For pilots who came up through the regional world in the 1990s and 2000s, the news must have been a shock. Envoy and Piedmont, two of American’s wholly-owned regional airlines, are now paying first year first officers the same as American mainline… for the next couple years at least. It wasn’t long ago that some regional pilots might qualify for food stamps. Now, it’s a very different world. What isn’t clear is where this road will lead the industry, but upheaval is likely.
Both Envoy and Piedmont announced the deals, and I had the chance to speak both Piedmont’s VP of Flight Operations Steve Keefer and Envoy’s VP of Flight Operations Ric Wilson to get more information. A quick word of warning: The pay rates at both carriers under these deals appear to be effectively the same, but I’m not sure if the contracts are completely identical. I will be talking about this as if they are.
First year first officers will get $90 per hour through August 31, 2024, up from $51 previously. (This includes a 50 percent bonus that will expire that day, but it’s still higher than what was being paid before.)
Pilots need 1,000 hours in the right seat before they can become captains, so for someone with no right seat time, that’ll take 2-3 years. But now, once a first officer hits 750 hours, they will start getting paid captain wages at that point anyway as part of this agreement. And what does that mean? A second year captain or almost-captain will now pull down $150 per hour, or close to $150,000. This comes with some work rule improvements as well.
This is such a good deal that it took two days between the time that Piedmont proposed the deal and when ALPA agreed to it. These contracts were not open for negotiation. The airlines are simply desperate for pilots.
We’ve been hearing about pilot shortages for some time. The legacies have not had any issues filling their cockpits, but that’s because they could easily steal from their regionals. The regionals have been bleeding badly, and their flying has dropped dramatically.
This is a little rough, but it will give you a sense of what’s going on. The chart below looks at the number of June block hours per aircraft in the fleet. Where it gets squirrelly is that I have fleet numbers only as of December 31, 2021 for most airlines, but I have March 31, 2022 for Endeavor, Mesa, and SkyWest. So the numbers may be a bit off as aircraft either retire or get added to the fleet, but you’ll get the idea.
Daily Scheduled Block Hours Per Contracted Aircraft by Regional Airline
It is a bloodbath. On the left you see December 2019 which is what the airlines were doing at full strength. Naturally December 2020 is much lower, and even December 2021 should be lower since the recovery hadn’t full kicked into gear. But by June 2022, you would expect to see a lot more flying, especially since most of it is domestic so it doesn’t face the same issues as, say, China flying would. But some airlines actually are flying less in June 2022 than in December 2021..
The best performers vs 2019 are Piedmont and Republic, down just a smidge over 18 percent. And that’s good. The worst is GoJet down 75 percent, but that airline flies only business-focused CRJ-550s, so I’ll give them a bit of a pass. Just below that, however, you have Mesa down 65 percent, Envoy down 64 percent, and Commutair down 62 percent.
This isn’t an issue with demand. This is an issue with getting enough pilots to fly the airplanes. Ric over at Envoy told me that the issue isn’t actually attracting new pilots. He said they get 250 qualified applications a month and they only hire 60. He says the bigger issue is that they come in, get their hours to move to the left seat, and then they move on to ultra low cost carriers, cargo operators, or fractional jet companies. Then they eventually move to the big guys. Piedmont says it only needs to hire 40 a month with its smaller fleet, but it needs help both in hiring and retention.
The idea behind this agreement is that it boosts the pay enough that it will keep pilots at the regional until the flow-through agreement kicks in and they move up to American. This gives them more of those 3-6 year captains that they so desperately need.
They have had to put all kinds of extra guarantees in here as well. For example, if a pilot isn’t offered a job at American by the end of their fifth year, they will automatically be given the top 20 year captain rate of $213.75 per hour. Envoy says that shows “our firm belief in the flow program,” but it’s also going to make things exceedingly expensive if American stops hiring in the next couple years. Of course, that is highly unlikely.
What’s most remarkable about this is that American’s first year first officers? They also make $90 an hour (though it quickly rises to $137 in year two). So you can imagine at some point the question becomes… why bother with having the regionals at all? This has been a pilot union dream for years — get rid of regionals and get everyone paid at mainline levels. You have to wonder if this is a step in that direction.
Sure, the pay rates are temporary right now, and they should fall back down, but what if pilot demand is still high? They may need to extend it further. At some point, it may become permanent and then, why not just roll everything into mainline? Both Ric and Steve said there were no discussions happening along those lines, but it’s too early to know where this will lead.
