Why airlines tend to be unionized
philip.greenspun.com
philip.greenspun.com
Some might say going from $MM/year CEO to $18k/year new guy would be a step down, but he seems to be genuinely enjoying the ride. I especially like how he keeps the whole "dot com millionaire" thing hidden on his aviation resume:
http://philip.greenspun.com/narcissism/resume
http://philip.greenspun.com/flying/resume
If you haven't read about the guy, it's worth picking up a copy of Founders at Work just for his interview.
It's interesting to see him slightly back in the public eye as an aircraft nerd.
http://www.npr.org/templates/story/story.php?storyId=1293863...
At its apex aD had 200 employees and 20m in funding and maybe 10m in invoices. However, I'm going to update my resume with your version.
Senior pilots make more than junior pilots because back when the government set routes and fares, the airlines collected higher-than-market revenues, which they could share with the pilots. After deregulation, the industry was no longer so profitable, and the pilots’ union compromised by protecting its existing members’ salaries while letting new pilots make less.
Some other sports-employment models, broken in different ways:
1. The owner-collusion model. A league is exempted from anti-trust laws, and the owners get together to institute rules. There's a draft, and new players can't be hired except via the draft. There is no free agency, or limited, owner-supervised free agency. Basically the "market" is you either do whatever the system tells you, or you leave the league entirely. Most new sports leagues being set up follow this model (e.g. Major League Soccer).
2. The contracts-ban-free-agency model. There's no draft, and you can sign with any team you want. However, the owners have officially or unofficially standardized on an employment contract that requires you to get your team's permission before signing on with any other team, even after your contract expires. Basically a noncompete clause. This is more or less how European club football worked prior to the EU's Bosman ruling invalidating that variety of noncompete (among other things).
The reason junior officers get paid 16k a year is because there are people willing to do the job for 16k a year. Without the unions airlines could probably get volunteers (much like Greenspun who is certainly not doing it for the money) to fly their planes. But then we would have every pilot inexperienced, overworked, and underpaid.
Yes, the airlines are a mess, but he provided no evidence for his arguments. Southwest has been consistently profitable. Why haven't the pilots eaten up all their profits?
Selling the company to the union, or rather, worker-owned companies seem to be the best case solution to the "union problem" - If my employees started unionizing, that'd be my first shot at a solution "Hey, uh, so I hear you don't like how I'm running the place. How 'bout you take a shot?"
Of course, the only way I've ever heard of that working is with large, established unions, which have large established pension funds that can be leveraged.
When you hire someone and they end up doing a poor job, it's your fault, and your responsibility to clean up the mess. This applies just as much to hiring managers as it does to hiring level 1 support techs.
Personally, I think that owners (or shareholders) that don't understand this (and that keep hiring managers who didn't act in the interest of owners at previous jobs) is a big part of what is wrong with our economy.
If pilots were actually taking nearly all airline earnings, why are there airlines at all? Running an airline requires a substantial capital investment, and if the return on those investments is effectively zero (or much smaller than other businesses), then there shouldn't be airlines because it's just not a profitable business, right?
The other thing is, given the rules he outlines, an airline could drastically reduce its costs by hiring more junior pilots and firing senior pilots. How would they hire more junior pilots? By paying them slightly more than competing airlines. So there should be pressure in the market to increase the salary of junior pilots, which long term should lead to higher salaries for juniors. This seems to contradict the authors experience.
This would not be permitted by the union - he covers that later in the article.
Hence the constant bankruptcy / bailout cycle. They are in effect subsidized by the government. I believe American Airlines is the only legacy carrier not to have been through bankruptcy.
What's important to me is airfares are incredibly low and I can fly anywhere I want with insane convenience. And in that sense, the American labor movement is doing exactly what I want: providing an ever-increasing quality of goods and services for me to consume at lower and lower prices.
At least you could before 9/11. Pre-9/11 I would have flown anywhere that was more than 3 hours away. Now I would drive up to 10 hours to avoid flying.
But I suppose if you derive some serious negative utility from security inspections that would make sense for your personal case.
I read this all the time on HN, but I fly relatively frequently I have never had a problem flying post 9/11. Flying out Denver I can get through security in 10-15 minutes tops. The biggest domestic problems I have had have either been delays at the giant airports (ATL for example) or a single long security line at small airports in BFE.
I've been stopped twice for forgetting to leave my money clip in the car (it has a small knife on it). The TSA guy was polite and simply asked if I wanted to throw it away or mail it back to myself. Both times I paid the $10 to mail it back since it was a gift and is engraved. After filling out the paperwork they then put me through the express line so I wouldn't be delayed any further. For a mistake that was clearly on my part they were beyond reasonable.
The biggest issue I've had in the last 10 years was getting shaken down by customs in Jamaica. Third world countries, fun stuff.
