What do you do when you want to attract new candidates to a job? You pay more right? Having to cancel flying due to not having enough pilots, that’s exactly what some airlines have been trying to do by raising starting pay and offering bonuses in order to at. This has created a few problems, though.
The first is that pilots are typically unionized groups. This means that pay and other portions of compensation have to be negotiated. At first glance, that wouldn’t seem like a problem. What union would turn down a raise? Many probably wouldn’t except that this isn’t a raise for all the pilots, it’s a raise to attract new hires and does nothing for more senior pilots, who are already there. Because of this, some of the affected unions, particularly at regional airline Republic Airways, are pushing back through the legal system to say that any pay changes must be negotiated. This means no raises until that is settled and therefore more canceled flights. It also highlights another problem with the whole mess.
Regional airlines have built their models off of longer contracts and lower costs. Unless they can negotiate higher pay from their major airline customers, many of these carriers are on tenuous ground. If their pilot pay goes up, which it almost has to in order to attract and retain pilots, then their costs will go up. Costs go up, need more revenue to make a profit. No profit=no bankruptcy. This whole mess is highlighting what has been a broken model for a number of years by offering substandard costs on the backs of pilots and other employees willing to take lower pay for the hopes for that major airline job down the road. Now the pilots can get those jobs much more easily and are taking them as they can. Prospective pilots are looking around and saying that they aren’t willing to make the $20k annual salary that many of us made our first year (if that) and are going off to become accountants or something other than a pilot.
These companies are in a tough spot and we may be seeing the remaking of an industry. It also means that pilot pay must come up to attract candidates and meet the demand. In this article, Motley Fool does a nice job of looking at this through the eyes of an investor, showing that this is not just a pilot or airline problem. Of course, bankruptcy would not be painless for the existing pilots. Keep your eyes out. It’s a great time to become a pilot, even with industry changes on the horizon.