The idea of pilot shortages at regional airlines may seem mundane to those of you outside the industry, but this has created some absolutely fascinating situations that will impact every air traveler. Most recently, union leadership at American Eagle Airlines (which I’ll refer to as Envoy here since the name is changing soon), opted not to let its membership vote on a concessionary contract that was stated to be the last and best offer from American’s management. American will now do what it can to shrink Envoy into oblivion, but Envoy pilots are betting American won’t be able to pull it off in light of the lack of pilots around the industry. This is a risky strategy, but it does highlight how things are changing.
For years, the regional strategy was the same for most carriers. Mainline airlines looked to a variety of regional carriers to carry passengers for cheaper than they could themselves. Naturally that meant the regional carriers paid lower wages as one way of keeping costs down. That wasn’t a problem because the supply of employees to work at lower wages was seemingly endless. Even the highly-skilled pilot ranks were filled with people willing to do the job on the cheap. And they even paid for their own training, putting them into debt as they worked their way up to the minimum 250 hours required.
Why would the pilots do that? Well, they loved to fly and there was a promise of a better life. With airlines growing, the regionals were an entry point into the sought-after job flying for the mainline carriers. That dream was hit by a truck when the bubble burst in 2000/2001.
Since that time, airlines have shrunk on multiple occasions putting their own pilots on furlough. Meanwhile the pilots at the mainline carriers that remained stopped retiring. See, at the end of 2007, Congress raised the mandatory retirement age for pilots from 60 to 65. So essentially until just about a year ago, no pilots retired. There were a lot more qualified pilots than jobs out there, so the regionals could continue to pay less but those pilots weren’t going anywhere. They were just living on a dream deferred.
On some occasions, regional pilots tried to stand up and demand more. Even if they made short term gains, they were simply marginalized in the long run. The mainline carriers could just move on and pick a different regional. In some cases, that meant the end of the regional entirely. Look at Comair, one of the earliest regionals that succeeded at flying jets for Delta. Its costs were too high, and Delta eventually opted to just shut it down, moving flying elsewhere.
Those regionals with higher costs who failed to bring them down faced certain doom. And that burden usually fell on the employees.
Sometimes the mainline carriers would dangle carrots in front of the employees of their regionals in order to get them to cut wages. US Airways-owned regional PSA was offered 30 more big regional jets if the pilots agreed to concessions just last year. They did. American Eagle pilots were offered more big jets as well if they did the same. They didn’t.
What was the difference in these situations? Just a little bit of time.
I already mentioned how pilots had started retiring again last year, and there are a lot that will be hanging it up in the next few years. That already had people talking about a pilot shortage, but the government kicked it into overdrive with new regulation. In the name of “safety,” they introduced a new rule requiring pilots to have 1,500 hours of experience (or a little less in certain circumstances). That combined with new pilot rest rules that force airlines to hire more pilots to fly their existing schedule means the tables have turned.
Airlines are now struggling to find the pilots they need to fly their schedules at all. Just a few examples that have popped up in the last couple weeks…
- Great Lakes shut down its Minneapolis hub because it couldn’t find enough pilots
- United blamed the timing of its Cleveland hub pulldown on not having enough regional aircraft available
- ExpressJet told United it had to reduce its flying due to lack of pilots
- Republic announced it would stop flying 27 aircraft for United and American because it didn’t have enough pilots
- Silver announced it would drop its Cleveland routes and stop flying its Beech 1900s due to lack of pilots
And that brings us to Envoy once again. The airline’s pilots were faced with concessions if they wanted to get a bunch of big jet flying from American. The union leadership, seeing all these shortages, refused to even let the pilots vote on the agreement. They shot it down outright.
The way they see it, pilots have leverage for the first time in recent memory because there aren’t enough qualified pilots out there. So they are going out on a limb and refusing to make concessions. In other words, they are trying to call American’s bluff.
For its part, American has said if the pilots didn’t agree to concessions, the airline would slowly but surely move regional flying to other partners. Envoy will eventually cease to exist. The Envoy pilots, however, think that American can’t find any regionals to do the flying, considering how many are short on pilots. They think American will come crawling back. I tend to think they’re overestimating their chances.