There’s also the question of whether this is at all economically sustainable. Piedmont flies only single cabin, 50-seat jets. When you have pilots making that much more money, it can add a significant cost per seat on an airplane that small. The 50-seaters are getting older and will require more expensive maintenance. Nobody is building new versions of those airplanes. At some point, the economics make it not worth flying those airplanes at all.
These are things that had seemed to be in the distant future before, but things can accelerate quickly. It’s hard to know exactly where this ends, but it would seem likely other regionals will end up in an arms race for pilots, further increasing their offers as a way to steal from each other. While wholly-owned operators are probably safe, you can imagine the smaller independents like Air Wisconsin, GoJet, and Mesa may be the ones left standing once the music stops.
32 comments on “Regional Airlines are Racing Into Uncharted Territory With Big Pilot Pay Bumps”
With many of the RJs starting to get a little long in the tooth, significant increases in crew wages at the regionals, and jet fuel prices high and possibly remaining somewhat high for the next few years, I’d be a little concerned about the future if I were the manager of a smaller airport with only a few handfuls (or less) daily flights, especially if most of those flights are RJs to hubs.
Options may be much more expensive and/or limited a few years from now for business travellers if the trends continue, but we’ll see how the next black swan impacts the industry.
Exactly.
There are two sets of airports that should be worried: The subsidized airports like Hays, KS and Watertown, NY, and the small, unsubsidized places like Valdosta, GA and Erie, PA.
Service to these places was already headed to a slow, painful death as the 50 seat planes wore out, but the pilot shortage will make it worse.
I’d love to see a new design for a ~40-80 seat airliner come out, preferably powered by a new generation of turboprop engines. I know that much of the general public isn’t a fan of turboprops, but when used for flights of < ~400 miles between smaller airports and hubs, the difference in block times compared to RJs isn't that significant, while the fuel savings can be very significant.
I doubt it will happen, but if trends continue it seems like at some point in 5-15 years there may be a reasonably sized niche for such a plane, especially if a happy medium could be found for the wages for the crew operating such a plane and if a freight version were also viable.
The ATR-72 is still in production and the Dash 8 is as well (at least on paper) so those are still an option if carriers want them. But they don’t seem to, at least in North America.
Yeah, I really like flying Dash 8 Q400s for short hops. Love the view from under the wing. (I also find it really fun just to watch the wheels hit the runway on landing!) I actually wish the smaller variants were still in wide use: at the airports I fly out of, when Alaska/Horizon and Air Canada switched from 37- or 50-seat Dash 8s to the 76 or 80-seat Q400s, they cut frequencies from a robust 3-4 daily flights, which enables good connections to most destinations through the hub, to 1-2 daily flights, which means a many hour or overnight layover is typically required for all trips.
It will be interesting to see the impact of the new Regional pay scales on mainline pilot wages. If a 45-seat ERJ pays $214 per hour, what is a 300-seat widebody worth? Or, for that matter, a 150-seat 737/A-320?
It’s possible we’ll start to see some deterioration in the “bigger plane means more money” scale. My understanding is that the main driver behind this idea is that bigger planes carry more people, so it’s a bigger responsibility. This has never entirely made sense to me, at least not to the degree of difference, since the most work (and most potential for trouble) comes during takeoff and landing. The pilot of a 300 passenger widebody may only perform a single takeoff and landing in a day, where the pilot of a 50-passenger RJ performs many more. If the 50-seat pilot flies 6 flights in a day and the 300-seat pilot only flies one, they’ve had the same number of lives in their hands.
Now the 300-passenger plane costs much more than the RJ, so there’s more responsibility there too, so how much the scales will narrow isn’t clear. But I do think we’ll see some movement.
I think you are omitting the revenue factor. Yes, 300 lives over the open Atlantic or Pacific is a much greater responsibility (and liability) than an ERJ flying MGM-CLT 2 daily roundtrips. But the BIG factor is how much REVENUE is generated by the flight. The pilot unions use that data as part of their negotiating stance. Yes, the airline sells that MGM-CLT seat 4 times compared to the widebody selling it once, but the revenue generated by those 4 ERJ legs pales in comparison to the widebody revenue when you consider first and business class fares and international cargo revenues.
