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A Challenge to ALPA Captains Paul Rice and John Prater

On the last day of 2009, Caroline Salas of Bloomberg (edited) wrote an article on the regional airline industry titled:  Pilot Complaints Highlight Hazards of Regional AirlinesIn it were references to Gulfstream International (a training academy and airline) that were first reported by Susan Carey and Andy Pasztor of the Wall Street Journal on December 1, 2009. Salas quotes Captain Paul Rice, First Vice President of the Air Line Pilots Association (ALPA) alleging that the industry contracts flying to regional carriers to circumvent pilot agreements at the mainline carriers. 

Rice says: "The way the industry is structured is that management will go out and find a new airline and start siphoning off the business to whoever will fly for cheaper.  The American public is only just starting to wake up to that. What they are buying is the lowest-cost operation that's available."

This is a gross misrepresentation of the truth. What Rice does not say is that his very own union is a primary reason why the industry is structured the way it is. ALPA and others negotiate contracts with mainline carriers that proscribe the terms on which an airline can outsource flying to its regional partners.  Under the restrictive collective bargaining agreements common in this industry, most airlines can’t even make these important business decisions without the authorization of the pilot unions.

It is high time for ALPA and Captains Prater and Rice to tell the truth and take some responsibility for the current structure of the industry, even when it doesn’t necessarily serve the interests of big labor and its members. 

In a recent post, Sacred Cows and Fatigue, I referenced a thought-provoking column by Michael E. Levine in Aviation Daily that took on some of the debate over regional flying today.  In it, Levine noted that the February 2009 Colgan Air crash near Buffalo raised issues about pilot experience, fatigue and performance that “underscore the need to revisit negotiated seniority rules and pay scales that pay pilots more to fly bigger aircraft, leaving some of the least experienced pilots to do some of the most demanding flying.”

Earlier, in US Pilot Unions’ Dirty Little Secrets, I discussed the complex structure of airline networks that have developed over time through mergers; acquisitions; regulation and, importantly, union influence. And one place that labor influence plays out is in pilot contract “scope” clauses that too often hamstring an airline’s operations in the name of job protection for pilots.  The question we in the industry should be asking is whether those scope clauses really serve that purpose or, rather, whether some union leaders use scope in a way that is both misguided and ultimately harmful to the pilots they represent.

My Challenge to Captains Rice and Prater

Based on the testimony of ALPA since the Colgan accident, there has been nothing said that makes me think that the nation’s largest pilot union is ready to take responsibility and become part of the solution. Yes, regulatory barriers play a role in many airlines’ ability to serve certain markets profitably.  But at the same time scope clauses also contribute to a situation in which airlines are forced to outsource flying to their regional partners when mainline economics cannot support that flying. This fact is as true today as in the late 1980’s when the architecture of the network carrier's relationship with the regional airline industry was being drawn.

How about this resolution: Beginning in 2011, ALPA and other unions that hold collective bargaining rights for airline workers actually employ the members they now represent. Let’s use pilots as the example:

Let’s say Airline X needs pilots for 1.7 million block hours of mainline flying.  Of that, the airline needs .6 million hours of 777 flying; .2 million hours of 767 flying; .5 million hours of 737 flying; and .4 million hours of 757 flying.  Based on its projections of the revenue it can earn to fly these routes, Airline X is willing to pay $1.2 billion for pilot labor. In addition, and a result of the current industry structure, Airline X will require .5 million hours of CRJ flying and .5 million hours of EMB70 flying for which it can pay $500 million.  So, in total, Airline X needs pilots to perform 2.7 million hours of flying and is willing to pay $1.7 billion for those services.

Based on calculations compiled in MIT’s Airline Data Project and an assumed split for captains and first officers, on average, the industry pays a captain cost per block hour of $325 and a first officer cost per block hour of $225 for small narrowbody flying.  For 757 flying, the cost per captain block hour is $350 and $250 per first officer hour.  And for widebody flying, captains cost $563 per block hour and first officers earn $400 per block hour.

