Jet Blue Productivity Advantage

[pilotyip]

How does United address crew cost per hour on the A-320 $916/hr? How does USAirways do it at $1,063/hr Jet Blue $409 per hour. How can you make money flying against someone with that cost adavantage? Jet Blue guys take home great money they are not in proverty by any means. But they do fly alot of hard block hours to make their paycheck. The United crew works an average of 427 block hours per year and gets paid an average of over 900. Did management elect to make the airline unproductive?, did the pilot group ask for this in bargining?

 

[usna91]

Seems to me that just comparing costs per hour doesn't tell the whole story.

A Jet Blue Captain who's been with JB for three years makes X.

A UAL Captain who's been with UAL for 20 years makes Y.

Don't expect JB's cost structure to stay low forever. If they succeed their labor and equipment costs will increase over time. I've heard smart investor-types say that JB's costs are "artificially low" at this point in time.

Regardless, don't expect the 12+ year Captain (2012) at JB to pull down the same check he/she makes now...and I'd bet pay in the out years will be more representative of the rest of the market.

JB's costs will probably go up, and if UAL is to make it in this environment, their labor costs will probably decrease.

 

[Dieterly]

How much longer before "JeffG" chimes in, because someone said something negativ about JB?

I've heard smart investor-types say that JB's costs are "artificially low" at this point in time

 

[AlbieF15]

So are you saying an aspiring airline pilot should avoid JetBlue right now since they are eventually going to have a higher cost structure? What are the alternatives? Sit on the sidelines until an ALPA backed carrier starts hiring again?

Perhaps all those guys I've been helping prep for their JetBlue interviews that are from USAir are idiots and just need to wait around for 10-12 years until JetBlue has problems of its own.

Personally, I don't think labor costs are the big issue at JetBlue, nor do I think they will be in the next 10 years. The company is built from the ground up on the premise that if you take care of your customers, they will return and pay a "fair" fare and keep you profitable. You just need to manage your costs to insure you can make money without having to charge $1000 for walk up business class tickets. AirTran, SWA, and Frontier are also doing the same thing, but JB seems to be both the customer and media darling. SWA has been profitable for years, even as flight crew numbers have increased and average tenure has gone up.

I don't know if JB can make money if/when their crew costs 900 bucks/hour. But I DO know United can't make money when its management bungles millions on dreams of buyout mergers, a fleet of business jets for high end service, and the other various hotel/rent-a-car/computer reservation systems they have bought and sold over the years. Nicer seats or satellite TV to make customers more comfortable?...nah...build a nicer frequent flyer lounge. Now that the business travelers have evaporated, many of the majors have forgetten how to take care of the "backpack" customer they used to simply tolerate as a cost of doing business. I'll know JetBlue is on the way to death only when Neelemen hires Stephen Wolf on his staff.

As an ALPA member, I appreciate the benefits that majors have tradtionally provided...good work rules, A and/or B plans for retirement, and a competitive wage. However, those who sling spears at SWA and JB working for "less" compensation ignore the various profit sharing/stock option plans offered to the employees. Those "underpaid" JB employees are hoping that by building a profitable business model (which DOT said United was not) they eventually will be more than rewarded by their investment in the company. Personally, I'd like to have some FedEx stock as part of my compensation package at my carrier--if only to convince the media we aren't a bunch of "overpaid underworked pilots" who have no stake in the company's profitabilty. If JetBlue employees choke their golden goose for an "industry leading" wage, they know while their paychecks go up, their total net worth goes down. Guys who left other carriers over the last 2 years to start with JB are not different than the rest of us--they want to maximize their earnings. However, when they compare the wealth/security of a 12 year Captain at SWA verses guys (or gals) who had a great contract only to see their career disappear when their carriers were liquidated or merged (lets see...Braniff, Eastern, Continental, Pan Am, Flying Tigers, TWA....) they decided to give the former a try.

As for egging on Jeff G...well...imagine a guy who likes his job and is proud of his company in this industry! What an anomaly! I'll bet he even tries to save JB money here or there with gas saving techniques, and even has the gall to be pleasant to other crew members and passengers. He has got what most would love to have....a job he's proud of, a wage he thinks is fair, and a company that for now, at least, has found a way to be profitable in a tough market.

