Luck is Not the Best Career Decision Strategy

Early Career Decisions

Back in the 90’s when many of us considered what we wanted our careers to look like, we unknowingly considered our possibilities with two related but different strategies: long term and short term. The long term strategy had more to do with what a position would be in the latter half of our working years and near term perspective dealt with how we would get there.  Some folks opted for a military career while other weren’t given,or didn’t take, that opportunity.  My experience is that I had always assumed the financial part of my career would work itself out based on opportunities I could create – an assumption which has certainly changed with more experience (and age).

First, I love airplanes so the thought of flying heavy metal was actually more exciting to me than earning a big salary at the time so really, as much as I’d like to say that I was totally goal oriented and focused, the choices I made early on were based on what seemed to put me closer to that heavy metal.  Most of us assumed, in the late 80’s that the turmoil of the industry was behind us and that deregulation had made its mark.  When in fact, Mr. Toad’s wild ride in this industry was only getting started.

As luck would have it, I found myself about 5 years into a career flying the rich and famous around in small corporate jets and working some piston airplane deliveries overseas on the side.  Sure, I was happy with my job and career but I knew that lifestyle would not be sustainable if I wanted to get married and have a family.  Job security was somewhat elusive in that sector of career aviation.   There I was in 1993 – earning $45K a year and flying a Lear 35 and doing some aircraft repositions and deliveries for an Italian airplane maker. Despite my job satisfaction being a Lear commander at age 24, I felt like there was still something missing from my career.  I often worried that I didn’t have all the information necessary to either stay on the heading I was on or maybe change course.

Making the Change

At that time, Kit Darby’s Air, Inc. seemed to have all the answers about who was hiring (and more importantly how much money one could expect). After familiarizing myself with the data I started to think I was in danger of pigeon holing myself into corporate aviation and so I decided I needed to make a change.   A few months later, my boss at the corporate outfit thought I was crazy when I resigned my position so that I could pay $9,000 for a job earning $22,000 flying a turbo-prop job at a local regional airline.  Yes, in those days some of us actually PAID for a job, whether we should have is another matter entirely but that was the state of the market at the time.  I wasn’t one of those people who had access to a lot of capital to fund my pursuits- like college and flying lessons. In fact, I pretty much always have had a couple of jobs at once and I even got my undergrad degree on a shoestring budget.  With a clear understanding of the sacrifices I was making I needed to consider all variables.  Here’s how I looked at it:

Option 1:  Keep flying corporate for another 35 years at around 500 hours a year and hope for an average of $100,000 per year, all the while moving around to find and keep jobs, keep getting fat living on airplane catering, days sitting in FBO’s with the occasional very cool all expenses paid vacation into some really great places.

Option 2:  Resign my $45K a year job, pay $9k for a $23K job and hopefully build enough experience to get hired by one of the majors who were topping out at $250K per year after 20 years or so.

Based on what I knew about money and financial planning at the time and having worked on boats and small airplanes, I noticed a correlation between toys and airline pilots so my decision was made mostly emotionally, I’d choose the airline life.  As far as how that would work out in the long run, I never once considered other variables like opportunity cost and the time value of money.   Really, I just went the direction that seemed the most popular.  I went with the airline option.

Today at age 42, I get to work for a major airline earning upwards of $240K a year with 15 days off and go to many very cool places.   Did I make the right decision? I like to think so.  I think my daughters (ages 10 and 7) and wife of 16 years also agree I made the right decision since we’ve lived in the same house and in the same school district their entire lives.   But knowing what I know today about finance would I make the same decision today?  Probably so. But clearly I would take some additional considerations into account and rely less on the popular choice or the traditional flight path.   In fact, I’ve often found that what is popular amongst pilots is often not financially sound. Today when I talk to my fellow pilots, I’m often surprised at how people have chosen their career path.  More often than not, like me, it’s purely by luck and mostly based on being in the right (or wrong) place at the right time.  About 5 years ago I was working myself into airline management and decided to put myself through graduate business school. A universal emphasis of any MBA track is starting with an understanding of the time value of money and understanding the nuances of considering choices relative to money.  The truth is that the ability to weigh out the pros and cons of any financial decision doesn’t require an MBA or a CFA, actually the process is quite simple and tools like excel make it a snap.

I will spare you the extensive details about assumptions and variables that go into the calculation (and save it for another article), however if I had to make the same choices today, I would certainly take both probability and estimated earnings into account.   The following calculations are based on what I should have been able to reasonably estimate under best-mid-worst case scenarios back in 1995 and what I would likely consider when making the same decision today.  For the calculations below; n is the number of years remaining in my career, PV is the Present Value of money and FV is the future value of money.   Thus for the calculations below PV = FV / (1+i)N and FV = PV (1+i)N  

As we all know, money made today will buy less in the future.  This formula basically lets you estimate dollars today and what they will be like in the future (in “n” years.)

Option 1:  Stay in corporate for the remainder of my career

Worst Mid Best
Position Year

Starting Salary

Earnings in Position Starting Salary Earnings in Position Starting Salary

Earnings in Position

Corporate Pilot 1995 $50,000.00 $2,036,770.52 $75,000.00 $3,055,155.77 $150,000.00 $6,110,311.55
Total $2,036,770.52   $3,055,155.77   $6,110,311.55

 

Option 2:  Leave corporate aviation for a regional within 2 years and then get on with major

Worst Mid Best
Position

Year

Starting Salary Earnings in Position Starting Salary Earnings in Position Starting Salary

Earnings in Position

Corporate Pilot 1995 $50,000.00 $50,505.05 $75,000.00 $75,757.58 $150,000.00 $151,515.15
Regional FO 1997 $20,000.00 $40,608.10 $33,292.80 $67,597.87 $42,436.00 $86,162.27
Regional CA 2002 $32,000.00 $164,914.28 $42,885.41 $221,013.04 $74,664.57 $384,789.18

Major Airline FO

2014 $30,000.00 $350,688.96 $58,272.45 $681,183.45 $113,977.89 $1,332,359.61
Major Airline CA 2029 $45,000.00 $679,881.08 $177,573.84 $2,682,868.83 $343,118.31 $5,183,992.10
Total $1,463,597.47   $4,115,445.27   $7,863,015.08

 

 Option 3: Stay in Corporate and try to get on with a major within 20 years.

Worst Mid Best
Positon Starting Salary Earnings in Position Starting Salary Earnings in Position Starting Salary Earnings in Position
Corporate Pilot 1995 $50,000.00 $205,101.78 $75,000.00 $307,652.67 $150,000.00 $615,305.34
Major Airline FO 2000 $30,000.00 $453,254.05 $44,163.23 $667,238.80 $75,352.81 $1,138,465.63
Major Airline CA 2015 $45,000.00 $679,881.08 $185,743.42 $2,806,298.67 $260,040.79 $3,928,818.14
Total $1,463,236.91   $4,086,096.80   $6,167,982.71

 

As you can see, just looking at the numbers and based on what I knew at the time, I accidentally made the best choice.  Moving later wouldn’t have been a bad choice and it’s good I had options, but paying for that job more than paid me back over the years.  I’m going to go over this more in coming articles, along with a calculator so that you can calculte this view for yourself based on what you know today.

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