I can understand your point but the responsibility doesn’t change any more or less based on the distance flown whether it be over land or over water. It might be more complex; however, the responsibility doesn’t change. It doesn’t matter if we fly 1 pax or 300, they are the precious cargo we vow to get safely from Point A to Point B.
The size of the aircraft shouldn’t matter that much regarding pilot pay. Are the regulations; ways of flying; types of approaches; types of departures; etc…, any different for an aircraft that carries 50 people compared to one that carries 200? This has always been a misunderstanding to me. I’m retired military and have flown mostly helicopters from the small Bell 206 to the Huey to the Blackhawk to the S-76 variants and the EC-135. These aircraft carry a different amount of people based on their size but the responsibilities did not change. We flew a ton of IFR in helicopters as well. I also have an ATP in rotorcraft so I cannot understand how size matters regarding pay. Let me use the Air Force as an example of pay and sizes. Do you think a C-130 pilot, an F-16 pilot or the pilot of a 747 flying for Air Force One have much of a difference in pay? I know this is apples v. oranges a little when comparing military to commercial work but my point is the size. When I flew the S-76 (albeit in Africa) I was making around $150k/yr. This aircraft is significantly smaller than any RJ and the RJ pilots were making less than me. I believe the size issue is probably a union driven thing; however, I still cannot understand how this ever came to be because the responsibility remains the same. We don’t fly safer based on the number of pax behind us; we fly the same. Now, with all this being said, I’ll be joining the airline world soon and am pretty excited about the industry right now. I’ve been wanting to do this for a long time.
I wish you great success sir, in your new career. Your timing is fortuitous.
With airfares being as high as they are right now, I don’t see a lot of pricing elasticity. This might push some people to drive farther to a larger airport, drive or move over to Amtrak.
“With airfares being as high as they are right now, I don’t see a lot of pricing elasticity. This might push some people to drive farther to a larger airport, drive or move over to Amtrak.”
That maybe the end goal. By reducing the scope of regional flying you not only eliminate the costs of small jets that are costly to operate, you also have the added benefit of decluttering the airspace near the busiest airports.
Think of all those short hall flights into ORD, ATL, JFK/ EWR, & other hubs largely gone making flying a bit less congested. For example, why fly between MKE & ORD to connect when you can just go directly to ORD to catch your intended flight.
Routes like MKE-ORD and Chattanooga to ATL I can understand a bit more if they continue, as the smaller cities are still fairly sizable and there’s enough highway traffic to get to the bigger city airports that flights on those routes will probably still run, as I’d wager that even at somewhat higher fares there may still be enough business travelers looking to save time.
I’d imagine that would be more at risk would be the service between “small” metro areas and the hubs… Continuing with the ORD theme, I’m thinking of places like Bloomington-Normal, Decatur, Urbana-Champaign, Springfield, Peoria, Davenport, and so on. Leisure flights to beaches with ULCCs from those locations are one thing, but flights to hub may be tough to work 10 years from now, unless pax are willing to pay a lot more to avoid driving a few hours to a hub airport.
Amtrack? What the heck is Amtrack? This is a question asked by most of America because this country is not designed or supported for a passenger rail system. Maybe in the Northeast of America but the vast part of America probably has never been on a train (in America) but odds are they have been a plane…a few times.
You’re right. For years, I lived blocks away from the Amtrak station in Atlanta. But I’ve only ever taken it once: from Penn Station to Providence.
Interesting that there are enough qualified applicants. Here is central Indiana, my town of Carmel just “stole” the HQ of Republic from neighboring Indianapolis with all the typical government bribes and incentives (even hilariously state incentives even though the jobs are remaining in-state). It is a planned two-phase project, with phase 1 being a new pilot training center because Republic said that was desperately needed to attract and retain pilots. The pilot training center is being built as fast as any commercial project I’ve ever seen. There is no real timetable on the second phase, the actual HQ itself. Will be interesting to see which is better–paying the pilots like these two regionals or training them yourself like Republic.
The simple reality is that large parts of the US regional airline system weren’t working even before covid and the resulting current pilot shortage but even larger parts of the regional airline system won’t work now.
As much as some resist “ranking” who is most or least affected by it all, the legacy carriers will be seen politically as the villains for cutting back service to small towns while low cost carriers including Southwest and JetBlue never served much of that segment so will not face the heat as the legacies (including Alaska) will.