So, in our example, simple math produces a mainline cost that is $85 million more than what Airline X can pay based on projected revenue for that flying.  As an employer, ALPA would either have to agree to reduce the rate charged for each pilot or find another way to get the flying done at that cost.  That might mean increasing pilot productivity beyond the average 40-50 hours per month most network pilots now fly.  Or expanding the arbitrary and artificially low limit most unions put on pilot duty time. Or rethinking the level of benefits provided.  But the exercise itself – one not dissimilar to what most airlines are trying to do through labor negotiations to correct for bloat and inefficiency in current contracts – would be an eye-opener for labor leaders who don’t now have to trouble themselves with the hard work of making the airline’s budget actually balance.

The Math Is the Math

Now ALPA has to decide if it is in their best interest to maintain a greater number of pilots (today’s practice in which younger pilots ultimately subsidize the generous pay provided more experienced flyers) or fewer pilots who would earn more based on what the market is willing to pay. 

That decision must include many considerations, including:

  • Is there really a difference in the cost of a life flying on a 50-seat regional jet versus a 250 -seat B777?;
  • As market economics have made mainline narrowbody flying uneconomic in a large number of markets, is it good practice for a union to negotiate lower rates and different work rules for pilots at one carrier in order to support higher wages and more time off for pilots at another carrier?;
  • Is it the case, as Prater testified before Congress, that “a safety benefit is derived from all flying being done from a single pilot-seniority list because it requires that first officers fly with many captains and learn from their experience and wisdom before becoming captains themselves”?; 
  • If ALPA actually employed all pilots, then wouldn’t the creation of a single pilot seniority list facilitate the implementation of a system to address the experience problem at the regionals where, as Levine suggests,  a  30-year 737 captain might actually be assigned by ALPA to fly the demanding flying that today is performed by 50 seat CRJ pilots?; and
  • Does a system of pilot promotion from right seat to left seat; from regional to mainline in a market that promises only a growth rate roughly equal to the rate of attrition at best, really work anymore?

As employers, the unions might be forced to make decisions like management must – based on what is in the long-term best interests of the airline and all of its employees.  From that position, it is much harder to throw stones or seek job protections and wages that don’t recognize market realities. ALPA and the unions would have to answer some really tough questions.  

Given that the market offers little promise for growth like that experienced between 1978 and 2001, it is time for a new compensation and work rule model.  Perhaps it is time to put the most experienced pilots on trips that include the most demanding flying. 

And it is time that organized labor, particularly ALPA, to step up to the plate and become part of the solution rather than continue to contribute to a troubled industry’s troubles by not accepting any responsibility for today's structural predicament.  ALPA can put its dues money where its mouth is and truly promote safety.  But that might just mean a total overhaul of the way pilots are compensated.  

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Reader Comments (17)

I'd like to know who is working 40-50hrs a month making $350 dollars an hour!?! Are they hiring?

01.5.2010 | Unregistered CommenterT-Bone

T Bone

That number includes both lineholders and reserves, per diem and the cost of overnights, pensions and health and welfare benefits. What makes it relevant is that there is much more to the cost of a pilot or employees than wage rates alone.

Swelbar

01.5.2010 | Unregistered Commenterswelbar

Mr. Swelbar,

Thought provoking article as usual, but I do not think you really understand the structure of ALPA. John Prater and Paul Rice could no sooner make something happen than you could fly to the moon.

Bob Burke

01.5.2010 | Unregistered CommenterBob Burke

Bob

I do understand that the power at ALPA lies at the local level. That said, Prater and Rice are often the spokespersons on ALPA issues. As I have posted before, I do think I could get to the moon before today's ALPA leadership delivers on what it promised.

Thanks for making me laugh.

Happy New Year.

