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May192009

« Colgan 3407: Fatigue, Commuting and Compensation »

Justin Bachman at Business Week is fast becoming a must-read aviation reporter. In a May 17, 2009 column, Bachman asks: Have Airlines Cut Too Deep? This question of course was also being asked at the NTSB hearings on Colgan Airlines flight 3407. What makes Bachman’s work a must read is the context he provides on the economics of the situation. That is what the best reporters do.

But context in the reporting on Colgan 3407 was generally lacking in many of the press accounts. We read about the most sensational aspects of the story, like one pilot commuting from Seattle; like the other sleeping on a couch in the crew lounge; like the salaries paid at regional airlines; that somehow flight time/duty time was at issue; and of course fatigue. You didn’t need to read too far between the lines to see the supposed correlation between salary and safety.

 

Fatigue and Commuting

Unless the flight crew was on a suicide mission, this is a grossly unfortunate attempt at sensational reporting. It is incumbent on flight crews that choose to commute to arrive at their domicile rested and fit to fly a schedule that complies with flight time/duty time regulations. And through it all, there was no mention that “Sully” Sullenberger lives in Danville, CA and is based in Charlotte, NC. Or that the same flight time/duty time limits that applied to Sully’s trip applied to the Colgan crew’s trip as well.

Fatigue is a difficult issue. To conduct a meaningful scientific study, one must first assume that the crew is rested prior to the trip that they are scheduled to fly. That is their responsibility. In the case of the Colgan crew, the two pilots did not meet that obligation to the company, their fellow crew members or the passengers on the doomed plane. What is certain to come will be scrutiny on the issue of commuting and a debate as to whether we will return to the days when crew members are required to live in their domiciles.

Already some claim that low salaries force airline employees to live in places other than the metro areas where hubs are located. But that’s an individual choice, and most cities have a broad range of housing available.

The subject didn’t come up in the Sully case in part because, as a captain for a major carrier, he likely makes a pretty good living even after the concessions imposed on US Airways employees and so many airline workers as the industry struggles to turn a profit. But I’m pretty sure living in Danville, CA is not cheap, nor is Seattle known for its budget housing.

But long commutes for airline professionals should be reviewed and possibly prohibited if there is a connection between that travel and fatigue. And the fatigue issue cannot be studied until commuting practices are completely divorced from the regulations covering time on duty for flight crew members.

My guess, however, is that as the Colgan investigation continues, the real debate is going to involve pay.

Over the past weeks, there has been discussion here and elsewhere about the role of seniority in the airline industry and a system that chains flight crews to the fortunes of a single carrier because they risk losing the benefits of seniority if they change jobs. I’ve joined others in advocating for a national seniority list that will help crews preserve the seniority credits they’ve earned in the event of a merger of two airlines. A national seniority list also would provide portability in the event of furloughs or an airline’s shut down, meaning a pilot or flight attendant wouldn’t have to land at the bottom of another carrier’s list and all but start over.

This system wouldn’t offer a job guarantee – there’s no such thing in the airline industry -- but in the event a surviving airline is hiring, an employee would have the opportunity to compete for an open position and be paid in keeping with his or her experience.

As I envision it, a national seniority list would not serve the whims of those who perhaps want to fly for a carrier in Florida in the winter and a different carrier the rest of the year. Seniority is not necessarily an indicator of the industry’s or a company’s best employees – as important as experience is. But it does serve as the structure that governs pay and benefits.

So let’s talk about pay. Today’s regional industry is yesterday’s B-Scale. Back when the industry began experimenting with a tiered pay scale, the unions argued to get rid of B-Scale wages because one employee doing the same job with the same seniority should not be paid less than another. While the advent of the B-Scale compensation structure in the mid-1980’s led to explosive growth for the industry, the unions were successful in eliminating the two-tier wage scale in the subsequent round of negotiations.

Today, regional carriers like Colgan, Comair, American Eagle and others account for roughly half of all domestic departures. The regional sector has experienced explosive growth because small jet aircraft have allowed airlines to continue to serve smaller markets that couldn’t support bigger planes, in addition to cost and competitive pressures in the industry that have forced down average wages and benefits.

