Support for other pilots and Simple Math

[GhettoBeechjet]

No matter how much you dislike a pilot group wishing ill on them affects the whole industry. Industry management would like us to believe that the wage rate of the top earner any given time is unsustainable. If we buy into this we are doomed as a profession to continue the race to the bottom in. Consider this simple math. What if tickets were raised by $2/flight hour? Even on a Transcon the total fair increase would be less than $15. Given everyones record load factors how many people would a $2-$15 fair increase price out of the market? With a load of 100 people that would finance an unheard of raise of $60/hour/per pilot assuming a very high 60/40 pay benefit split.

 

[GhettoBeechjet]

We have come through this latest round of economic and industry drama. We now have record load factors and industry profitablity even at $100 oil. During the whole process managment wanted us to believe that high labor costs were putting them into bankruptcy. Mostly this was a lie. Over leveraging, poor planning, underfunded pension plans, and huge bonus awards to transient management were much more to blame than labor. We could have all worked for free and the outcome most likely wouldn't have changed. My point is no matter how you feel about USAPA or SWAPA or ALPA the mindset of "I took it in the ass so they should too" is very counter productive to all of us. Also to those on top remember that you are one bad CEO away from the ill fate of others.

 

[BrickTop]

AND FU###ING DELTA is planning to cut ANOTHER 2-3% next year. I would love to Punch Anderson in the teeth. Airports are SLAMMED, planes are stuffed like a college dorm room closet and these dipsh!ts continue to cut capacity when there is a MARKET DEMAND for more capacity. Again more evidence that the hiring boom hopefuls should seek a reality pill. Corporate profitability is the ONLY motivator of Staffing, operational and shrinking measures.

 

[kf4amu]

You guys realize that passengers will change airlines to save that 2 dollars per hour right?

 

[GhettoBeechjet]

You guys realize that passengers will change airlines to save that 2 dollars per hour right?

Mangement would love us to believe that they all would. Some will but:

1. Almost every attempt at a fair increase in the past two years has been matched by every other carrier

2. They will only switch in a head to head schedule. If they want to leave at noon most pax won't fly at 6AM to save $10 or less.

 

[shon7]

What if tickets were raised by $2/flight hour? Even on a Transcon the total fair increase would be less than $15. Given everyones record load factors how many people would a $2-$15 fair increase price out of the market? With a load of 100 people that would finance an unheard of raise of $60/hour/per pilot assuming a very high 60/40 pay benefit split.

Firstly your reasoning is over simplistic. But even if we take it at face value - what makes you think the profits from a ticket price increase will be distributed to the pilots. They will go to the shareholders or be kept within the company to strengthen the balance sheet - both of which will make the stock more attractive.

Airlines are earning millions from baggage fees. Have you seen any of that in your paycheck?

 

[airplane wizard]

The soccer mom with 20 kids in her minivan would switch airlines to save $.02

 

[gator_hater]

AND FU###ING DELTA is planning to cut ANOTHER 2-3% next year. I would love to Punch Anderson in the teeth. Airports are SLAMMED, planes are stuffed like a college dorm room closet and these dipsh!ts continue to cut capacity when there is a MARKET DEMAND for more capacity. Again more evidence that the hiring boom hopefuls should seek a reality pill. Corporate profitability is the ONLY motivator of Staffing, operational and shrinking measures.

Airlines are not in the business of moving everyone where and when they want to go. If they were you would see hourly 747s from ATL->MLB to accommodate pax and commuters. Instead airlines are in the business of making money ( like all businesses) and therefore need to move the right number of people for the right price. Companies should care less about "market demand" and more about revenue generation and cost alignment. Read The Wal-Mart Effect for a laundry list of companies that chased marke share only to get kicked in the nuts. If that means cutting capacity to adjust the supply and demand curves and raise revenue so be it. Accept it or go get an MBA and make those decisions yourself.