01.5.2010 | Unregistered Commenterswelbar

This is actually a old idea that is supported by many pilots. Just six months ago we were eating lunch during recurrent training and discussing a very similar idea. There are two main benefits that most pilots I know would value the most; job security and not loosing the valuable seniority that you accrue if your company goes under. A national seniority list would address many of these issues.

Here is the problem, junior pilots would be for it because of obvious benefit of not have to reset your seniority when you switch to a major and the additional job security, but senior pilots would be against it in fear of loosing even more compensation and benefits or bargaining power.

The only way to implement a national seniority would be to start with new pilots in the future. I don't see any possible way to reconcile the current differences between different companies and junior compared to senior pilots.

Great idea, but it just doesn't seem feasible for the current generation of pilots.

Northerpilot

01.6.2010 | Unregistered CommenterNortherpilot

I am really interested in the data used in MIT’s Airline Data Project. I have, after 15 years of flying, never flown less than 50 hours a month. Usually, it is 80-90 hours. With all due respect, flying the line and living the life would add credibility to your write-up. I enjoy your blog; however, this was a bit over the top...again with all due respect, sir.

Mark

01.7.2010 | Unregistered CommenterMark White

Mark

Thanks for writing and raising a very important issue regarding the data. You make the point that you fly 80-90 hours per month. And I do not doubt that you are not paid 80-90 hours per month. Legally, a pilot cannot fly 90 hours per month in each and every 12 months as that would exceed the 1000 hour annual limit.

The Airline Data Project data is not limited to just the crew responsible for flying the trip, but rather the total cost of having necessary crews to do the flying for the three ranges of fleet types. The difference between 50 hours per month and 80 hours per month is important. On average the crews assigned to certain flying are in command for 50 hard hours per month. The 30 hour difference between pay time and block time is time associated with reserves necessary to fill in for those pilots on vacation, sick etc. Also, there is pay time that is not hard time like rig time, guarantee time and other contractual provisions that contribute to the difference.

The expense also includes pension costs on average, health and welfare costs on average, per diem and the cost to house crews on overnights as well as the cost to train - a minimal cost of late as there is very little growth in the system.

While you may feel I was over the top in my latest post, and you are certainly entitled to feel that, the big point is that there is much more to crew costs than just the rate of pay. The relationship of pay hours to block hours is different among each airline as the difference between the two is unproductive time to the company. This difference is what causes one airline to employ more people to do the same amount of flying than another competitor.

Further, it is my opinion that the big labor unions representing pilots have contributed in a significant way to creating the current structure of the industry. Scope relief at the mainline has rewarded mainline pilots with increases in compensation. The labor arbitrage agreed to by the big pilot unions has contributed to the significant differences in pay and work rules at the regional carriers when compared to the mainline. In my opinion, in a slow growth industry the differences between mainline and regional compensation will prove problematic as expectations are built on a growing industry - and that is going to be very different going forward.

For that, there is responsibility for organized pilot labor - yet they typically point fingers as if they had nothing to do with it.

Swelbar

01.7.2010 | Unregistered Commenterswelbar

Great post and I agree on all points, but if we all took part in this fair-pay-for-all campaign then somebody would take a hit in pay at the top level of pilots. That senior 777 CA making $200+/hr isnt going to want to take a pay cut to $180/hr in order for some "junior punk RJ guy" to make 90/hr instead of 70/hr. They will argue that they "paid their dues" and everyone needs to go through it.

Can a union truly cater to a long-term vision instead of catering to those members who's 1.8% dues count for the most?

Spot on r-c pilot. Spot on. No a union cannot get out of the way of dues income. There is no better time than now to fix a system that is broken. A industry that better reflects reality in terms of size would seem to form a baseline necessary to begin making changes.