Std disclaimer....I fly rubber dogsh!t in the middle of the night sitting sideways....and I may very well be wrong.

 

[Eagleflip]

But you're not...

 

[Jeff G]

How much longer before "JeffG" chimes in, because someone said something negativ about JB?

You misunderstand. I try to speak up about incorrect information, not negative information. Of course, rumors being rumors, most of the incorrect information is also negative.

Naturally wages are "artificially low" at this point. How could they not be? You only have your most senior people at the lowest payscale once. After that, barring something unforeseen, wages rise. Why would I argue with that? I'm actually kind of insulted you think I'm so blindly loyal that I am unable to recognize obvious truths when they're presented, or that I would idiotically defend the indefensible. I love my job, but I'm not stupid.

 

[jointops]

Eagleflip,

Amen!

Albie,

You always do an excellent job of an explanation. For those of us who are proud of JB, thanks for sticking up for the little guys. You're right on the money!

Happy Landings,

 

[HPaul3]

Well said, Jeff G and Albie.

 

[ShaggyF16]

Atta boy!

Albie -

You rock.

Couldn't be more astounded at the disinformation spread by union and other un-named sources about our company. I am happily employed by a great company that pays a great wage and who's leadership I trust.

Those of us in Blue do not wish any one else at any airline any ill will. We have created a low fare customer base at every destination we serve as opposed to "stealing" customers away from other carriers.

As a result, more folks are flying now on our routes than ever did before we were in business. If customers will pay pilots $250,000 to fly an A-320 around the country, then more power to those pilots.

It has nothing to do with what folks think "industry leading wages" are and everything to do with what the market will bear. I see lots of folks flying with us for <$300. If the price was higher, they wouldn't fly at all.

I sincerely hope the major carriers can get their costs under control. At the same time, they need to focus on their strengths: serving people through their "connection" carriers to global destinations with First Class service (if it is so desired).

If I were them, I wouldn't worry about what impact a fleet of 35 airplanes has vs. a combined fleet of 1500.

Folks that want to choke off an industry in order to raise (or justify) their own wages will ultimately get what they deserve - which is a market-driven wage for a market-demanded service. If you can't stand the heat of that reality, find a job in a non-capitalist economy.

Honestly, best luck to all in this roller-coaster industry.

Shaggy

 

[Race Pilot]

Randy - great subject you started here. BTW, just got back from two days of testing at Talladega and things are looking up for the boys from down the street in Michigan!

Albie - marvelous response as always. I must make one minor correction however.
"Sit on the sidelines until an ALPA backed carrier starts hiring again?"
ATA is now respresented by ALPA and is hiring. I know most folks don't count them as a major (which technically they are) or a factor in today's market but they are trying hard to do good things.

jointops, Jeff G, Eagleflip - I know you guys are proud to be with JB and well should be. They are a great airline with great people and are doing great things. I am currently with ATA having started class there five days after my JB interview. I have now been called for a class with JB starting Jan 6th and am agonizing over what to do. I have had PMs from several people offering great advice and I have worked hard to make as close to an "apples to apples" comparison as I possibly can. At this point it's still a toss up in my mind. I would welcome more input from anyone either by PM or here in public about which route to take. It's killing me trying to figure this out but believe me I am very thankful to even be in this position.

 

[usna91]

JB

To all of you fortunate enough to have a job at JetBlue congratulations. It seems like a great company to work for. Many of us are envious and would love to be in your shoes. It's a great service you provide too and the customers are happy. Customer service attitude can't be underestimated and it'll continue to help you build market share and strength.

The market cap of Jet Blue is roughly equivalent to Delta. That is just what it is. Doesn't mean the market knows anything about either company because...well look at the last three years of stock market performance and you'll see the market doesn't really know.

As JB matures, costs will go up. Maintenance costs will increase. Labor will have a big spike because employees will have been around a while. The sweet deal lease David worked is keeping costs down now...what will the 320s cost in 3-5 years?

I hope this goes great for all of you...just don't know if Mr. Market knows the negatives (probably does as the chart is not pretty). It's nice to have an airiline out there that believes treating customers with respect and being passionate about loving your job is part of the company culture and not just lip service.

