When people find out I was an airline pilot, nine times out of ten, the response is something akin to, “Wow, no wonder you can afford to ride your bike around the world!” I usually respond to this kind of statement with a quick insider lesson on the realities of the US airline industry in which I focus upon dispelling the myth of huge salaries and lavish lifestyles. Most people are surprised to find out, for instance, that the airline industry has gone the way of most other U.S. industries; racing to “the bottom”. In this post, I’ll give you the short version of what I learned, first hand, about the industry and it’s recent history, and its effects on the related workforce.
The 1980’s :: Effects of Deregulation
Following the airline industry’s deregulation in the late 70’s, and the corresponding rise of “discount” airlines, major airlines – in order to compete with non-union carriers – struggled with how to create lower wage, so-called “B scale” pilot jobs. The industry was in turmoil thanks to the same “race to the bottom” mentality that generally follows deregulation of any industry. Since discounted fares were gobbling up market share and so much money was at stake, the need for majors to increase their bottom lines at the expense of pilots was obvious. For guidance in doing so, the airlines needed only to look at the rest of US industry, which had already started turning its back on its domestic labor force by moving its production to places in the world ripe with desperate populations (with little power to argue against meager wages) and no meaningful environmental and labor regulations. Unwilling to raise ticket prices and desperate to figure out a way to outsource their labor, airlines were nonetheless thwarted by a combination of diligent labor unions, government oversight, and poor timing.
The 1990’s :: Effects of Outsourcing
If the prior decade was an example of bad timing, the 1990’s would present an unparalleled opportunity for airlines to join the growing ranks of major industries successfully outsourcing their production and “off-shoring” their labor.
For many years, US airlines relied far more on large aircraft to funnel passengers from outlying cities into their hub airports, this in support of the so-called “hub and spoke” system that is still with us today. However, large airplanes and appropriately compensated crews cost money. Therefore, to get around the unions and thus achieve the post-deregulation fare structure that rewards carriers that charge less for seats, major airlines began in earnest in the 1990’s to place more emphasis on their commuter divisions (smaller wholly-owned companies with smaller airplanes that “fed” customers from smaller cities to the hubs). And around this same time, and sparked by bankruptcies that were beginning to shaking the industry, many of the largest carriers sold-off their commuter divisions for much needed cash. Slowly but surely, mainline carriers began the process of shifting more and more flying away from well-paid “mainline” crews and into the hands of their less experienced and lower paid “regional” replacements.
It was no accident that this outsourcing of labor coincided with the financial turmoil rocking the industry in the closing decade of the twentieth century. Working within the flexibility provided by the concept of the “The Shock Doctrine” (the title of Naomi Klein’s ground breaking expose), these and other cost cutting measures were presented to unions as ‘necessary evils’ by management; essential in staving off insolvency. In fact, many times these actions were achieved while companies were embroiled in bankruptcy proceedings. That individual pilots largely failed to see the writing on the wall is testament to the disruption and anxiousness that results when you don’t know if you’re going to have a job the next day. And that pilot unions with resources and experienced leadership also missed the slight of hand also says a lot about the effectiveness of unions in the decades following the Reagan-era union busting.
In defense of their own actions, airlines routinely claimed that by using smaller aircraft to feed their hub operations they could offer lower ticket prices and thus increase frequency of flights for their customers, both of which, they argued, would translate into more work for their mainline pilots. And since a small airliner requires just as many pilots as a larger one (exactly 2) increased frequency meant more airplanes and, hence, a net increase in the need for pilots. This scenario pleased pilot labor union since more pilots meant more dues. And it pleased inexperienced pilots too. In fact, throughout the 1990’s, fresh low-time pilots were being hired at record rates to fly jet aircraft – something that until that point was totally unheard of in the history of aviation. Prior to this boom, it regularly took fifteen or more years of commercial flying experience to reach the flight deck of a jet airliner. My own rapid career trajectory, from First Officer to Captain in just over three years, is a perfect example of this phenomenon.
