract (if they are union) is negotiated. Every worker in every industry is paid not what they are worth, but what they negotiate. Self-worth is subjective.

 

True, but is it democratic to allow airlines to void workers negotiated pay and benefits in bankruptcy with no recourse? How many companies have been able to survive (probably unfairly otherwise) thanks to the extremely biased corporate bankruptcy laws. Is it democratic that companies can drag their feet for 5+ years with no recourse (see ASA and now Pinnacle) and the workers just have to put up with it rather than be able to strike or otherwise provide self help thanks to the less than democratic Railway Labor Act we must bargain under?

 

That's just what some airline managers would like to see: each pilot acting as an independent contractor, bidding for work, and the hungriest gets the job. Don't worry about employee qualifications; the FAA assumed that burden by issuing a license and medical certificate. Don't worry about poor-quality work; collect a bonus and escape through the revolving door before that bill comes due. If anyone complains, blame the market.

I hope your prediction is wrong, but weak or non-existent unions could make it come true.

 

In the free market people compete to do the job by deciding how much it is worth to them. Pilots are obsession driven people who love their jobs. Much of their compensation comes in the form of job satisfaction. Once union influence and tradition is completely gone 737 captains nationally will earn between 60 and 80K.

Eventually everyone will have to adjust their wages to match the lowest common denominator.

Skyhigh

 

I think that airlines could get better pilots for less money on the open market. Start up airlines consistently rate higher in travel surveys then legacy airlines. The reason is that employees are more happier and more satisfied than people who have been locked into long held airline dynasties.

During my time at an LCC there were plenty of highly experienced pilots eager for a job even though the wages were considerably lower than the legacies. During simulator training at a major airlines training center the instructors were constantly complaining about the legacy pilots they also trained and declared that they wished that they had a good attitude like us LCC guys. There is better opportunity in the free market.

Better opportunities equate into happier people doing a better job. Eventually every airline will be forced to match the wages of their LCC competitors.

Skyhigh

 

SkyHigh,


I applaud you for leaving this industry and I agree with many of your post but this one seems to be a little hard to believe. 60K for 737 Captain is not really feasible. With that pay scale how much will an RJ FO make? 10K? That's below minimum wage. I think that the reason why present RJ Fo's take the 30k job is because of that 'promise' that they will be making 150K as a 737 Captain. Even at current state of the industry number of Commercial pilot certificates has dropped very significantly. I find it hard to believe that the airlines would get enough people with SJS to fill the cockpit for 10K a year if the ultimate best case scenario is making 60K when your are in your 40's.

 

These "more happier" LCC employees are waiting and hoping for that call from a "long held airline dynasty", as you did. When the call never comes, they become "less happier", as you did. Why would they be satisfied with a pay cap of $60k, when you were not?

 

Yep..."not making" it then was still every bit as lucrative as "making it" now...