More than "cost advantages" I think that is why JBLU will flourish in these times. You need to be efficient and contain costs, but company culture is what will keep loyalty where it needs to be and this is an intangible that JBLU will take to the bank.

 

[pilotyip]

More productivty stuff

United flies there A-320's about 10 hrs a day, USAirways about 9 hrs a day, and JB about over 13 hours per day. United and JB have almost the same average stage length. JB get a free stage ever day over United and does it with half of the crew ratio per airplane. United has to fly their airplanes more hours, with about 25%-30% fewer crews to match the productivty of the LLC's Major changes in work rules, will it happen?

 

[G100driver]

JB guys, please help me out. I can see what a first year F/O makes on their web page. But what can one expect as a captain.

thanks

 

[HA25]

How does United address crew cost per hour on the A-320 $916/hr? How does USAirways do it at $1,063/hr Jet Blue $409 per hour. How can you make money flying against someone with that cost adavantage? Jet Blue guys take home great money they are not in proverty by any means. But they do fly alot of hard block hours to make their paycheck. The United crew works an average of 427 block hours per year and gets paid an average of over 900. Did management elect to make the airline unproductive?, did the pilot group ask for this in bargining?

wait till JB has to start maintaining those busses, right now they just do light maintenance.... soon they'll have to ramp up a maintenance hub to support that fleet..... JB will just be a smaller SWA and nothing more.

When this economy returns, so will AMR, DAL, UAL...et al.

 

[AlbieF15]

Lets see...

SWA....$15.50 Mk cap 11.8 billion

DAL.....$12.25 1.5 billion

AMR......$7.57 1.18 billion

UAL.......$1.97 129 MILLION

JetBlue$ 26.32 1.16 billion

VT....by my math, being "just another SWA" is exactly what I would be wanting. Even at only 30% of the size of SWA, the market cap (even assuming the multiple deflates somewhat) would be much higher than the majors.

I was concerned if I joined JB I might get bought out and "stapled" to the bottom of someone elses seniority. Looks like I may have had the equation backwards.

Also....it might be cheaper in the long term to sell off old airbuses and get new ones to minimize mx costs. Accepting higher initial costs to control unsheduled mx expenses is exactly what lot of American consumers do when they trade in 5-6 year old cars on newer models. I'm not sure that would work here, but again...I doubt the airbus will be eating anyones cost in mx down the road. If its too high....write it off and get new ones.

Must....get...off...computer....and....go...to...real...work......(I can quit whenever I want...really!)

 

[Midnight Mike]

Jetblue is competive not because of the salaries, but because of the work rules, the same is true for Southwest.

At Southwest the pilots fly 80 hours & are paid for 80 hours.
At United the pilot fly 80 hours & are paid for 50 hours.

Southwest has been turning a profit for the past 25 years, I would think after 25 years, they should have senior pilots flying by now???

If Jetblue keeps paying an honest wage for a honest days work, keeps the union out, they should be able to maintain the cost advantage for years to come.

MIKE

 

[jointops]

G100,

I think a search on this site will give you additional pay info on the going salaries.

1st year Captain is $110 an hour for the first 70 hours. Anything over 70 hours is at time and a half (same policy for F/Os, F/As).

Our upgrades are running anywhere from 10 months to a year. I started in March and 4 guys from my class made it to the Dec upgrade. I missed Dec upgrade by 6 people. I missed Jan upgrade by 35. So you can see it's all timing.

Happy landings,

 

[JayDub]

United has to fly their airplanes more hours, with about 25%-30% fewer crews to match the productivty of the LLC's

The last I knew JB's target was 14 crew members per airplane. American Airlines has 11 per Super 80 in JFK (and would assume every where else). The red eyes really eat up crews.\

United flies there A-320's about 10 hrs a day, USAirways about 9 hrs a day, and JB about over 13 hours per day.

wait till JB has to start maintaining those busses, right now they just do light maintenance.... soon they'll have to ramp up a maintenance hub to support that fleet

So with this amount of utilization, you don't think we've needed a single C-check? Never had an engine change? We have three maintence hubs, and are working on building a hanger for heavy MX at JFK.

Only time will tell. However, from my perspective, I get treated better, with more respect, and more like a real person in a flight department with 511 pilots, than I ever did in a flight department with six pilots. That's what will keep this company strong and profitable for years to come.