 

[Data]

No matter how much you dislike a pilot group wishing ill on them affects the whole industry. Industry management would like us to believe that the wage rate of the top earner any given time is unsustainable. If we buy into this we are doomed as a profession to continue the race to the bottom in. Consider this simple math. What if tickets were raised by $2/flight hour? Even on a Transcon the total fair increase would be less than $15. Given everyones record load factors how many people would a $2-$15 fair increase price out of the market? With a load of 100 people that would finance an unheard of raise of $60/hour/per pilot assuming a very high 60/40 pay benefit split.

Using your same 'logic' why not increase gas prices $0.10 so that the clerk can make $55,000 a year? Why not raise milk prices so that the Publix bag guy can bring down $70,000? What about other airline employees that work hard that 'deserve' $80,000 a year? Pilots are a part of the puzzle, they earn what they can negotiate, it's that simple.

 

[GhettoBeechjet]

Everyone is missing the point here. My point is that in the big picture pilot pay is a very small percentage of an airlines operating cost. Mangement trys to convince us that our salarys are the problem but that isn't the case and I laid out the overly simple math to prove it. The larger point is that when any of us say or believe that the top earners salary is "unsustainable" or cheer another unionized pilot groups loss we are hurting the profession. In the end they will pay us what we think we are worth and can negoitiate. With capacity, demand, and prices at their current levels we as a profession have the ability to recapture some of the staggering losses we have suffered in the last decade. We need to support each other in that effort no matter what our union pin reads or what the paint job on our plane says. They can in fact afford to pay us more and lowering our expectations doesn't help our cause.

 

[Andy]

That was a painful read.
For starters, it's FARE, not fair.
Your thesis is overly simplistic and shows a lack of understanding of airline economics.

 

[AC560]

Accept it or go get an MBA and make those decisions yourself.

Great point. Management has small brains and big salaries so it should be relatively easy for anyone to do better, you often wonder why more don't jump at the opportunity.

 

[scoreboardII]

Everyone is missing the point here. My point is that in the big picture pilot pay is a very small percentage of an airlines operating cost. Mangement trys to convince us that our salarys are the problem but that isn't the case and I laid out the overly simple math to prove it. The larger point is that when any of us say or believe that the top earners salary is "unsustainable" or cheer another unionized pilot groups loss we are hurting the profession. In the end they will pay us what we think we are worth and can negoitiate. With capacity, demand, and prices at their current levels we as a profession have the ability to recapture some of the staggering losses we have suffered in the last decade. We need to support each other in that effort no matter what our union pin reads or what the paint job on our plane says. They can in fact afford to pay us more and lowering our expectations doesn't help our cause.

sorry, no one who disagrees with you misses the point. your point misses the logic test based on economic reality.

 

[The Prussian]

That was a painful read.
For starters, it's FARE, not fair.
Your thesis is overly simplistic and shows a lack of understanding of airline economics.

:laugh: One of my biggest fares...oops...'ahem'...fears!...is that the more I visit flightinfo, the worse my spelling, grammar, and critical thinking skills will become, until I are one of them...

 

[Dan Roman]

Unfortunately beech 's premise kind of shows why pilots should fly airplanes and managers should manage. If you pay a pilot, say 10% more per hour, it's not just the pilot flying that get's it, everyone is getting 10% more. The pilot sitting at home not making min guaranty the pilots on sick leave, the pilots on vacation etc. So.....if you give the pilots a 10% percent raise and your pilot payroll is 500 mil per year, it costs the airline 50 million a year.
Beech you work for SWA, you guys succeeded because of the consumer that puts saving a few dollars as a very high priority. People will often times go to the cheapest no matter what the airline. You of all people should understand LCC economics.

 

[ultrarunner]

AND FU###ING DELTA is planning to cut ANOTHER 2-3% next year. I would love to Punch Anderson in the teeth. Airports are SLAMMED, planes are stuffed like a college dorm room closet and these dipsh!ts continue to cut capacity when there is a MARKET DEMAND for more capacity....

Only demand for cheap tickets. At some point, capacity will be reduced to the point that EVERY SEAT SOLD generates a profit!

