MAJOR Upheaval

[atpcliff]

Hi!

I just read a very interesting article in December's Aviation Week and Space Technology with regards to the future of the majors.

This year, the majors flew about 75% of the market share. That number is predicted to move down to and settle in at about 45% market share in the next 10-15 years.

SWA is predicted to pass AA to become the largest airline in about 2012? JetBlue is predicted to pass Delta to become the 3rd largest in 2015?

The author doesn't think the current major airlines will be able to change fast enough to avoid being surpassed by the new(er) airlines.

Cliff

PS-I hope UAL survives!

 

[pilotyip]

Productivity

It is all about productivity, fly more time for less money and your airline can also make a profit.

 

[pylut]

The article is quite thought provoking. It caused me to think what kind of idiot thinks he can predict the airline industry to 2015 in this enviroment. I remember a couple of years ago air traffic was predicted to double in 5 years.

 

[flx757]

EXACTLY!!

 

[T45Flyer]

Just an observation...

Pilotyip,
Not sure how you meant that comment. I would say its more like, "Fly for THE RIGHT AMOUNT OF MONEY" and your airline can actually make a profit.

It seems like many people think the airlines owe them more and more money to pay for there ex-wives, bad business dealings, or excessive spending habits. In my humble opinion, this is not a hard job and we are very adequately compensated. (Coming from someone who has commuted across the country for a year now.) On that same note money doesn't buy ya happiness, but it sure can rent it for a while.

-T45Flyer

 

[HA25]

I am so sick of all this talk that insinuates that pilots are over paid.... I mean what the **CENSORED****CENSORED****CENSORED****CENSORED** people? Are you pilots on this site? Or are you plants from the ATA??

The fact is that Delta is paying their pilots more than anyone right now and are still doing pretty good... while AMR and Continental have been paying weak wages and with much tighter work rules and they are in the pits...

There is more to the success or failure of an airline than the pay of it's pilots...

There is management, and other structural issues that relate to financing and capital investments, as exemplified by UAL's woes... they would be in a much stronger position had their managers not tried to combine with US Air and in so doing restructure much of their debt to cause large balloon payments that sunk them to where they are today..

again, DAL is paying their pilots UAL+ wages, and they are doing just fine, especially when you consider the catastrophic economic situation. It's not just pilot wages people!

It's the Economy, Management, and other things first.... so quit selling your selves and our profession so short... you sound like a bunch of trailer trash..

 

[T45Flyer]

Reality Check!

V70T5,
I never said pilots were OVER PAID! I was pointing out that when your compensation affects the companies ability to make a profit, then their might be a problem. Productivity is the key. It does not matter if you pay pilots a butt-load of cash as long as they ACTUALLY FLY to earn it. UAL/DAL/AMR work rules pay pilots a ton of money to stay at home/fly very little. Great for pilots in the short run, but in the long run the market catches up to the companies.

If this is what you consider "doing just fine", I would hate to see what you think doing poorly is! And yes, I am a pilot and do fly for a major.

Dow Jones Business News
Delta Sees Wider 1Q Loss on Hard Business Environment
Tuesday March 25, 11:39 am ET


WASHINGTON -- Delta Air Lines Inc. (NYSEAL - News) said it expects a wider loss for the first quarter amid a difficult business environment, according to a filing with the Securities and Exchange Commission (News - Websites) Tuesday.
ADVERTISEMENT


The air carrier also reiterated that it expects a loss for the full year.

Delta now expects its first-quarter net loss to be wider than its year-earlier loss.

In mid-January, Delta said it expected its loss for the first quarter of 2003 to be "no better than" the first quarter of 2002. In the year-earlier quarter, the air carrier reported a net loss of $397 million, or $3.25 a share. Excluding items, the year-earlier loss came to $354 million, or $2.90 a share.

During 2003, Delta said it expects pension, interest and fuel expenses to increase by $600 million to $800 million, compared with that amount in 2002, the filing said.

In addition, the company said it has about $700 million of current debt maturities and capital lease obligations due in 2003, including $250 million under a receivable securitization agreement that expires March 31, unless the company is able to renew or refinance the facility.

In a letter to shareholders included in the report, Delta Chairman and Chief Executive Leo Mullin said "economic analysts indicate that recovery is unlikely before 2004, if then" in the airline industry.