Respectfully,

JayDub

 

[Seeniner]

Curious:
How much would a year one or two UAL A-320 capt make, if that were ever possible?

How much of a raise does a JetBlue pilot get each year? What will a 12 year JB capt make?

How often do 2 captains fly together on JB? It sounds like there are a lot of captains there.


Does anyone really thing JB "created a low fare customer base"? Of course these customer were "stolen", whether from other airlines, buses, or personal vehicle. It sounds like there are many business travelers on JB, they didn't just magically appear, they don't fly on another airline anymore. Any data on how far the average JB customer drives to the airport?

Don't get me wrong, I'd love to have a flying job right now.

See

 

[Andy Neill]

On date of signing for their current contract, I'm showing $193.73 and $195.34 for a 1st and 2nd yr captain on the A319/320 at United. After all the concessions that may or may not have taken place since then, who knows?

 

[HA25]

If Jetblue keeps paying an honest wage for a honest days work, keeps the union out, they should be able to maintain the cost advantage for years to come.

MIKE

Keeps "the union" out? I'm sorry, I thought I was on a pilots message board....

I have to say, that your point could just as easily be turned around and re-stated as.... if JB And SWA can bring their pay and work rules up to the level of the "Majors", maybe there would be whole lot less of us on the street because our airline can't compete on a level playing field with non-union, lower wage workers...

 

[Skank]

If you are on the street because you think Jetblue and its 34 airplanes put you there you are a little off in your braincase. I wouldn't hold your breath waiting for us to become like everyone else, either. Maybe you might want to flip on the T.V., or read a newspaper. There's a lot going on in this industry, and I guess you just haven't heard.

 

[Midnight Mike]

Just because you are a pilot does not mean that you have to belong to a union.

WORK RULES, these just about kill the airlines, even if Jetblue and United pilots were to make the same amount of money, Jetblue would still beat United or the other major airlines! '

If a Captain at United pulls in $300K, good for him, but make sure he works for that money, and not average 8-10 working days.

Jetblue also does other things to cut down on cost, like giving pilots laptop computers to cut down on Jepps charts.

TV monitors on every seat to encourage passengers to fly on Jetblue.

No meals, another cost saving measure.....

When I flew on Jetblue, the FA's asked the passengers to clean the area around them, so that Jetblue to cut down on cost & decrease turn-around time.

Flying "1" type of aircraft, this cuts down on training cost. The "1" aircraft type has worked at Southwest for years.

MIKE

 

[JayDub]

if JB And SWA can bring their pay and work rules up to the level of the "Majors", maybe there would be whole lot less of us on the street

I think you are the victim of flawed logic. It would seem to me if jetBlue did things like other airlines, jetBlue would mirror the other airlines. That is to say jetBlue would have people on the street too if they operated as inefficiently as the majors.

The CEO of jetblue makes $200,000/year with no stock options. Just a little differnt that say, UAL's dearly departed Goodwin. I have no problem working a fair days worth of work for a fair dollar. Especially when my CEO leads by example.

 

[NYRANGERS]

I I have no problem working a fair days worth of work for a fair dollar. Especially when my CEO leads by example.

I think this is a problem. The "fair days work for a fair dollar" is getting lower and lower. Now I don't think your wages have anything to do with furloughes at other airlines. I am just scared we are in the big wage race to the bottom.

Rember a "fair days worth of work for a fair dollar" is all relative. You and I have a completly different view of a "fairness".

I wonder what will happen to your wages when all the majors take the inevitable pay cuts? Food for thought.

 

[Seeniner]

My guess is no one with half a brain thinks JetBlue actually caused any of this current pain, but the title of this string does lend one to make comparisons to said company.

No doubt the CEO's are making too much money, but if anyone thinks for a second that JetBlue's CEO is just yucking it up with $200,000 a year, you need to go find that other brain half. Sure he may only receive $200,000 salary, and yes he may not get paid any stock options, but how much of the company does he own? You know, Bill Gates doesn't make much of a salary either, but he owns quite a bit of Microsoft, and he ain't doin' too bad.

 

[JayDub]

Sure he may only receive $200,000 salary, and yes he may not get paid any stock options, but how much of the company does he own?