American will be looking to pull out some of the 50-seat aircraft in its regional system and those pilots will be able to fly bigger jets. American could make a deal to swap them out and give them a fast track to flying mainline. In addition, this shortage is likely a shorter term issue. It’s hard for a pilot to justify spending a ton of money to get 1,500 hours only to get paid a tiny amount of money once they cross the threshold.
While many speculate that the way to fix the problem is to increase wages, I think another solution is more likely. Instead, the airlines can work on putting together (or partnering with existing) training programs that get pilots through without the massive debt they’d require otherwise. It may take some time before the airlines figure out how this will work, but eventually they will.
Does this mean costs will go up? Yes. Will that make it harder to serve smaller cities? Yep. It just means that the government will have to decide if it wants to pay even more to retain service in these cities or if it will just let it go away.
As for Envoy, the airline is going to try to play its hand at the time when it has the most leverage it will likely ever have. Can’t blame them for trying, but it could mean the beginning of the end for the airline if they haven’t played their cards right.
Leave a Reply
45 Comments on "American Eagle Envoy Pilots Throw Down the Gauntlet, Try to Call American’s Bluff"
I agree the way out of this mess is for the mainline carriers to start partnering with the training shops. European carriers have been doing this for a very long time. Lufthansa and BA both do it. They pay for your training, you get a job, and you are just required to spend a set number of years flying for them. It is actually very similar to how you would go the military way of being a pilot.
the airlines have finally learned what a pilot’s reservation wage is.
http://en.wikipedia.org/wiki/Reservation_wage
Somebody going to med school or law school will put up going into debt because they’ll be able to pay it off afterwards with a high-paying job. Why should somebody go into debt to get their flying hours, only to work for peanuts at a regional for several years?
How do new pilots in other countries get their hours? Surely they aren’t all doing it on their own dime (or through the military)?
Many ICAO (International Civil Aviation Organization) countries have a Multi Crew Member Commercial Rating. These are pilots who do not meet the requirements of a Full Commercial Rating (This means they are not qualified to be Pilot in Command of an light air-taxi or charter aircraft, but can be a crew member of an airliner. This is how they meet their needs. A recent
article in Flight International, a researcher related the safety concerns of highly indebted pilots.
Do you realize that a person with “Multi Crew” license is just someone trained to babysit the airplane while the REAL pilots are resting ? With a Multi Crew license you can’t even rent a cessna and fly yourself around because they are only trained on how to push the buttons on an autopilot and not how to REALLY FLY. Do you really want to put your kids on an airplane like that and hope that if there’s an emergency the REAL pilots can get to the cockpit in time ????
Eric – I agree with most of what you say, but I don’t think it’ll take years to get more qualified pilots over the 1,500 hour threshold. First, there are guys that aren’t starting from zero. They just need enough hours to get to 1,500 from wherever they are today. Second, there are ways to lower the 1,500 hours to 1,000 by making it a degree program. The airlines could partner with these kinds of places (Embry Riddle?) to create programs that get people in faster.
There are still plenty of pilots overseas that aren’t flying wide bodies that might come back. There are a lot more companies that hire or contract for US pilots besides ME carriers and China…
Why would they want to come back unless the money is there?
If the airlines are prepared to pay overseas pilots enough to entice them, why not just pay local pilots more?
It doesn’t seem at all likely that overseas pilots would take a pay cut to work with a regional outfit. Well, not the ones that you would want up front in any case.
once american and usair are fully merged…american eagle will dissapear…replaced by american connection= made up of PSA wholy owned(already recipinet of the CRJ900’s)…and piedmont also wholy owned…air wisconsin will cease to exist. the rest of the flying will be divided among Mr.Bedford, Mr.Ornstein, Mr Kanodia and skywest(which by the way will be fully merged with express jet). piedmont will eventually become and all JET operation as the DHC-8’s get grounded because they approach their 40k hour limits.
Think they will shut down ExpressJet and let go of its 5000 pilots during a shortage? Doubtful, this is just the beginning of the shortage. Who will do this flying when no one can cover their own flying. This is the largest “regional” in the country. Pilots don’t start over at other regionals, it happens rarely.