Among legacies, Delta realized ten years ago that the economics of regional jet flying wouldn’t work and started the transition away from 50 seat flying but still have a lot of 76 seaters which will be just as challenging economically as 50 seaters were 5-7 years ago. The 717s suddenly look like good choices again alongside the A220-100s. American followed with reducing 50 seat flying but still has the largest two cabin RJ operation, much of which is on young jets so the reduction of 76 seat flying will take years – which explains part of why AA is the first to take a very aggressive role in raising regional carrier pilot pay. United’s massive narrowbody fleet acquisition will help to reduce the amount of 50 seat flying on large routes but UA will have to put alot of capacity into their system just as a recession looms and they will greatly increase their fleet expense, stressing their balance sheet just as AA did over the past decade. Alaska will be making cuts to its system which could be even more politically difficult than the big 3.
The big 3 will navigate a difficult political arena and will work hard to retain their nationwide networks including to small towns but sheer economics of both labor and fuel will mean that the US airline system will be more concentrated in fewer markets and will have large aircraft on average – which means the gap between the GAP between Southwest and the big 3 will increasingly be blurred.
Right off the bat, it’s worth remember that Skywest alone can’t serve 29 cities just as part of United Express, not counting Delta Connection, without a taxpayer subsidy for 50 seat jets and another couple dozen or so can’t have airline service with 9-seat planes without a subsidy. That doesn’t count the subsidized places served by American Eagle and Contour 50-seaters,
When there are 50-odd cities that haven’t been able to support market-based airline service for the last 40+ years, there’s a fundamental problem afoot. This was an unnecessary and unsustainable situation before Covid hurried the day of reckoning not for pilots, but for airplanes. Look at the dates of introduction to service for so many 50-seaters and you’ll see they are clustered between 2000 and 2005. There are literally hundreds of 50-seaters wearing out.
With the exception of Delta’s unique arrangement with their 717’s and A220’s, neither, AA, UA, or AS have shown the slightest interest in planes less than 150 seats going forward, with most orders for 175+ seats.
The future of US air travel will look like Southwest’s route map with places like ICT and PSC hanging onto air service by their fingernails when that old reality of “one can make money. Two will both lose money.” returns in force with 150-seat planes and $200k captains.
This will quickly test ALPA’s theory that it’s a lack of pay and not a lack of pilots. If true, you’d expect to see plenty of experienced pilots who had not considered an airline career (or perhaps Lost Generation pilots who abandoned an airline career earlier) come out of the woodwork to apply.
I’m most interested to see how this plays out between the wholly owned regionals and the contract ones. Envoy and Piedmont are both spending American’s money at American’s orders to protect a few billion in American’s aircraft assets and the feed they provide. Contract players like SkyWest work for multiple majors, none of whom (yet, I think) have offered increased pay to pass through as payroll. And even if one did, others might not. Independent regionals can’t match except from their own pocket, which isn’t sustainable, and majors may not be incentivised to help them.
I agree with you and I also see the 1500 hour rule either getting a reduction to something like 1000 or 750.
It is 1000 for four year aviation degree holders, 1250 two year degree and 750 for military pilots. That’s the minimum to hold a Airline Transport license. The 1500 hours is for no degree off the street applicant. I don’t see that being reduced as that is not the issue. The problem is a Captain needs to sit in his seat for minimum off two years so that a new hire (1500 hour CFI etc.) can gain his necessary 1000 hours of airline experience (part 121) so that he can upgrade to Captain, wash-rinse-repeat.
How do get Regional Captains to stay in their seat for 2-3 years? Pay equal to starting pay at mainline and a promise of a job waiting at mainline after said tour in the RJ.
Without that their going to head off to WN, Spirit, Jetblue whoever calls them first and the entire regional model the legacy mainline carriers relay upon for connections to small cities will collapse, it’s already begun.
I should have elaborated further on the rule. You are right about the different hour requirements. My point is I think with some major airlines no longer requiring a degree, I would see the degree part of the requirement being waved and it just being a flat 1000 for everyone. Besides most professional pilot degrees are not very useful anyway. At least when I trained back in the early 2000’s and every other professional pilot told me to get a degree in something else. Which is what I did sadly.
I do also understand what you’re saying about needing a Captain to be at a regional long enough. I would agree that contributes to the problem as well. I just think lowering the entry point to increase the pool of potential pilots would help too. But I don’t think it should go back to what it was before because there were so many applicants that some were paying for FO time. (Gulfstream Academy I think)
A couple of thoughts come to mind.