The last I knew, Neeleman had 4,934,880.00 shares in jetBlue. With that said, tying what he invested in (as a venture capitalist) to his compensation is like my expecting to be compensated by jetBlue for losses I took on Lucent while investing on my own. It is preposterous. Nobody says George Soros got paid xxxxxx number of shares in jetBlue as compensation. He saw an opportunity and took a risk, the exact same thing Neeleman did. Soros doesn't get paid in jetBlue stock; he bought it with money he got from other dealings. The exact same thing Neeleman did.

Remember a "fair days worth of work for a fair dollar" is all relative. You and I have a completley different view of a "fairness".

I am just scared we are in the big wage race to the bottom.

So exactly what industry-leading precedent did PSA set while you were working there?

Respectfully,

JayDub

 

[HA25]

like NYRANGERS said, I just don't want to race JB and SWA to the bottom on wages.... we should always aim high.

Don't kid yourself, management will always aim low, that's just how it works.

And thank you, I do have a full brain and an MBA, but you don't need an MBA to understand supply and demand.

 

[airbus331]

I can tell you this about Jetblue. From the very first contact to arriving back home after the interview, there has never been a more convincing show of support for a company from employees ever. In the past several yrs, I had been interviewed by many of the "majors" and it was anything but a good experience by most accounts. The entire employee group at Jetblue displays in the open, why that company is successful today and why it will be in the distant future. Whoever came up with the formula for attitudes at that company should be commended, because it is across the board for positive outlooks. It is obvious why they are all there, to satisfy the customer, which is something so many of the others have forgotten.

Airbus331

 

[AlbieF15]

NY...

If you compare hourly rate to hourly rate, it is true SWA and JB do not pay what a UAL, DAL, or AAL pay.

However...depending on date of hire and other variables, there are a lot of guys who are millionares (so I hear) with stock at SWA. There are also annual profit sharing checks that aren't factored into the hourly rate.

Are there any really smart SWA guys who have a "real" handle on annual compensation for Capts and FOs the last few years (Mozam...where are you?). What does the typical 5 year FO and 10 year Capt really make?

Another wrinkle....would you rather work 20 years interupted by furloughs here and there, or work for less and not get laid off? At what point does a guy hired in 1998 by SWA catch or pass a 1998 AAL/UAL/DAL hire based on working verses NOT working? I said it in a previous post--I think many of you look at the HOURLY rate at SWA or JB and say "that's low". However, you may forget the extra money earned here or there with profit sharing, etc.

A/B funds verses stock options is a huge debate. The market may eat your options and stock. On the other hand, going out of business eliminates your retirement pensions. This gut check was one reason I went with Fedex...no guarantees but I really thought the pk of actually making it 23 years to retirement with them staying solvent was pretty good. (But...as any fighter pilot will tell you, nothing has a Pk of 1!)

What really matters to me is how much money do I have at the end of every month/year, and how many days did I have to be away from home to get those dollars. (I may be different here than some...but block time verses hotel time verses ground time is a wash with me...if I'm not at home with family I could really care less as long as I can get a safe/legal rest and good meal). I don't think the average JB or SWA guy leaves mom and the kids much if any more than any other major pilot, and with the various other compensations (at SWA anyway) I think the salary might be closer to the majors than you realize. Certainly the career earnings at some carriers may be lower than the old Air Inc charts in the pay guide, simply because guys are going to be furloughed for a few years or upgrading at a much slower than historical rate.

And for the record...I wish captains all made $500,000 a year. Every new contract that pushes wages up makes life better for all of us. However, the fact is the economy, the internet revolution, and inevitiable competition has put wage pressure on all of us. I think the most successful union groups are going to be the ones that figure out how to get some win-win compensation options from their carriers in the future, tying increased pay to increased profits and revenue. In any case--with my degree in aviation management, its hang tough in this business or wash cars, so I'll see all of you out there while slipping the surlies...

On a lighter note, my newest co-pilot landed today. It'll be 16 years before she can solo, but I'll be busy until then getting things in line for her. Hopefully I'll have a nice Steerman or Waco to train her in by then, but if not maybe she and her 2 sisters will tolerate bouncing around with their dad in a cardinal or tiger.