Swelbar

01.12.2010 | Unregistered Commenterswelbar

Thank you for this blog and the information you post. Although you do not include cargo airlines, the pilot's at my company are associated with ALPA. Every blog you have written about unions, their views and goals have been extremely accurate. In this case, ALPA should start a national seniority list, beginning with 2011. As for implementing the pay and making necessary changes, this could come as the seniority list grows. As many pilots know, this industry is one where seniority is great as long as your airline is healthy and you are employed, but when you leave, for whatever reason, you start on the bottom again. That is, if you can find a job.

What most pilots do not seem to grasp is the actual costs associated with a pilot. As you have clearly shown, pay per hour is not all that is involved. There is one cargo airline, not associated with ALPA, where each seat, Captain, F/O, S/O, irregardless of aircraft type, receive the same pay per hour, just varied by years of service. This seems to be one way to balance the experience in aircraft types. Of course, this does not address the regional carrier versus major carrier experience problem, but it might help the regionals within themselves. Another problem is an airline not having an 'up or out' policy. Some airlines allow pilots to camp out in a seat position, wasting valuable talent, when the pilot should have moved up.

Holding ALPA accountable is excellent, the master seniority list idea is excellent, but ALPA will not even entertain a motion to change. They do not want to upset the good deal they have in believing they know how to operate a company better than the management of that company. In addition, as you have stated before, the union's goal is to increase membership at the expense of the company. You would think they would be listening to what you have to say and inviting you and the MIT people, to come, help and start an overhauled union. After all look at what Deming did for Japan.

01.16.2010 | Unregistered Commenterfreightrat

Dear Mr. MIT,

I hear you bashing the pilots and their unions. I have a question for you, if you were king for the day how much do you think airline pilots are worth? How many hours a month should they work? How many hours of time away from base should the airlines be able to schedule a pilot? Is 300 hours away from home a month to make 80 hours of pay a great deal? I don't like the inefficient schedules the company makes for me, but I really don't have a choice.

Also why does MIT figure in the cost of layovers in the pilots pay? Is this not the cost of doing business? I wish I made 40/hour as a 777 pilot and got paid for every hour I was away from home. I am tired of doing flight planning, pre-flights, de-icing at the gate, engine runs for maintenance, sitting at the airport between flights, studying for check rides and layovers for free. Brake release to brakes set is our time clock. It is interesting how nobody puts a price on these items.

You like to point fingers at pilots, so come up with what you think we are worth and maybe I'll think about reading your articles. Are you like the management of airlines and think we should work for free? By the way how much do you make a year? Oh I forgot you probably want that kept a secret. I will be very surprised if you respond to my questions. I love surprises. Please play king for a day. ND

p.s. I am not a big fan of ALPA either.

01.21.2010 | Unregistered CommenterND

Dear Mr. MIT,

I hear you bashing the pilots and their unions. I have a question for you, if you were king for the day how much do you think airline pilots are worth? How many hours a month should they work? How many hours of time away from base should the airlines be able to schedule a pilot? Is 300 hours away from home a month to make 80 hours of pay a great deal? I don't like the inefficient schedules the company makes for me, but I really don't have a choice.

Also why does MIT figure in the cost of layovers in the pilots pay? Is this not the cost of doing business? I wish I made 40/hour as a 777 pilot and got paid for every hour I was away from home. I am tired of doing flight planning, pre-flights, de-icing at the gate, engine runs for maintenance, sitting at the airport between flights, studying for check rides and layovers for free. Brake release to brakes set is our time clock. It is interesting how nobody puts a price on these items.

You like to point fingers at pilots, so come up with what you think we are worth and maybe I'll think about reading your articles. Are you like the management of airlines and think we should work for free? By the way how much do you make a year? Oh I forgot you probably want that kept a secret. I will be very surprised if you respond to my questions. I love surprises. Please play king for a day. ND

p.s. I am not a big fan of ALPA either.

01.21.2010 | Unregistered CommenterND

ND

I will respond. I am rarely if ever a pilot basher. I do take to task pilot union leadership. And it is my view that most of those in leadership positions today are doing little to advance the profession.

