Friday, February 21, 2014

Question: Would you get on a plane flown by a pilot making $21K

It looks like some of the regional airlines are having to shut down some of their lesser routes – you know the ones, Air Egregious flights from Podunk to Schlumpville – because there’s a pilot shortage.

In theoretical life, labor shortages usually mean an increase in wages.

As so often happens with theory, the real world tells a different story.

Race to the bottom pricing – as low cost regional carriers compete to get that vaunted Podunk-Schlumpville route – does eventually reach the point of no return on your investment. Eventually, if you can’t charge enough to cover your costs, you will go out of business. As I have seen happen in my very own real life. But I understand that airlines are somehow exempt from this law of gravity, and can survive for decades running billions in the red.

The latest problem is that those meanies in Congress – who says that they don’t do anything? – have mandated that even the pilots on crumb-bum airlines have to have a certain level of training before they can be certified to carry passengers.

This training can cost $100K – all on the pilot. After which you’re going to be happy to graduate into a job where, as a first officer/co-pilot you can pull down a cool $21K? That’s not all that much more per hour than my 17 year old niece makes at The Gap.

Needless to say, Air Egregious et al. are having a hard time wooing pilots. 

While some – those who believe it’s reasonable to entrust a plane full of passengers to someone willing to work for $21K a year -  pooh-pooh the notion of a shortage. But…

“There may be a shortage of qualified pilots who are willing to fly for U.S. airlines because of the industry’s recent history of instability, poor pay, and benefits,” ALPA President Lee Moak said last week in a statement that aimed to refute the “myth” of such a shortage. The union says that Emirates Airlines pays new first officers $82,000, “plus a housing allowance and other extraordinary benefits,” and that thousands of U.S. pilots on furlough and working abroad are “eager to return to U.S. airline cockpits—under the right conditions.” (Source: BusinessWeek.)

Top, that, Air Egregious – especially when you’re appealing to folks who don’t want to take the bus, but aren’t willing to pay more than bus fare for a flight.

It’s not just the Podunk to Schlumpville routes that are being impacted:

Flight cuts caused by the pilot shortage have rippled from the tiniest of airlines to major hubs. Wyoming-based Great Lakes Airlines ended service to a half-dozen small towns on Feb. 1 after seeing its pilot ranks slashed from more than 300 to fewer than 100. United, meanwhile, explained the recent plan to dismantle its Cleveland hub in part by pointing to the inability of regional carriers to staff all of its flights there.

Industry analysts, having take Econ 101, do predict that the laws of supply and demand will eventually kick in, and pilot wages will eventually start climbing – although perhaps not to the lofty Air Emirate heights.

Meanwhile, would you get on a plane flown by someone making $21K a year?

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