I'm sure there are people who have issues while trying to fly, but I don't think it's as widespread as people like to believe. I recently spoke to a friend of mine who happens to be an executive who travels 3 weeks of each month. She has had zero problems from a security standpoint, with delays from weather being her biggest complaint.
how can we explain a 19:1 pay differential..? The answer is to look at who controls the pilot's union: very senior pilots.
Why wouldn't the junior majority vote out the senior minority or leave the union?
It isn't as bad as the UAW, though, where the majority of the voters aren't even workers any more but rather retirees.
Most airlines are made of a lot of junior pilots. Junior is a relative term because you can be with the airline for a decade and be considered a junior. The senior pilot making $300k is an anomaly at the airline, like the Welfare Queen in politics. So when the airline wants to cut salaries these dozen (for a large airline) or so senior guys, that are almost near retirement, are the ones put on the press release as the big bad pilots. To the guy making $300k taking a 25% paycut, its not a big deal, the guy making $16k taking a 25% paycut, BIG fucking deal.
And just like politics, airline pilot unions don't always vote rationally. They could vote in a system that randomizes schedule according to availability, but they'd much rather keep the bid system. I guess its a case of "I got mine" where the senior guys get to choose the priciest routes. And the junior guy wants what senior has even if its costing him. Taxes on the rich are the same, they are an easy target but the middle class don't want it because they might be one of them one day.
I don't think you'll find a person alive willing to say I, with 25+ years, is okay with you firing me if the junior gets to keep his job. No one wants to be furloughed and as you get higher up in the company the stakes get higher so don't expect this piece of union contracts to change. Not for pilots, not for detroit, not even in the IT sector; you know, last hired first fired.
If airlines paid workers according to personal experience and skill rather than seniority within their particular airline, pilots would be more likely to live near where they worked.
Capt. Sully could stay in SF but there are more senior pilots who are just as experienced as him, there. To move up the ladder he chose to go to NC. Hell, even Heather Poole, FA blogger on gadling, chose to take NYC while living in LA. Your choice is either to get experience working at a different FBO, or be on reserve, sitting in the terminal, not getting any experience. Tough choice, huh?
An airline that is successful and growing will enjoy lower costs because of the new pilots being hired for almost nothing.
If you are referring to LCCs most are just a proving ground for pilots until they can make it to mainline carrier. So you have cheap, inexperienced pilots and lots of churn with the best, most experienced pilots leaving for better conditions. I'd like to point out that LCCs like Jetblue and SWA are anomalies. Most LCCs operate on razor thin margins and are usually just a few months away from bankruptcy. The good ones grow the bad ones you never hear about.
Also, for airlines the biggest expense is the plane itself. labor is such a minuscule part of the operating budget that if they are in trouble cutting there is just laughable excercise. The pilots, the flight crew, and the ground crew know this. A declining airline will, in this order, cut routes, crew, and then aircraft. With the aircraft being the 800lb gorilla in the room.
The author is type-rated in the Canadair Regional Jet and Cessna Citation Mustang and has more than 3500 hours of flying experience
Most mainlines require 5000 hours. For now, you couldn't get a job with the big boys even if you wanted to. Anyway, when you do cross that threshold and see things from the other seat I wonder if you'll have the same opinion. In any case godspeed with your career.
Is it expense or what's fixed vs variable?
When you cut routes, you save gas and possibly landing fees. Over time, you save variable labor costs as well. When you layoff people, you save their fixed costs.
When you park a plane, you still owe payments to GE capital. You still have to do a lot of the maintenance. You probably have to pay for parking.
If the unions make it so hard to employ humans, it would only give incentive to further develop auto pilots, and the problem will solve itself.
It's fairly easy to tell a computer, "See that line (runway slope), follow it".
Autoland is very rare and is either used in ideal conditions or in terrible conditions (but then both aircraft and airport AND flight crew have to be rated to Cat IIIc standard - extremely rare occurrence).
Autonomous drones can already fly but they block off dozens of sq.miles for them to fly. Anyway there is legislation going up to allow drones in controlled airspace. Guess what? It requires each one to get the same type rating and hours as a commercial pilot. Which increases the cost significantly.
Being a programmer, I wouldn't want to trust my life to a computer program with no human supervision.
And, knowing just how much can go wrong both with software and with flying, I know I'm not going to fly with such an airplane. Auto-pilot and auto-land systems today work well because they do a very narrowly defined thing with great precision, with the amount of software needed kept to a minimum. A software system that would be able to account for all that can go wrong when flying would have to be very complex and difficult to get defect free (and don't get me started on the idea of remote controlling passenger planes).
and
...the pilots, having expected to collect 95 percent of the airline's profits, will in fact be entitled to 115 percent...
WTF! Did the pilots think about the poor entrepreneurs and shareholders who own the business?
More reason why labour should be fungible. Some unions really rile me up.
Then why don't the airlines standardize their operating rules?
Remember, the current system favours the unions.