If I were god I would move to pay salaries to pilots. I am not of the view that the system of pay rates by equipment type work anymore. I would make pilot compensation similar to management compensation where a base salary is paid and some portion of that salary can be earned each and every year based on the performance of the company. I do not think that the seniority system works in the US anymore or for that matter in any industry that promises little to no growth.

I would seriously reveiw soft time components in the contract. You talk about 300 hours time away from base and only being paid 80 hours. Dont you have trip rigs or duty rigs. soft time components designed to compensate you for inefficient schedules? I bet you do. Also, shouldn't there be a system where everybody flys a full schedule rahter than the high time flyers constantly cross-sbusidizing the low time flyers. I would reward more time off to those that fly more. Not what seniority says I should earn.

I absolutely do not think you should fly for free. Rather if the unions would recognize that salaries for the majority are being held lower than what the market might pay because unions are more interested in the number of pilots paying dues, then we have a problem.

As for including travel costs, the lion's share of that cost is per diem paid to you for each of those 300 hours time away from base I assume. So that is a cost and is most often dictated by the collective bargaining agreement. No you personally do not see the sum paid to hotels, but your collective bargaining agreement stipulates hotel standards (and I agree they should be comfortable and where the best rest can be attained), and the location of those hotels (airport or downtown) where cost differentials ebb and flow with local economic conditions.

And finally, I think that today's practice where regional pilots subsidizing mainline pilots is wrong. It was created by pilot labor and is nothing more than a band aid trying to be applied to an economic situation that requires major surgery. This too needs to end which at the end of the day would suggest that mainline pilot salaries under my scenario would need to be reduced even more and regional pilot salaries increased.

And that is probably not going to happen because I am sure pilot labor unions think that everything included in a 50 year old compensation scheme today works against the realities of airline economics today. It does not.

I am sure that some of what I say comes across as pilot bashing. Rather I think pilot leadership trying to perpetuate the past is doing little to move the profession into the new economic world called the global airline industry.

Swelbar

01.21.2010 | Unregistered Commenterswelbar

How about letting the individual decide for himself what is his best interest. Most Americans get to negotiate their own labor contract. Why does a union get the right to dictate the terms of my work? Isn’t it my job? Shouldn’t the terms of my employment, within the law, be between my employer and me?

If someone wants a collective to negotiate a wage, good for them - but the individual should ultimately have the right to sell his labor as he sees fit. He should be paid based upon what he brings to the company.

If the NFL had a player’s union like American Airlines' pilot union, mediocrity and absenteeism would be rewarded and nobody would watch the game. If you want a better idea, bring free agency to the airlin

01.26.2010 | Unregistered CommenterAA Pilot

Bill you are spot on regarding the ALPA structure and the reason they remain structured as such. They wrap their arms around the power of the local as long as it fits their needs and agenda. They portend to protect pilot jobs by modifying the CBA to lower pay caps and line construction criteria that further exacerbates pay and benefit cuts taken in previously bargained concessionary agreements for one reason...ALPA. It is a game of numbers as it maintains a higher dues income to the mother ship and THEIR pay and benefits.

ALPA after endorsing the Obama administration has chosen sides for the pilots just as political party caucuses chose candidates regardless of the majority opinion. Case in point is John Prater could not even get re-elected to the MEC Chair position at CAL yet became president of ALPA with the endorsement of the standing CAL representatives.. not the pilots.

I dare say their would be different outcomes in the union leadership elections if a majority of the populace mattered instead of the back room horse trading. Does the age 60 rule position sound familiar? They are nothing more than the politics of Washington with pilots licenses.

ALPA will never accept responsibility for anything and their structure is designed to insulate themselves from exposure. The true irony is ALPA is nothing more than a business with highly compensated leadership with a very substantial law firm to protect them. The recent award of nearly 44 million dollars to the group of United pilots is clear example of what you will find if you peel back the layers of the onion.