In the SEC filing, Delta said it expects its capital expenditures in 2003 to total about $1.5 billion, consisting of $1 billion for regional jet aircraft and $500 million for nonfleet capital expenditures. The company's capital expenditures, including aircraft acquisitions made under seller financing arrangements, amounted to $2 billion in 2002.

For mainline aircraft deliveries, the company has deferred delivery of 31 aircraft, so that no deliveries are scheduled in 2003 or 2004, which will reduce capital expenditures by about $1.3 billion during that two-year period.

While it doesn't expect new financing transactions to be available on an unsecured basis, the company does expect secured financing to be available on commercially reasonable terms, although in the current business environment the company said it cannot be assured access to financing.

Failure to obtain new financing could have a material adverse effect on the company's liquidity, the filing said.


- T45Flyer

 

[P3-Adub]

War & Economy ?

I agreee in today's climate the business model is quite flawed for many of the MAJORS, steps are being taken to address these. After this is all over, say 2-3 years down the road, this board will hear a bunch of whining about who is making what and how do we get ours ! Don't have to be an economics major to see that even with massive pay cuts most airlines are still losing bundles of $$$. Could it be the rediculously low fares, fear of travel, fierce competetiveness for remaining travelers, and absolutely stupid fuel costs ??? ( I paid $3.60 per gallon in Florida the other day !!!, this of course is in the private sector but geeze !) I have heard all of the arguments about hedging, work rules, fleet types, and how some pilots think that the job is so easy that we should pay the airline to work there. Great, I enjoy flying too. I just like to think that for the investment in our flying education, whether it be a 6-7 year commitment in the military with exposure to actually need to use those skills like right now, or in the civilian sector where you spend big $$$ and then pay dues with a commuter/freight/flight instruction/135/ type job, it is all worth it in the end because you can actually make a decent living. Not looking to make the bank my father did flying a 747-400 for the last 5 years of his 36 year career, unbeleivable ! But I also think that a 747 captain should make more than a 737 captain, with the planned cuts at UAL alone, it will be pretty darn close. Do you guys think that a 747 captain should pull down a mere 150K a year ? None of this will mater much if the MAJOR is no longer a MAJOR or if they even exist at all, and I am not just talking about UAL.

How to fix it ? Focused management that will stick to the core business during good times with big profits and reinvest in the company, work rules that actually make sense ie. an honest days pay for an honest days work, less fluff in the contracts such as vacation overides and bunkies making 200K per year, less fleet diversity, longer training freezes to keep training cost down and productivity up, govt.s involvement with security costs, a successful outcome of our present conflict, and a serious recovery of the economy. I believe the market correction in pilot pay is happening as we speak. This will have a trickle down effect on everyone else in this industry so don't be surprised.

History in the making, we will be reading about these times for the next 50 years. My point ??? Just airing my opinions as my wife is getting sick of listening to me talk about it with her !

Good luck to everyone out there !!!

 

[StopNTSing]

V70T5 writes:

The fact is that Delta is paying their pilots more than anyone right now and are still doing pretty good... while AMR and Continental have been paying weak wages and with much tighter work rules and they are in the pits...

There is more to the success or failure of an airline than the pay of it's pilots...

Excellent point! My favorite response to the simple-minded "Industry Leading Wages = Industry Leading Losses" argument is AWA. They've consistently ranked among the lowest paid employees of any major, and yet the company can barely eek out a profit even during the boom times.


P.S. Not meant to be a slam on any hard-working Cactus folks....you guys do a great job inspite of your management. And the pilots have my eternal respect for voting down a TA in this environment!

 

[Huck]

How 'bout we all go to this: each and every passenger pays the crew on a per hour basis: Captains $2.00/hr, F/O's $1.50, S/O's $1.00.

Would that be too much money? Even a DC-9 captain would make over $220/hr. And the pax wouldn't even feel it - $3.50 an hour for a 2 hour flight....

The lead flight attendant could "work the door" like a cover charge at a bar. Put it in a coffee can. Tips accepted for smooth landings.

Aw, heck, I'm getting greedy again. I'm supposed to do this for the love of it.

 

[Cadillac]

Huck

Great idea Huck, or pilots could place a "tip" jar outside the cockpit door.

