Overpaid Pilots....yeah right!

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So what should entertainers get? What about politicians (please include kickbacks and bribes as part of their total compensation)?

I see where you're going with this. The aforementioned groups should earn whatever the market offers them. The only reason I say that airline pilots should earn more than the market rate (today's market, that is) is that they are responsible for human lives, and should not be expected to carry their jobs out properly on low wages.

 

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I don't care if you think that $100k is enough. Who are you to tell me what I should or shouldn't make? You sound like a communist.

Coming from someone who no doubt supports any and all airline labor unions. You're calling me a communist? Yeah, I guess you could call me a Communist for saying that airline pilots should earn a wage somewhere above the market rate. Of course, that would make you a super-Communist. After all, a Capitalist would tell pilots to suck it up and accept the market rate, like everyone else. What a crock.

The reason ticket prices are so low in certain markets now is because those markets are saturated. A ticket from LA to NY is cheap because there are 20+ flights a day.

Yeah, and do you think for a second that pilot wages twice or triple the market rate foster saturation?!

 

[fLYbUDDY]

Your arguements up to this point are not sound, because they are not backed by anything other then that a 777 captain makes 250K and that is too much money in your opinon. All you have to support your evidence is the recent struggles of the majors, but your lack of knowledge of the industry prevents you from seeing the root causes of the struggles the majors face.

So what is the "root cause?" I am not claiming to be an expert by any means, but it doesn't take much intelligence to see that higher salary pilots equal a higher operating cost for the airline. Is the management off the hook at "those" airlines? No, I am sure they aren't running an efficient enough airline.

Guess what, a Southwest captain, which most academia people consider the darling of the airline industry and labor relations, makes more then any of his other major peers at his/her position. Does that mean they are a greedy labor union? Well the SWA guys should take pay cuts cause 140K is way too much for a button pusher.

SW however is a very efficient airline that can afford to pay its pilots what they are paying them. Also LUV doesn’t belong to a nation pilots union, and can set a wage based on company policy instead of union policy. Companies like United have been bullied by unions to pay outrageous salaries to their pilots. So do you really think that a top-paying captain at the “major” carriers is worth that kind of money? And do you really think that if they are getting that kind of money, not because the market determined it, but because unions have forced it out of the company, it has no effect on the success and efficiency of the airline? Come on you can't be that ignorant. It’s not even a matter of opinion; it is just plain simple economics. Supply/demand! Heck I would love to see all pilots make 500g’s per year, but unfortunately not at the expense of my money equating into higher ticket prices. So I guess I agree somewhat with you that management inefficiencies could be the deeper root to this cavity in the aviation industry (if that is what you are advocating.) However I do believe one part of management’s biggest inefficiencies is having to pay some of the wages unions have insisted upon.

BTW—You mentioned Southwest. Here is a good article about them, it also mentions Jetblue and gives some more "sound" evidence to my logic (I guess):

here is the link

The Secret To Southwest's Success
Lisa DiCarlo, 04.18.02, 1:57 PM ET

NEW YORK - The secret to the success of Southwest Airlines is not rocket science: low costs attributable to no-frills point-to-point routes and aircraft efficiency. But the largest advantage the airline has over its competitors is that it is the only major carrier that does not belong to a national pilots union.

Southwest (nyse: LUV - news - people ) today reported that first quarter earnings dropped 82%, but it still managed to turn in a profit of $21.4 million on sales of $1.2 billion. Meanwhile, its larger competitors reported hundreds of millions of dollars in losses--each--and they don't expect a profit in the second quarter.

Labor represents the largest expense for all airlines, even the small regionals. But for some carriers, it makes up a crushing 40% of costs. The average is 37%, according to the Air Transport Association. Southwest's pilots are independently unionized, and while its overall labor costs are just slightly below average, they are more efficient because they fly far more hours than those at other airlines. National union rules limit the number of hours pilots can fly.

That means that even if Southwest pilots made the same salary as, say, United Airlines (nyse: UAL - news - people ) pilots, the airline would still be better off because planes would be flying paying passengers instead of sitting idle. Other workers at Southwest are nationally unionized. For example, its mechanics are members of the Teamsters.