We had false hopes when ALPA returned to the property here at CAL and they have done nothing more than disrupt the stability of our pilot groups goals. With the merger of NW/DAL and the soon to occur merger of CAL/UAL..it will happen!..all the major carriers will be better served with in house unions as the AA pilots have and the recent mutiny of US/AW.
That case in itself will define the answer to your question on the single national seniority list. Prater and Rice are career politicians that have less flying time at their respective airlines than many of the so-called commuter pilots. They are much safer in their current positions with benefits of better salary, pension, per Diem, vacation, travel benefits and Oh yes the the expense accounts that allow them to purchase high priced real estate to sell as an additional perk when they leave or are throw out. Duane Woerth was not re-elected because he held to the majority opinion of 60,000 ALPA pilots....Prater on the other hand in a dark room promised to go against the polling and even got the vote of the CAL MEC who would not return him to the leadership role at their own airline. Woerth had a vision and respected the majority opinion. Prater only has his personal goals and is not done yet with his aspirations.

ALPA is nothing more than a political machine with an insatiable appetite for cash to continue the lifestyle of their employees. Don't ever expect them to take responsibility for anything unless it puts them in good light. They have not told the membership about the 44 million dollar problem they have...gee sounds familiar does it not. Kinda like asking Barney Frank about Fannie Mae.

Keep up the good work and the reality check.

Regards

A CAL pilot

01.31.2010 | Unregistered CommenterA CAL Pilot

I see you originally posted this almost two months ago, so please accept my apologies for arriving late to the discussion.

First, is your proposal even legal? I doubt it. If ALPA operated in the way you suggest then ALPA would be an employment agency, not a union. Another union would spring up to represent the pilot's interests to ALPA, which would no longer really be a union.

Even if it is legal, I don't think it would play out the way you think. IMO, ALPA, or the union that replaced ALPA, would immediately begin to ratchet up pay and benefits across the board. Duty rigs would become more advantageous for the pilots as negotiating power is concentrated in one cohesive unit. Remember, prior to the early 21st century bankruptcies almost all concessions by pilots were made due to being played off against another pilot group. In your brave new world there is only one pilot group, and they have all the power.

Yes, it is true that increasing pilot costs will increase fares and drive some passengers out of the market. The new union would have no reason to care about this. All they have to do is to push up compensation at a rate that keeps the MAJORITY of the CURRENT pilots employed. Unions, quite properly, have no responsibility for any potential future practitioners of their craft. Any current pilots pushed off the bottom would get no sympathy from the survivors. That's the way it always has been, and always will be. Pilot hiring would pretty much stop cold for a while, because we'd already have plenty of pilots for the reduced demand.

Over the years the current group of very lucky pilots to be working under the "Swelbar Rules" would retire due to health problems, age, or just having enough money to take it easy for the rest of their lives. You know, early pilot retirements used to be common. They are extremely rare today, as none of us have any real retirement and simply cannot afford to go on a fixed income any earlier than is neccesary. New pilot hopefuls will then find that because the job pays well and offers a decent lifestyle (neither is true today) that there are many applicants for every position. Only the best will get hired, which is exactly as it should be. Bad pilots would never get in the door.

Don't bother to argue that some other alternative "pilot employment agency" would pop up. I don't see it happening. No airline could afford to replace even a small portion of its pilot group at a time. The training costs would be enormous. The new pilot 's union would have every airline by the short and curlies.

I also sincerely believe that other "independent" pilot unions would come along for the ride. Why not? They already look to ALPA for help on a regular basis, and there is no way they would leave money on the table if the "new union" put it on the table.

Consolidation of ALPA's power would be the best thing that ever happened to me personally. Bring it on, I like your brave new world.

Oh, and you actually do say in your article that a widebody first officer "earns" $400 per block hour. I want some of that. Can you tell me where to find it?

02.26.2010 | Unregistered Commenter20 year Captain

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