Keep reducing that capacity, price goes up, profits go up....

I'm ok with that!

 

[GhettoBeechjet]

I get the economics. Consider the following.

1. For the first time maybe ever the entire airline industry is being run like a real business. Despite a crappy economy and oil in the 90-100 range the industry is profitable.

2. The high fuel costs are acting as a bar to new competition. Cheap labor from a start up doesn't provide enough of a CASM advantage to offset high start up costs.

3. Load factors across the industry are in the 80 percent range.

4. Industry productivity per employee and airframe is at a very high level.

5. The industry carrier to carrier CASM is in a historically tight range.

6. Short haul is basically already dead. Customers that are within practical driving range of destination are driving.

The above all combine to give the industry pricing power it has never enjoyed in the past. There isn't enough excess capacity or even the ability to create that capacity quickly to greatly affect any carrier's market share. This is why the vast majority of recent fare increases have "stuck" and have been matched industry wide.

 

[Dan Roman]

I get the economics. Consider the following.

1. For the first time maybe ever the entire airline industry is being run like a real business. Despite a crappy economy and oil in the 90-100 range the industry is profitable.

2. The high fuel costs are acting as a bar to new competition. Cheap labor from a start up doesn't provide enough of a CASM advantage to offset high start up costs.

3. Load factors across the industry are in the 80 percent range.

4. Industry productivity per employee and airframe is at a very high level.

5. The industry carrier to carrier CASM is in a historically tight range.

6. Short haul is basically already dead. Customers that are within practical driving range of destination are driving.

The above all combine to give the industry pricing power it has never enjoyed in the past. There isn't enough excess capacity or even the ability to create that capacity quickly to greatly affect any carrier's market share. This is why the vast majority of recent fare increases have "stuck" and have been matched industry wide.

I agree with you here and you are right. The game of musical chairs in this industry is finally coming to a halt. All the airlines left no longer have to fight over market share as the seats out there are all in demand. There is no room left for any airline to liquidate like in the old Braniff, EAL PanAm etc days when one airline could pick up the slack if another disappeared.

AA can't go away, to much demand for what they fly. At worst, if they hypothetically couldn't come up with a reorganization plane, their planes and employees would have to be deployed somewhere (merger). AA/USAir is the only option left for any real kind of consolidation. May or may not happen, but the bottom line is every airlines routes and equipment are now in demand.

 

[pilotyip]

Unfortunately beech 's premise kind of shows why pilots should fly airplanes and managers should manage. If you pay a pilot, say 10% more per hour, it's not just the pilot flying that get's it, everyone is getting 10% more. The pilot sitting at home not making min guaranty the pilots on sick leave, the pilots on vacation etc. So.....if you give the pilots a 10% percent raise and your pilot payroll is 500 mil per year, it costs the airline 50 million a year.
Beech you work for SWA, you guys succeeded because of the consumer that puts saving a few dollars as a very high priority. People will often times go to the cheapest no matter what the airline. You of all people should understand LCC economics.

Nice touch of airline reality, the only thing that will really raise pilot's wages is for pilots to refuse to fly for the present wages. However considering most pilot in the majors are in the upper income brakets of US wages earners there will be lot of people looking at those high paying wages.

BTW we could always go back to regulation. Life was good for a few pilots under regulation. There are probably 4-5 times as many pilot’s jobs now as there was in 1977. Back in reg time it was about 90% military that went to the majors. Dereg opened up a lot of airline job to non-military pilots. To return to regulation would raise ticket prices, reduce the number of passengers, and therefore reduce the number of pilots needed. But it would be good for a few senior guys and bad for everyone else.

 

[GhettoBeechjet]

So what does the above mean to us as labor? In short that there is room for us to take back some of what has been taken from us in the last 10 years. Basically in the present environment if carrier x raises fares to cover higher labor costs carriers y and z will most likely raise match those raises because it will more positively effect their bottom line than selling what few seats they have left at the old lower price. This of course has some rational end because at each increase a few will choose not to travel at all.