I certainly hope there are liveable wages at the end of the tunnel when I get there. I do not believe pilot salary affects the profitability of an airline to the extent the media/management would have us believe. I do believe that there are probably excesses at the very top ranks of some of the majors, but I would rather not live at 20-40K for the rest of my life.

 

[llowwelll]

Being a pilot is a relatively easy job (most of the time). I don't think the average degree of difficulty of the job is what pilots are (or should be) paid for.

First, part of what pilots are paid for is their highly specialized experience and training just like doctors or lawyers. You can't just graduate from the local technical training instritute and walk onto the flight deck of a major airliner. The vast majority of major airline pilots have spent years paying their dues in either the military or civilian track. One reason being a pilot is easy is because of the caliber of people flying airplanes nowadays. I don't know that everyone or the average joe off the street would consider flying airplanes to be an easy job.

Second, pilots are forced to retire at age 60 and thereby have a shortened period of time during which to accrue earnings. Combine that factor with the dues-paying process pilots go through and you can shave something like 10-15 years off of the average major airline pilot's earning years compared to that of other members of the workforce. Additionally, studies suggest that pilots are at higher risk for melanoma, motor neuron disease, and cataracts.

Finally, and most importantly, pilots are paid to save the day during that very small proportion of the time when being a pilot is not easy. Unlike a bus, you can't pull an airplance over to the side of the road. How much was Capt Al Haynes worth to UAL and the 184 survivors of the Sioux City DC-10 crash? What about the crew of Aloha Flight 243 after 18 ft of the fuselage skin ripped off in flight and the crew safely returned with all 89 pax onboard. How much were they worth?

At present, pilots at the major airlines are very highly qualified and high quality people. The same is true of doctors in marquis hospitals and lawyers in federal courtrooms. The reason why this is (IMHO) is that the high salaries traditionally paid by the major airlines draw them to the job and lure them through all of the dues-paying. Obviously, some pilots would fly, some doctors would operate, and some lawyers would argue cases no matter how much money they were paid. They simply love it and couldn't be kept away. I'd argue that folks like this are relatively small in number esp when they have families to support and other dreams to finance.

The danger the airlines face by drastically cutting the pay of pilots is the foundation they lay for the future. If salaries remain low, very few high quality people will be willing to run the gauntlet required to fly for a major airline. Not when they could make far more money as a doctor, businessperson, or whatever else. Low quality folks would eventually become the norm and would directly impact flight safety which in turn will eventually threaten airlines' bottom lines. As I said in a previous post, this process will take quite a long time to play out (a generation). Right now, we all hope and believe that the downturn in salaries is temporary so we continue to hang in there. How many of us would continue to pursue an airline career if we knew for a fact that the most money we could every make would be $60K as a 20-yr captain?

You all are right. No one "deserves" to be paid more than the market will bear. The only trouble with applying that argument in support of reduced pilot salaries is that it is shortsighted. Airline pilots do deserve to be highly paid and the market will only demand it after low paid and low quality pilots get in over their heads and some number of catastrophic mishaps with planeloads of passengers result.

 

[Bumble Bee]

You couldn't be more correct about the reason we deserve what we get paid... Not many would put up with spending 50-60K on training and when finished hope and pray for a job making less than 20k for the first few years... Management gets paid too, and I certainly wouldn't want the job but when the CEO's yearly check is larger than the entire pilot payroll together something isn't quite right.
I have only been at this for just under four years and was psyched that I almost broke 30k last year... I am willing to pay my dues for a better return in the future. By the time you get there you sure as heck earned it!

 

[Gulfstream 200]

DAL doing "pretty well" these days???

I bet the 1100 pilots on furlough disagree.

 

[HA25]

DAL doing "pretty well" these days???

I bet the 1100 pilots on furlough disagree.

On paper DAL is much stronger than the other majors that pay much less... CAL, NWA, and AMR, that is a fact..

as for going off the rocker... sorry guys, but it's not just this thread, I hear it everywhere.. even with the FO's I'm flying my 560 with who are making $50K themselves.....

I mean how much do they expect to make as an FO on a 16,800lb jet if a 747 captain is to make $150,000???