It the curriculum and training at the academy are rigorous enough, the FAA might conceivably lower the hours required below 1500 for its graduates. I think that this is the case with military pilots. They need fewer than 1500 hours to get a civilian job under the assumption that their training meets rigorous standards and their experience might be more relevant.
False, for starters air wis has a better contract and pay than Eagle and are unlikely to take concessions for bigger planes. Seconds, psa only has 35 crj 200s and are already set to receive 30 900s so that replaces almost all of them. Taking on 60 emb 170s would double their fleet and would require them to double their staffing for crappy pay.
Seems like if AA shuts Envoy down even slowly, wouldn’t those out of work pilots want jobs and go to the other regionals AA would start using who would now be hiring more pilots so they in turn would be right back working for AA but at the bottom of the senority list and maybe even making less money?
These pilots need to remember union leaders work for the union so would not loose their jobs, it’s they the pilots that would so they need to step up and not let outsiders decide their fate.
This is exactly the line of reasoning on which Parker and Kirby are betting.
They rejected because AA regional partners are all paying higher wages than AA offered Envoy.
It won’t work that way, the pilots at Eagle have been there for years and certainly most won’t start over again at year one pay. We have a few Comair pilots at our airline but most of these guys went on to do other things.
And this is why Southwest, Jet Blue and Spirit are going to survive. No regional flying, only mainline with mainline pilots. No hub and spokes, just a great route network.
Technicly Southwest & JetBlue have hubs, but they aren’t at the scale of Delta, American or United. They call them focus cities. Look at BWI, LAS & MDW for Southwest – they function like hubs even if that isn’t the intention. As for JetBlue at JFK, that is a hub no matter what you call it.
You set out the issues very well, Cranky. I wonder what impact the new tentative contract Republic just worked out with its pilots will have (assuming it’s ratified, of course).
DesertGhost – Well, we’ll have to see if it’s ratified first, but I imagine this will drive a need for more pilots. They say improved working conditions are a part of this, so I assume that means a less burdensome flying schedule – more pilots will be needed to fly it. Hard to say more than that at this point. Even hard to say that since I don’t know details.
Why was Fee for Departure even created? Maybe it should just be eliminated. I like the Allegiant and Spirit model. I think Southwest is veering toward a major mentality which is sad. Allegiant and Spirit PAX may feel like they’re being cheated but they keep coming back so their models have to be working for the present.
Probably for schedule and equipment. I remember back in the day that the regional carriers could sell their own seats, which presumably means they had more say in the scheduling and aircraft fleet planning
Fee for departure is mostly about risk shifting. The majors wanted a spoke flown, but it might not’ve made sense depending on how you sliced the revenues in general. The majors got the plane to fly where and when they wanted it to, and the regionals only had to deal with making sure the plane actually flew, not if it sold enough seats to be profitable.
While it’s the pilots who think they control this situation, American Eagle have a couple of thousand other other employees in a variety of roles – all doing a fine job. Eagle has done a great job in ground handling other airlines, for example, and it would be a pity to see it suffer. Maybe they’ll spin that off too?
Eagle ground handling is horrible unless you are flying on a plane painted in and operating under an AA codeshare flight. But don’t you worry, that part of the company will continue to exist long after the fate of the flight ops department has been decided.
Ed – I don’t see why the ground handling business can’t survive even if the airline doesn’t. Piedmont has the same thing – a fast-growing ground handling business. I don’t know if a spin-off would be necessary. That may just be the only part left standing.
This faux Craigs List ad seems a pretty accurate depiction of what AA is attempting to extract from the Envoy pilots from my distant perspective: http://dallas.craigslist.org/dal/lbg/4332339424.html
Funny. Except it should be signed by Scott Kirby; Pedro is just a messenger in this chess match.
Oh, but I thought Parker was the answer to all the labor problems at AA? Right Brett? LOL
Perhaps like many other US trained pilots you might like to consider working overseas?
Some of the outfits pay reasonably well for experienced people.
That is exactly why I left AA. I LOVED going to work at ORD every day as an international CSR. I just couldn’t handle the crap pay and bullying by Crandall and Co along with the January furloughs. My language and customer care skills paid better outside of AA. I’m glad I had a chance at my dream job. AA made it untenable.