Airlines are making record profits, and it’s not from airfare. The industry’s total net profit margins jumped dramatically in one year alone, from $98 million in 2012 to $12.7 billion in 2013. The reason is due to increased ancilliary fees. Carry-on luggage, checked luggage, reservation changes.
Delta saw the highest profit margins, collecting $833 million in baggage fees alone, and $840 million in reservation/cancellation fees. That’s a total of $1.67 billion. United reported a total $1.38 billion collected, with $625 million of that in baggage fees. American Airlines and US Airways continue to report their earnings separately, although they have technically merged into one mega airline. The profits for both airlines totaled more than Delta and United combined, collecting more than $1 billion in baggage fees and $848 million in reservation/cancellations.
This could be good news for pilots frustrated by stagnant and decreasing wages since the recession, but it doesn’t appear that airlines are willing to pay. Regional pilots have endured low wages for years. To illustrate how low some of these pilots’ wages are, In-N-Out Burger starts its employees at $10.50 and hour. Regional pilots often start around the minimum wage of $7.25 per hour. Experienced co-pilots often earn less than $40,000 a year and they feel underappreciated.
Pilots at Republic Airlines recently rejected a new contract, even with a proposed pay raise. They are apparently holding out for more money. 85% of pilots who voted on the agreement opted to reject the offer.
American Eagle pilots have also rejected a new contract proposal, but their contract would have frozen wages and increased their health insurance premiums. The CEO of American Eagle is stating the airline will begin to downsize rather than put up more money to increase pilot salaries. SkyWest pilots have also rejected contract proposals.
Regional airlines like Republic Airways and SkyWest do most of their flying under long-term contracts with the legacy carriers that pay a fixed rate (with minor performance-based incentives or penalties). Pilot pay raises will cut directly into the regional carriers' profit margins -- and these are very low in the first place.
Stricter federal regulations requiring regional pilots to have 1,500 hours of training to become a first officer, instead of the previous 250 hours. The Federal Aviation Administration changed this requirement last fall as a result of the 2012 Airline Safety and Federal Aviation Administration Extension Act. The law was passed after a regional airline crashed near Buffalo, N.Y., in 2009, killing 50 people. The crash was ruled primarily due to pilot error, hence the increased training requirements. Many pilots simply don’t have enough hours to qualify. Of those who did have the necessary hours, many went to larger airlines with bigger pay.
The diminishing pool of qualified pilots is giving pilots an increased sense of power to bargain for better wages.
Delta saw the highest profit margins, collecting $833 million in baggage fees alone, and $840 million in reservation/cancellation fees. That’s a total of $1.67 billion. United reported a total $1.38 billion collected, with $625 million of that in baggage fees. American Airlines and US Airways continue to report their earnings separately, although they have technically merged into one mega airline. The profits for both airlines totaled more than Delta and United combined, collecting more than $1 billion in baggage fees and $848 million in reservation/cancellations.
This could be good news for pilots frustrated by stagnant and decreasing wages since the recession, but it doesn’t appear that airlines are willing to pay. Regional pilots have endured low wages for years. To illustrate how low some of these pilots’ wages are, In-N-Out Burger starts its employees at $10.50 and hour. Regional pilots often start around the minimum wage of $7.25 per hour. Experienced co-pilots often earn less than $40,000 a year and they feel underappreciated.
Pilots at Republic Airlines recently rejected a new contract, even with a proposed pay raise. They are apparently holding out for more money. 85% of pilots who voted on the agreement opted to reject the offer.
American Eagle pilots have also rejected a new contract proposal, but their contract would have frozen wages and increased their health insurance premiums. The CEO of American Eagle is stating the airline will begin to downsize rather than put up more money to increase pilot salaries. SkyWest pilots have also rejected contract proposals.
Regional airlines like Republic Airways and SkyWest do most of their flying under long-term contracts with the legacy carriers that pay a fixed rate (with minor performance-based incentives or penalties). Pilot pay raises will cut directly into the regional carriers' profit margins -- and these are very low in the first place.
Stricter federal regulations requiring regional pilots to have 1,500 hours of training to become a first officer, instead of the previous 250 hours. The Federal Aviation Administration changed this requirement last fall as a result of the 2012 Airline Safety and Federal Aviation Administration Extension Act. The law was passed after a regional airline crashed near Buffalo, N.Y., in 2009, killing 50 people. The crash was ruled primarily due to pilot error, hence the increased training requirements. Many pilots simply don’t have enough hours to qualify. Of those who did have the necessary hours, many went to larger airlines with bigger pay.
The diminishing pool of qualified pilots is giving pilots an increased sense of power to bargain for better wages.
No comments:
Post a Comment