 

[dogg]

First you have to start with the premise that most reporters and all of the airline analysts and wall st. monkeys have ZERO credibility..... Next, it is a bit of a stretch to put Jetblue and Airtran etc...in the same league as Southwest. Finally had the big 5 not played "stay up with the Jones's" at whatever the cost they might be in better shape to weather a natural down turn in the economy. Rampant over capacity at mainline, excessive fee for departure schemes at the regionals in an attempt to fill the over capacity and the rapid decline in the business traveller(who paid all the bills) has the big mainlines in an impossible corner from which there is no return in there current form.

In the end the reduction in capacity by the liquidation of a couple of mainline carriers, the flood of taxation and fee relief that that will surely bring and the complete restructuring of productivity, pay and benefits within the union and non-union work forces will bring this industry around. That being said, the carriers that have a structure in place as it relates to capacity, productivity and cost in today's environment will probably do okay.

 

[WhiteCloud]

How 'bout we all go to this: each and every passenger pays the crew on a per hour basis: Captains $2.00/hr, F/O's $1.50, S/O's $1.00.

Would that be too much money? Even a DC-9 captain would make over $220/hr. And the pax wouldn't even feel it - $3.50 an hour for a 2 hour flight....

The lead flight attendant could "work the door" like a cover charge at a bar. Put it in a coffee can. Tips accepted for smooth landings.

Aw, heck, I'm getting greedy again. I'm supposed to do this for the love of it.

Beautiful Huck! We could up the tips by having the Hooters girls on board as FA's and hot tubs and backrubs in the passenger waiting area.

 

[Publishers]

Profit and Loss

One thing that sort of gets lost in the figures is the % of profit to sales or return on investment or return on assets. Airlines have been traditionally poor performers on these standard business evaluators.

The question always is not did the airlines make money, but, how did the airlines do in comparison to other businesses. In short, if you invested in business A versus business B.

While United was widely condemned for venturing into other businesses, one thing they were at least trying to do was invest in something that had a more acceptable return.

You can make $10 million in profit but if that is 1% of sales, you pretty well are failing.

 

[tredding@swa]

as for going off the rocker... sorry guys, but it's not just this thread, I hear it everywhere.. even with the FO's I'm flying my 560 with who are making $50K themselves.....

I mean how much do they expect to make as an FO on a 16,800lb jet if a 747 captain is to make $150,000???

VT - I believe that many corporate pilots don't get it when it comes to pay.... the SIZE of the plane argument in corporate aviation is a bad yardstick to use. We who fly jeys should make no less than $60K+, in either seat!!

For example - last year I interviewed a retired airline guy to be my FO..... I asked him how much $$ he wanted to do the job.... after telling me that due to his pension income, his 401k income & all benefits paid by his airline that he would take $5000 to $8000 LESS than what anyone else would expect..... I told him he was fired!! He pointed out that I had not yet offered him the job. My reply was - "if you are not willing to take this job @ what I would pay any other person, then you are not getting the job, additionally... it is not fair for you to undercut MY industry just because you can afford to do so. I would rather hire someone else who NEEDS the job than to pay you less than standard pay." He apologized, and accepted the offer at "full" pay.

Unfortunately, we in corporate aviation do not have a union to represent us, nor do we have a logical method of establishing pilot pay... however, we who are in management owe it to the rest of our kind to keep wages as high as possible. Unlike a commercial venture, a corporate aircraft (Part 91) is an expense with no hope of creating income. IF a company has determined that they need a plane, they also need qualified professionals to fly the darn thing. I believe that weather it is a CJ1 or a GV, captain pay should be something in the $100K+ range.... yea I KNOW - ggod luck getting Mr. X to pay his CJ1 captain ANYthing more than $55K... but my point is - get as MUCH $$$ as you can and ALWAYS ask for $10-15K more than you think you can get for the position. As you are aware, there is VERY little security with ANY corporate job. Better get as much $$$$ up front, as you may not have a job in 6 months!?

As for whining $50K F/Os.... please remind them that there are 1,000s of pilots currently laid off nationwide - they should be happy to be logging jet hours & getting paid fairly well to do so!!

 

[madjack]

I made 48K last year as a first year F/O at SWA. This year i am on track to make 68K (if i pick up extra trips). I work every weekend, long days and multiple legs. i wouldn't call my job easy (mostly because as a commuter i am gone16-18 days a month). Sure i would like to make what my buddy at Delta makes, but when i see Leo taking a raise and bonus while putting people on the street it really pisses me off. why aren't these CEO's feeling the pain that their employees are, i.e. no profit no pay/job??

madjack