First is mild surprise that PSA hasn’t done the same as it’s also owned by American. But I won’t be surprised to see it follow suit in the near future.
The second is the possible, if not likely, beginning of the end of the widespread use of 50-seat single-class regional jets. I believe Delta (the “perfect airline” according to at least one pundit I read on this blog and elsewhere) has announced it’s retiring all of its 50-seaters, and United’s large order entails the replacement of many 50-seat aircraft as well. American seems to be bringing in 65-seat aircraft as fast as it can get its hands on them, so it won’t surprise me to see its regional fleet devoid of 50-seaters in the not-too-distant future.
Another possibility is that this is a way to get slightly larger aircraft at the regional carriers long term. Money talks. And fewer larger aircraft require fewer pilots for a given amount of capacity.
To address the question the piece seems to ask, “How long are regional airlines going to last?” I still think there may be some demand for smaller planes for smaller markets. But the trend toward larger and larger aircraft is definitely here to stay.
Signed,
Captain Obvious
Desert – Annnd PSA has followed.
Thanks for the update.
The industry’s food stamps-for-pilots business model was completely broken and practically immoral for decades. Part of the reason for that was the inexcusably large disparity in earnings between late-career pilots and entry-level. What possible other career in the *world* would have a $25,000 to $300,000 gap between entry and end? The scales are tipping back, a bit, and the industry will have to deal with it. I can see them yanking all service from small airports, but I can also just see ticket prices finally start to go up to account for the increased costs. Airlines *for decades* have *vehemently insisted* that under absolutely no circumstances could cost increases be covered by fare increases. Turns out post-COVID price gouging was all it took to show that was a lie.
Also, can’t wait to see Alaska *not* do the same for Horizon. Despite having all the advantages of being wholly-owned, they don’t even offer flow-through, because, and I quote, “we don’t want those (QX) pilots to get a sense of undeserved entitlement.” Have fun with your airline going under.
> What possible other career in the *world* would have a $25,000 to $300,000 gap between entry and end?
Strongly disagree. Many doctors work as paramedics before they get their MD. Most also have to spend a few years as medical interns working crazy hours and making less on an hourly basis than many retail employees (and let’s not forget that these medical interns are often making critical decisions in hospitals).
Similar examples abound in the legal field, sports, academia, scientific research, the list goes on. Even areas of the business world can be like that.
I won’t argue that starting pay for many RJ pilots can be “low”, but it’s not like that’s kept secret from those seeking to enter the profession or become pilots (or other professions), and people make their career choices accordingly. Over the course of years, pay tends to be at least somewhat related to supply and demand for labor and skillsets.
How many of the careers you listed actually involve taking other people’s lives into your hands for their safety? Yes, I agree with the doctor intern analogy but that’s about it. The intern is pretty much guaranteed a nice lifestyle for his/her sacrifices after residency. The medic analogy I don’t buy because the medic is…not a doctor. Americans don’t want to say at the funeral, “Well, my loved one’s pilot was making $200k a year and yours only made $50k/yr.” The FAR/AIM is a huge document and as far as I know, there is no smaller one for lesser paid pilots. The responsibility, proficiency, knowledge, skills, etc…, are what the passengers are expecting all of their pilots regardless of what they fly or who they are flying for.
This is 100 percent correct, and it’s important to understand this in the context of hourly/wage-earning careers where there is *uniformity* of pay across the different career stages. There is a *huge* gap between a bank teller and a bank CEO, but that is a function of position/job title, not years of service. There simply is no other hourly/wage-earning career that has such a wide (and truly unforgivable) disparity between year one and year 25. That must level out, it’s long overdue.
Given all the talk/focus on the 50 seat problem I wonder (especially if this pay raise is long term or permanent) if this could lead to renegotiation of the scope clauses that keep those 50 seat jets flying in the first place? If the pay is the same it seems to me that ALPA should be able to care less than today about outsourcing of a flight to a smaller aircraft than “mainline” since it’s no longer undercutting “mainline” pilots on pay the same way
If the scope clauses are relaxed it could finally let replacement jets from the Embraer E2 or Mitsubishi Spacejet lines enter service or at least allow more 75 seaters like the E175 to enter the fleet