Free Agency for Pilots? I think it is here, or will be soon. First some facts and history: In the past pilots were bound by a straight seniority system, in place at all major and regional airlines. If you wanted to be a Captain you got hired and got in line. It was simply a numbers game based on nothing but how long you were at the airline and ultimately where you were on the seniority list. If you were in the top half, you were a Captain.
The pilots had strong unions and they kept the seniority system strictly in place. Post deregulation management went tooth and nail after the pilot unions, first cutting cockpit crews from 3 to 2 then going after pay and benefits. This onslaught culminated in management stripping contracts, zeroing out retirement funds and outsourcing pilot jobs.
Queue; THE LAW OF UNFORESEEN CONSEQUENCE!
Management has successfully broken the unions and “dumbed down” the job of Airline Pilot. However a funny thing happened on the way to multi-million dollar bonus land. They degraded the job to the point that fewer and fewer want it any more. The current recall rate for furloughee’s (laid off pilots) is less than a third. Delta and United Airlines have been forced to hire new pilots because their furloughed pilots (thousands) are not coming back; in short the job is no longer worth it. A historical precedent!
For the military pilot looking at the airlines the reality is a big pay cut and a retirement that will historically not be there. There is absolutely no incentive for a pilot to leave the cockpit of a fighter, to take a huge pay cut and be gone 18 or 19 days of every month. The draw of Airline jobs over the years has been financial reward, an acceptable schedule and a secure retirement. NONE of those enticements exist anymore and thus the draw is gone and it doesn’t stop there, classes for regional operators are going unfilled.
Youngsters seem to be rejecting the idea of paying hundreds of thousands of dollars in training cost for a 20 thousand dollar a year job. The result is not only empty classes, but pilots that do show up have the absolute minimum qualifications. Failure rates in simulator check rides are at incredible levels. Young pilots are routinely being hired with 500-600 hours of flight time. To put that into perspective the average airline pilot is now flying 800-900 in a single year. Do the math on that experience level. Keep in mind, that new hire is not flying a small twin propeller airplane into Rolla Missouri, he or she is flying a jet into LaGuardia. Couple the lack of Military and new entry pilots; and you have a looming crisis for the bonus-boys.
Here comes the other shoe! World wide airlines are expanding at an eye-watering rate. Mid East, Indian, South American, African and Asian Airlines are all growing and China is next. To do that they are hiring US and European pilots, AND they are setting up pilot bases (domiciles) in the USA. They are luring US crews with good pay and work rules plus 401Ks in the pilots name and thus safe. The most earth shattering of their enticements, Direct Entry Captains! FREE AGENCY!
A 15 year First Officer looks at the stagnation of his legacy airline and realizes prospects are not good, his retirement is gone he has taken a back slide from a wide body FO or narrow body Captain and thus his pay has been cut in half. Along comes a Mid East airline that offers him 9K a month tax free, matching 401K, free 3000 square foot home, free private school for the kids, a car, and a limo ride to/from work. Oh and by the way a promise of a future domicile in the USA. It doesn’t take a rocket scientist to do the math!
The pillaging of pilot careers in chapter 11 caused a mass exodus from the legacy carriers. It has not abated; many of the pilots furloughed have gotten on with FEDEX, UPS or South West Airlines. The pay is much higher and the benefits better, they will not be back as evidenced by the return rate. Many more returned to the military, got a pay raise and the promise of a secure retirement, they won’t even consider coming back for years (post Military retirement).
Airlines have been melting down for ever, so what is the difference? Three actually: 1-the job is not worth coming back to. I have an old friend furloughed from a major airline; he has a job with the federal government. For him to return he would take a 20% cut in pay, give up the best retirement system in the world and be gone 20 days a month. To put it into perspective an average Air Traffic controller now makes more than the average Captain and twice as much as the average First Officer. 2- A pending pilot shortage. Yes I typed shortage. 3- free Agency.
The legacy recall lists are merely a muster of who used to work for the airlines. Many have been gone over 5 years, they have moved on and quite simply the job has nothing to offer financially or in family security to bring them back. Over 90% of Airline pilots have at least a college degree; many have graduate and post graduate education. They are putting it to use.
Mean while internationally there is an acute shortage of pilots, so acute ICAO is lowering pilot licensing requirements, no solo flight necessary, abbreviated course. AND the growing International start ups are aggressively recruiting pilots, and not just pilots, Captains. Even legacy Captains are beginning to leave their airlines, retiring early. Now allowed to by-pass the seniority system and go directly into the Captain seat they can transfer airlines with out starting all over.
Virgin America has fired the first volley on the domestic scene. They have virtually thrown out the seniority system by having two separate lists for First Officers and Captains. To be sure the rates are low; however they have opened Pandora’s Box. They think this will keep costs down; instead it will usher in the new golden age for Airline Pilots.
Direct entry Captains can now enter Free Agency, once market forces kick in, Virgin will be forced to raise the bar to grow, because they will be competing with a foreign carrier who pays twice as much and also has a pilot base in San Francisco. Cathay Pacific has 2 USA bases now, Emirates is in the planning stage.
This is the new reality; there will be no world wide air war to produce hundreds of thousands of military pilots, those days are over. Age 65 is merely a five year patch and will actually cause more leakage for the legacies as their Captains services are bid for. Flight schools are closing due to no students and high costs, even foreign students are drying up as the Immigration requirements tighten.
SUPPLY and DEMAND, ECO-101.
The Airlines wanted “Baseball Arbitration” instead they are about to get “Baseball Free Agency”; truly ironic, because they have no one to blame but themselves.