The Role of Regional Airlines
 

Found this study about the role and history of regional airlines. It's a bit dated (and long?), but it wasn't a bad read to put the whole thing in perspective. Especially their analysis on major-owned versus independent regional carriers in the future. I'm certainly not trying to create my own crystal ball, but for those like me who are maybe a year or so out from joining the game, this seems like a good read to keep in mind.

http://faculty.weatherhead.case.edu/...pter_oct06.pdf

From this article, I take a way a perplexing dilema for all pilots.

Quotes from article:

So regionals are viable because the pilots are cheap.

RJ pilots want more money (as they deserve) but in doing so would negate the advantage, and thereby defeat their reason for being

Ok, so lets ditch the regionals, and bring all flying under the umbrella of the Majors (an argument I see often on these boards)

Well in order to do that the overall pay & work rules of all pilots would have to come down, to at least the "low cost carrier" level, as hinted to in the last quote.

Or we could just charge more for tickets - but then LUV wouldn't and well there you go.

You mention LUV, an airline that pays their employees well and doesn't outsource to regionals. It works there, shouldn't it work elsewhere?

Possibly if the whole industry was regulated - maybe.

I guess what I don't understand is that if Southwest's model is viable across the board as you suggest, then why isn't Virgin, Allegiant, JB, Spirt all treating and paying their employees what SW does? Is it because they're just more greedy? If so why aren't their profit margins exceedingly higher than Southwest's?

Two theories as to why SW succeeds at this.

They are one of a kind, and by such can flourish against the back drop of so many different animals. If they were competing head to head with many versions of themselves, they would no longer have the niche.

They were the first to the LCC party and have been riding that wave along with great fuel hedging. Isn't the jury still out on whether or not they will always be able to pay these stellar pilot wages?

Don't want to disparage any company or anybody. Just confused myself.:confused:

It is my understanding, and the opinion of others on this board that I have read, that SouthWest's wages are near/at the top of the industry only due the degradation of the other companies wage structures over the past many years.

I'd consider that to be a valid statement.

But the argument could be made that UAL and DAL's pre 9/11 compensation levels weren't sustainable. AA and NW were next in line for contracts. USAir used a "parity +" method. Even before 9/11, UAL's CFO was quoted that with downturn the economy was taking in 2001 that they'd be "getting some of that money back". Meaning, UAL would probably be asking for concessions down the road.

The new DAL and UAL pay rates aren't much more than their concessionary pay scales adjusted for inflation. And they pale in comparison to pre 9/11 numbers.

But I'd say sulkair's post pretty much summed it up in a nut shell. And ALPA national/Lee Moak's stance ISN'T going to help any.

Obviously this is an indirect process - can you briefly explain how it works? How does the degradation of one company's wage structure shore up that of another?

Is it that the economy of scale of the monster is so hard to compete with that others must sell their soul to do it? Something like that?

It's actually a very DIRECT process called pattern bargaining.

Works going upwards, as well as downwards. I've got to experience BOTH directions, multiple times.

No idea. All I know is that in 1989 SWA pilots were telling me they would never make as much as a Legacy pilot but they were happy. 20 years later, and with the gutting that I understand the legacies took in their contracts SWA pits are some of the highest paid in the industry?
Is it more likely that SWA jacked up pay or that other companies cut pay?

Jenny pays Johnny $20 to sweep out her garage.
Sarah only pays Jimmy $10.

After 6 months, Sarah cuts Johnny's pay to $8.
Jimmy is now the highest paid garage sweeper in the neighborhood.

This is what I've heard. Is it true? Somewhat true?
It seems John Carr's post makes sense.

It's 100% true. Funny, you use the garage sweep. I always use the landscaper in my examples.

And pattern bargaining extends past unionized labor.

It's a FACT, pilots and the rest of airline labor get paid what the market will bear.