Here is where Business Week’s Bachman provides the proper context: “Anyone horrified by Shaw's [first officer on Colgan flight 3407] salary must also confront their own primary motivation when booking an airline ticket: finding the lowest possible fare. The two are connected, say airline executives and pilots. "People will spend three hours on the Internet to save $8," says Arne Haak, vice-president for finance at AirTran Airways (AAI). "You know this! You do it yourself."

 

So, What to Do?

Pay rates for pilots have been largely dictated by the size and weight of a particular aircraft type. Supporting this is the idea that more responsibility is associated with flying 250 people versus 130 or 50. The recent NTSB hearings highlight the pay discrepancies between mainline pilots and regional pilots. They are very different sectors flying very different revenue generating flights. But . . .

The pay differences between the mainline and the regionals have become too great. In many ways, the gap between what captains earn and what first officers earn has grown too large. It used to be said that unions employ practices that eat their young. But with an industry in contraction, we have reached a point where current pay practices even eat the old. As the legacy carriers are forced to reduce capacity even further, we now have former captains flying as first officers on the mainline. That’s taking seat progression the wrong direction.

Much has been made about executive compensation in this industry and across the US. But perhaps we should look at pay practices elsewhere in the industry as well. Should a pilot flying 130 passengers be paid three times more than a pilot flying 50 passengers? I think not. Just as it is time to rethink seniority; it is also time for the airline industry to rethink how flight crews are paid. With lighter materials ensured on tomorrow’s airplanes, weight becomes less of an issue. Carriers’ fleets are increasingly made up of smaller aircraft. Perhaps it is time to shed the complex calculation that goes into pilot pay, and consider salaries for cockpit personnel and flight attendants.

Such a system certainly would have better served the first officers at the mainline today who once sat in the captain’s seat. Those pilots took a disproportionate cut in pay relative to the captains that were not forced to move from the left seat to the right during the last restructuring. Given that segments are typically divided between captains and first officers, the industry should reconsider the 35-50 percent difference in their pay. And differences between the mainline and their regional partners should not be 200 percent.

I am certain that a transition to a new pay system will increase costs to the industry. But either the unions get their arms around the issue and come up with a more equitable system, or someone will make that decision for them. Pilot wages are inextricably linked to the industry’s ability to bring in revenues. As we continue to rethink what will help strengthen our domestic airline industry, we should also be thinking about how we allocate those pilot labor dollars.

I am suggesting a sea change in thinking about compensation. Further what I am suggesting will require a challenge to those who fail to recognize new realities in the industry, among them some of the union leaders who have responded to new competitive challenges with nothing but stubborn recalcitrance. In an industry that cannot earn a profit on a sustainable basis let alone earn its cost of capital, maybe the compensation structure that Captain Sullenberger speaks to should be changed to in order to obtain the best and the brightest on all levels.

The upside would be less but the perception that somehow safety of the airline system is somehow tied to salary would be addressed. Moreover, a salary structure is more stable, more predictable, more in line with revenue picture that drives the global industry and certainly more in line with an industry that will not experience the rampant changes in technology that drove productivity of employees in the past.

It is a conundrum. But while in the restructuring mode, address the fundamentals. The airline industry can learn from the head in the sand mistakes made in the auto and steel industries because if not fixed, the industry will continue to contract.

Reader Comments (4)

I couldn't agree more, there are some excellent ideas here for the industry.
It is very frustrating to be in the position of working for a company increasingly deteriorating work rules, driven by arbitrary re-interpretations of a vaguely written contract and not be able to think about leaving without having to consider living on first year wages again. Not that second year wages at a regional are that great anyway, but the point is as you say that the experience should be accounted for when starting a new job.
The Unions have indeed eaten their young for too long as well. I believe this reflects the same selfish attitude (on the part of senior pilots that control many of the unions) that drives customers to find the absolute lowest fare they can. I'll be surprised if the unions change their thinking enough to address this though. Perhaps we need to have an alternative minimum wage for safety critical positions.
That selfish thought process we see everywhere I think is a basic character flaw we as a nation have developed, one that requires a bit of honest reflection upon who we are and who we want to be. That absolutely needs to include the executives and also the shareholders who make no contribution to the productivity of the company yet expect a dividend to be paid on the stock they bought at the lowest price they could. I'm not saying shareholders shouldn't get a return on their investment, but that return should not be the only thing they consider in voting on how the company is run.
Jumping back to commuting, I would like to add something regarding why people commute. A lot of the senior crew members at my company refuse to buy a house in base because the company has on several occasions closed bases on short notice in the past, in one case a base was not even open a full year as I understand it. I can see their point, not wanting to uproot their family to live in base only to have the company close that base.
Regarding rest, it really needs to be more strictly defined by the FAA. Travel time to and from the hotel should not be counted as rest as it is now, particularly when there are some places we stay where that van ride approaches half an hour each way. Combine that with an 8 hour reduced rest overnight and your working the next day on 5 1/2 hours sleep....I've had that going into a 7 leg 14 hour day, that is unsafe and it should be illegal.
Again, very good points in this article, thanks for writing.