At JetBlue Airways (nasdaq: JBLU - news - people ), which last week had a spectacular public offering and whose pilots are not unionized at all, its labor costs are about 29%. In a filing with the U.S. Securities and Exchange Commission, JetBlue cited the possibility of unionization as a risk factor to its business, saying "unproductive work rules" could raise costs and could potentially result in work slowdowns or stoppages in the event of a strike.

Running a profitable airline is very difficult because the fixed costs are so high. But there is little airlines can do about the cost of fuel, landing fees or insurance. The big fish is controlling labor expenses, and experts say that companies must reduce costs or get better efficiency (i.e. more working hours) out of pilots.

"The airlines need to cut 20% of costs to restore profit, and if you don't touch labor it's impossible to see clear the way they will do that," says Michael Dyment, managing director of the airline practice at Arthur Andersen.

and fly-n-high said:

We don't get paid based on what the public sees us doing. We get paid because of what we are able to do. The example about the Sioux City crash was perfect.

Okay your thingy (the part I DIDN'T quote) was loaded with contradictions, unless I misunderstood you. First point though, is it is the state of the economy that determines your pay. And it is a relative factor to consider how well an airline is run by management compared to an economic situation.

But anyways you mentioned the whole Sioux City thing; well, what about firemen and police officers? I am sorry but they take a lot more risks and assume a more heroic position from day to day than the average 121 pilot. So why don't we pay them more? Like 250g's? In my opinion they are well worth it, but unfortunately the economy, as a whole, won’t stand for it. And what about flight instructors? How come they aren't paid a lot more than what they are making now? Based on your logic (at least part of it) it seems they shouldn't settle for anything under 100g's.

 

[nimtz]

Actually, Delta has the highest paid pilots in the industry. Surprise, they're not doing well. That aside, I define any union which demands compensation well above the market rate as greedy. A wage near $140k is excessive, given the current market. In my book, an airline with a properly structured payscale should top out at $110k or so, and start around $70k.



So you claim that the recent struggles at the majors are not the result of competition from low-cost carriers?

Actually yes I would claim that. In case you didn't notice the source of problem for the majors was the drop off in traffic that came with the recession. It's a fundamental law of this industry that the airlines are the first hurt by recession and the last to come back. The majors were losing money prior to 9/11 due to this fact. What happened with 9/11 caused such a dramatic drop in traffic that it pushed the majors to their most depressed state yet seen since deregulation. The simple fact is that even though it is getting better people are not as willing to take an airplane when other options exist.

Accompanying the drop in traffic was the fact that most managment teams at the majors kept capacity up at unsustainable levels, because they foresaw a quick recovery. I remember Gordo at first claiming CAL would break even in '02 and make money '03. He wasn't even close. As a result we had too many planes for too few people. This did not change until after Winter '03. As for pricing, I think the internet has done more to keep fares down then simply low cost competition. The advantages of yield management have been nulled by the consumer having quick access to information. That is something the management teams are going to have to realize and find a new way to maximize revenue.

Sure the low cost carriers have gained significant market share in these times. They tend to do so during recessions, but that doesn't guarentee success when the economy is roaring. Ever heard of People Express. Back in the day it got as much buzz in NYC as Jetblue did. That is not to say Jetblue will have a similiar fate. To an extent they LCC have hurt the majors through pricing, but in the grand scheme they have not really feasted on the majors like the media would lead you to believe. If you look back to the Summer '02 it was Northwest and America West (both national unions btw) who refused to go along with any fare hikes, thus creating an environment where everyone continued bleeding. So we had the worst scenario, too much capacity for way too low of fares. This isn't simple economics, it took a long time to match demand to price in this case. That quite simply was a failure in airline management. You will notice that despite their overpaid employees NWA, CAL, and AMR reported profitablity in the third quarter. That is a definite sign that trends are turning upward. Oddly enough the economy has been out of recession for nearly a year. Got the correlation down yet.

BTW, I could care less what your spread sheet is for wages. If you look back to the mid 90's you'll find that AA, DAL, and UAL even with their greedy unions were making a sh*tload more money then SWA. I'm sure the SWA guys appreciate you calling them overpaid at 140K. Why not start with pay cuts for the executives like mine who made 12 million a year when the company lost 75 million in a quarter...