Likewise, cheap oil and the roll-out of a new breed of small jet – referred to as “regional” jets – in the mid to late 1990’s was integral to this maneuvering. The plan went something like this: Worried little about the price of fuel, major carriers sold-off their commuter divisions (which they usually retained some ownership of) and then subleased to them a fleet of regional jets which they correspondingly filled with mainline passengers. Savvy marketing departments followed this up by promoting “all jet fleets” while decrying the noisy and uncomfortable turboprop that they replaced. And the plan worked. Customers on the whole hardly knew the difference; the mainline carrier’s name was plastered on the side of the fuselage and low ticket prices made many simply accept the cramped seating and increasingly poor service.
The first regional jets were small and relatively-short-ranged 35 to 50 seat airplanes. Over time, however, improvements were made to the original designs that dramatically increased their range and carrying capacities. These modifications permitted the use of these aircraft on an increasing number of what had traditionally been mainline routes. The culmination of this effort is evidenced by the fact that one can now fly non-stop from New York City to Oklahoma City aboard a 50 seat jet. In fact, that’s likely some of the only equipment serving that route today since upwards of 60% of the mainline carriers’ lift is now being performed by third party contractors.
The 2000’s :: Effects of the “Democratization of Aviation”
These “advances” coupled with cheap oil, the virtual elimination of pilot pensions (the American taxpayer is now on the hook for these corporate liabilities via the Pension Benefit Guaranty Corporation), and a host of similarly Draconian cost saving measures foisted upon other airline employee groups have together served to bring down ticket prices even further. Some refer to this era as the “democratization of aviation” because more people than ever were able to afford to fly. Of course, there was nothing democratic about the sacrifices that workers were forced to make that allowed this to occur. Thanks to cheap fares, passengers of all walks of life snarled security lines as they flocked in record numbers to the skies. And since some airline was always willing to fly for less, and no regulation existed to prevent it, pay, benefits, and work rules across the board spiraled downward. My once proud profession crumbled.
Today, rather than requiring airlines to charge the flying public even close to what it actually costs to fly, the government chooses instead to subsidize all things aviation. The US tax payer unknowingly picks up the tab for all kinds of externalized airline costs like:
- Pensions (which the airlines say they can’t fund because they won’t raise their ticket prices);
- Excise Taxes (that fund the FAA);
- Fuel subsidies;
- Corporate taxes (largely sidestepped thanks to loopholes and tax credit giveaways);
- State and Local Taxes (state governments fight amongst themselves to win the right to have Airline X’s corporate offices or warehouses or maintenance facilities located in their state based upon how much of future tax revenue they feel it is appropriate to give away; in effect, gambling away their citizens’ rights to little things like roads, bridges, water and sewer, healthcare, education, and other public services).
Our government also either looks the other way or sometimes even supports when carriers’ butcher pay packages and downgrade benefits in order to further lighten the company’s financial burden. This allows carriers to turn a profit which pleases its shareholders. The government’s continual bending over backward to subsidize the airline industry’s cost of business – to the tune of hundreds of millions of dollars a year – undermines any motivation for airlines to increase ticket prices. And so, the race continues – hurtling us all toward the finish line.
The Writing on the Wall
As I write this, the “scope clauses” present for so long in union contracts to protect mainline pilots from the outsourcing of more of their jobs are either being eroded or have been so corrupted as to make them worthless. “Regional” airlines are buying bigger aircraft and flying more and more routes traditionally flown by mainline pilots. Also, the ‘noisy and uncomfortable” turboprop is staging a comeback thanks to what I’ll call ‘third-tier” airlines who, thanks to technological advancements and the increasing price of jet fuel (new higher capacity and longer range turboprops sip fuel, relatively speaking) are underbidding the regional airlines on short- and mid-range routes and thus ‘taking the flying’ away from their regional competitors. And just like the fact that when someone, somewhere, agrees to work for pennies an hour it depresses wages world-wide for everyone else doing the same kind of work, these latest maneuvers do not bode well for pilots when it comes to pay and quality of life.
I know a sinking ship when I see one.
As I sat next to First Officers making less money than some fast food restaurant workers, it became evident that the greediness of the airlines had almost won. But I also realized that by that point there was hardly a battle worth waging. After all the evaporation of the middle class and peak oil are already poised to bring the entire system crashing down.
Learn more About Kai.
You may also be interested in :: Kai’s blog post written for Aviation Justice, A Former Airline Pilot Speaks Out or Looking Back, Moving Forward, a podcast interview with Kai about quitting his job as an airline pilot and riding around the world on a bicycle.