05.26.2009 | Unregistered CommenterR.B.

Totally agree with you, Bill, and it is aboiut time the way pilots are paid is readressed. The notion that a pilot flying a 250-seater aircraft is somehow more productive than one flying a 50-seater is ridiculous. The extra ASMs they produce are purely a matter of managerial decision (what aircraft to fly on each specific route). It is like saying that the auto worker that places the wheels on the Caddilac Escalade is more productive than the one that places the wheels on the Malibu just because the Escalade brings in more revenue to GM.

The same should be said abiut seniority. If you work in most industrial companies and you are willing to take the crappier shifts (work nights, weekends, holidays, etc.) you get paid more. On an airline, if you have enough seniority, you not only get the good shifts but also get paid more. That makes no sense.

As a retired pilot and an investor, I am disturbed by some of what I read here.

First, R.B's notion that shareholders don't contribute to productivity is rediculous! To quote a line from the movie "The Right Stuff" - "No Bucks - No Buck Rogers". Where do you think the money for those big airplanes comes from? I believe that Southwest is the only airline still paying a dividend (a paltry .28%) and I'm pretty sure that American Airlines has not paid a dividend since some time in the 1980's. The only resonable question is "Why are people still investing in the airline industry?".

There is no "fair" way to merge the seniority lists of two different airlines. The growth history of each company is different and the future prospects of the employees are totally different. The best examples are the TWA-AA merger and the America West-US Airways merger. One employee group in each company would have been on the street looking for a job had the merger not taken place and the future prospects of the employees at the viable company were reduced. Ask any mediator how hard it is to make a 'fair' merged list. Merge that!!!

A "National Seniority List" is a really soft-headed idea and I am surprised to hear Bill support it (or did I mis-understand?). No pilot group at any carrier would make any concession to keep a failing company going when they had a reasonable prospect of finding a job at another carrier.

Then to form a "National Seniority List" you have to answer the question "What constitutes a 'start date'? When the pilot got hired at a regional carrier or when a pilot got hired at a major carrier or when a pilot entered the military? Talk about a can of worms!

Miguel Pires seems to have a really distorted view of productivity to me. No doubt he thinks the pilot with only 50 seats should get paid as if he had 250 seats. I wonder where he thinks the money is going to come from? If he thinks the pilot with 250 seats should be paid as if he had only 50 seats, I wonder where he thinks the pilots will come from?

I think it is time for a little 'reality check'. O.K., I'm in my foxhole now, fire away!

06.23.2009 | Unregistered CommenterBob Maurer

Unless there is a new issue of stock (as Mesa just did), I fail to see how stockholders are subsidizing new aircraft, which are usually leased now anyway and payed for out of the revenue stream. My point was that in the stockholders you have a group of people who have tremendous sway in the top decision making processes who likely don't know very much about the very specialized nature of the airline business. In order to make good decisions and pick executives who can run a successful airline I believe you need to understand the business to a greater depth that the dollars and cents bottom line; some do I'm sure, but my guess is the majority do not.
I agree with Miguel about pay actually. Regional pilots work tougher schedules (5-7 legs a day in 13-14 hours is typical), fly aircraft that are less automated (in some cases very "hands on"), have less time off, deal with a management organization that quite openly makes as miserable as possible to encourage "movement" and yet get paid a fraction of what mainline pilots do. I could agree that the job should be less rewarding in your junior years, but it is completely ridiculous for it to be as skewed as it is now.
I have no problem with the weaknesses in my ideas being pointed out, it is an opportunity to learn. However Bob, I would like to seem some constructive ideas. The industry is a mess, you can not argue otherwise.

06.25.2009 | Unregistered CommenterR.B.

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