 

[nimtz]

SW however is a very efficient airline that can afford to pay its pilots what they are paying them. Also LUV doesn’t belong to a nation pilots union, and can set a wage based on company policy instead of union policy. Companies like United have been bullied by unions to pay outrageous salaries to their pilots. So do you really think that a top-paying captain at the “major” carriers is worth that kind of money? And do you really think that if they are getting that kind of money, not because the market determined it, but because unions have forced it out of the company, it has no effect on the success and efficiency of the airline? Come on you can't be that ignorant. It’s not even a matter of opinion; it is just plain simple economics. Supply/demand! Heck I would love to see all pilots make 500g’s per year, but unfortunately not at the expense of my money equating into higher ticket prices. So I guess I agree somewhat with you that management inefficiencies could be the deeper root to this cavity in the aviation industry (if that is what you are advocating.) However I do believe one part of management’s biggest inefficiencies is having to pay some of the wages unions have insisted upon.

Up to this point the only explanation both you and the other guy have offered as to why the majors have struggled entirely involves employee costs, especially if a national union is involved. BTW, ATA pilots are ALPA and they seem to be a very well sighted Low Cost Carrier, but according to your arguement they are over paid since they belong to a national union. Okay so let me make your arguement more sophisticated since you guys have failed to prove otherwise. Your arguing straight Average Cost per Seat Mile logic, in that the LCC have lower ACSM thus the mainlines are completetly helpless when faced with competition from the ACSM.

Okay fine arguement, but employee costs play a very small role in the ACSM picture. Operating a hub network where airplanes have alot of downtime creates alot of time deadweight on the expense sheet. If you have a point-point network like SWA and to an extent Jetblue, then you can pick and chose when you fly at highest efficency. The majors are too deeply entrenched in their business model to ever match the LCC's efficency and thus dragging ACSM down to competitive levels. This busines model is a great sucess during upswings, but it tends to be a drag during downturns. This lastest downturn is the worst seen since the Reagen adminstration. It's a cyclical business.

There have been studies that have proven that American could have its employees work for free and still not be able to match SWA costs. The only solution would be to totally change the business model that is the backbone of our transporation infrastructure. Then all the sudden people lose alot of the flexibility and timeliness they so love about air travel.

BTW, I do believe the market determines mainline wages. Otherwise SWA guys wouldn't be paid like they are right now. Unfortunately since we are forced to do collective bargaining to get fair representation, it also means we are binded to contracts with specific duration. The DAL/UAL wages of 01 would have been easily supported by the market in 98, but wages are sticky in this business. I did not hear many people complaining about pilot salaries when UAL was posting 75 million+ profits. Unfortunately there has been a tendency for pilots to secure wage increases just as things are going down and then have to wait until past the apex of an upturn to get back what we have given. I would love to see our wages change based on GDP growth, but management will never allow it.

 

[dmspilot00]

I've been saying this over and over. People that blame pilot wages for the airlines problems need to stop and think. Do the math. A Captain making $250,000 per year and flying only 50 hours per month will cost $4 per ticket for a 1.5 hour flight with 150 passengers. If the First Officer makes half as much, that's $6 a ticket for the flight crew.

Aren't taxes on airline tickets in excess of $30? So maybe you should blame ticket taxes for the airline problems. No, I'm not saying taxes are the reason, but if the pilots cost $6/ticket and taxes are $30/ticket which seems to be more of a problem? And don't say "but the passengers pay the tax, not the airline" because it doesn't make a difference. No matter who the tax is placed on, the airline is still getting $200 for a $230 ticket, for example. If the taxes were eliminated the airline would save $30 per ticket (you could also say if the tax is elimated and the ticket price is increased to 230, they would earn $30 more in revenue per ticket whil keeping number of passengers the same because demand would not change).

Also, it doesn't matter what industry, almost all companies (especially large ones), pay higher wages than the market rate. This: 1. Creates unemployment, 2. Deters employees from quitting, and 3. Gives employees an incentive to work harder to avoid getting fired.

The idea that a person should be paid what they are worth (comparable worth programs) is a socialist idea and would ruin a capitalist economy.

Why are pilot wages the way they are? There is a high supply and low demand for low-time pilots because everyone wants to be a pilot, driving down salaries. There is a low supply and high demand for high-time pilots, driving up salaries.