The Cyclical ways of aviation
 

We all know that aviation has its good times and bad times. When I was a young kid I had a older captain tell me that you could set a watch to the cycles of aviation, every ten years would complete one full wave from peak to trough to peak. I am posing a question that has come to mind from me reading the post about Brad Bartholomew. We as pilots interact within the industry every day, and we know that as with every industry there are good times and bad times, however within aviation it seems that the cycles are just getting steeper. I once overheard a conversation with two pilots saying the airline that you should work for when you are getting into the industry should be the one that is doing the worst, or close to it, because by the time you are ready to retire that airline will be close to the top. My question that I am open to any and all opinions is this. Does the greed of the pilots of an airline, wanting to milk every penny from management just increase these aviation downturns and ultimately hinder that specific airline allowing for another airline to take top seed?

Cheers

Are you trying to insult pilots or are you just clueless?

Sir,

I'm not a Harvard MBA and I doubt very few people that post here are. With your name of Motleyfool you probably consider yourself smarter than the average financial bear.

It's my opinion that "greed" of pilots has nothing to do with the cycles of aviaton. I'm certain that someone in the home construction market was once told by an old home builder that he too could set his watch by the home construction business.

Mismanagement, instability of oil production, and futures traders (among others) are factors more to blame. Are Southwest, UPS, and FedEx pilots greedy or have their Unions done their homework and know that even though they are the best paid in the industry the companies they work for can afford to pay them, reinvest in the company, and most importantly keep the share holders happy.

Don Carty and Leo Mullins gave themselves and their management teams huge bonuses. I think it was someting like twenty-four million for Mullins, Reed, and Smith and fourty-eight million for the over all team. I have no problem with Executive compensation. However, when the company is losing a billion dollars a year and you take a bankrupt proof retirement all the while asking your employees to take a pay cut is criminal. What was really sick about Mullions and Carty doing this is they were so secrective about it. Their dealings were disclosed through a S.E.C. filing. Rule #1 in Leadership 101 states that you should never ask your troops to do anything you wouldn't, so how could these management teams in good faith ask their groups to take cuts when they wouldn't?

Southwest has had 64 consecutive profitable quarters, which is unheard of in this business, yet their pilots are now the highest paid in the narrow body. Heck, their narrow body pay is better than a lot of companies' wide-body pay. Can you say the SWAPA is greedy just because they want to make a decent wage? I don't think pilot
salaries are the problem. I think the problem is unethical, incompetent leadership. Downturns are a part of life in every industry. How you prepare for the inevitable downturn is a sign of maturity and good leadership.

I think back to the Northwest strike of 98. They lost half a billion dollars while those planes were moth-balled. That's pretty sad, but that is how militant and greedy management can be. I think also that NW took full advantage of the post 9/11 environment to drive salaries down even more. I don't think pilots are greedy, rather they just want a fair share of the pie. Like I said, I'm not a Harvard MBA ... I'm just a simple man, but these are my views.

J

Greed. Yes that gets unions and pilots in trouble. The ones with 3-5 years from retirement often negotiate contracts they think might hurt the company and cause problems. As you can see above it gets management in trouble too.


So....


You can negotiate to keep your pay lower than you know you can get and, hopefully, stay competitive.

Or

You can go for all you can get, bank the amount over what you calculate would keep the company competitive, and be prepared to start over at a JetBlue if necessary.

The only problem is even if you keep your pay lower than it could/should be it doesn't prevent the competition from finding a way to undercut your pay. Which leads to claims that you are leading the race to the bottom.


There is no easy answer here. My personal recommendation is profit sharing and options. This keeps everyone more focused on the health of the company. Which is indeed out of control of the pilots, but at least everyone is less likely to choke the golden goose.


If you are looking at this like an investor and don't give a poop about people, pilots or otherwise, we probably won't agree here. I don't believe in unbridled capitolism and am currently disgusted how America treats its workers.

Cycles
 

Aviation does undulate with the business tide however when it comes to pilots it is undeniable that their wages and benefits have been steadily ratcheting downward with every cycle.

I watched an interesting documentary last week about how the job market is changing. Educated people will forgo higher paying jobs for more "interesting" positions. As a result the wages and benefits of these "fancier" jobs are declining while other less technical positions are gaining.

I have the same idea for some time now. In other words in the near future pilots and engineers will be the lower paid than plumbers.

SkyHigh

Downwardly mobile
 

I rode the jumpseat yesetrday with a senior US Airways pilot. He mentioned that while cleaning out his attic last weekend he found a pay stub from 1987. 18 years later he now makes $2.00 less an hour. Less as a Senior Captain, than he did as a Junior FO. And the loss of pension, benefits, and work rules makes the job almost unrecognizable from what it was then.

Greedy pilots have something to do with this?

The Dow Jones topped 2000 for the first time in 1987. The other day it topped 12000. (1)

The consumer price index in Jan 1987 was 333.1; in Jan 2006 593.9. (2)

Real wages for this pilot are down by half, while stocks are up six fold.

In 1987 the average CEO made 71 times the rate of the average employee. In 2004, the average CEO made 240 times the rate of the average employee. (3)



No, I'm pretty sure that pilot greed has nothing whatsoever to do with Airline Corperation problems.


(1) http://www.mdleasing.com/djia.htm
(2) http://www.bls.gov/ro9/9211.pdf
(3) http://www.americanprogress.org/kf/ceo_pay_web_final.pdf

Outstanding post.

Excellent post !!
 

This is a point that I have been trying to bring up for sometime now. Pilots have been steadily loosing ground for the past 25 years or so. If projected into the future 25 more years things are very grim.

I really feel that pilots are to blame. We accept the job for less. Why would any company voluntarily keep wages higher? When a plumber feels that his pay is unacceptable he leaves for another company that pays more.

Pilots will hang on no matter what and management knows this. One day soon plumbers will earn much more than your average pilot.:(

SkyHigh

Pilots do try to milk every penny from management. I bet if management offered pilots a 25% increase across the board the pilot group of any major would accept it. The way the game works is simple. Pilots push management to get the highest wages possible, regardless of the airline's financial situation, and management has to decide how much they can afford to give the pilots after they've cashed the paychecks for the company officers and VPs. So basically they're greedy and we're stupid. I wonder why four of the six legacy carriers have been in bankrupcy in the last three years.

Great post robthree, this sums it up. I would be curious to see a comparison between a early '70's wide body capt at Pan Am or TWA salary compared to a Fedex MD-11 Capt adjusted for inflation.