Well, who would have thought…
American Airlines capped off the most successful year financially in its history by awarding most employees two days before Christmas with a 4% pay raise, on top of negotiated pay raises.
But during a busy midday flurry of labor announcements at the world’s biggest airline, the jubilation was mitigated for pilots at American Airlines Group subsidiary Envoy Air, who overwhelmingly approved a concessionary contract in recognition of the harsh new reality of the regional airline industry.
Harsh new reality? No, just pure unadulterated stupidity. The regional pilot industry is facing a severe pilot shortage (Envoy is offering a $5,000 signing bonus for new pilot recruits that agree to stay for two years) and the rest of the group, a unionized group to boot, is forced to take concessions? How?
Yet at the same time, the situation of pilots in the regional airline industry is deteriorating. Regional airlines compete on price for contracts with the major airlines, and much of the burden of that competition falls on employees.
At Eagle, a contract resembling one pilots rejected in March was approved this time by a 75%-25% margin, with about 91% of Eagle’s 2,400 pilots voting.
The difference is that in March pilots at several regional airlines had rejected concessionary contracts, said Sam Pool, president of the Eagle ALPA chapter, during a conference call with airline reporters. Since then, American has moved to assign new regional aircraft to Eagle competitors, who “fly with contracts not as robust as ours,” Pool said.
Horse#$%. Eagle ALPA doesn’t single out Republic Airways, the holding company that owns three regional carriers, but the EMB-175s Republic Airlines flies under the American Eagle banner is the source of this bull%^&*. Yes, the Teamsters that represent the Republic pilots have a worse contract…though the issue is that contract negotiations have dragged on since 2007:
Indianapolis based Republic Airlines (RAH) is one of the largest commuter airlines in the market. For the last five years RAH Pilots have been working without a contract. It has become so bad with RAH and the Teamsters that Local 357 members have already voted to strike. They have been in heated contract negotiations since 2007.
Now RAH is attempting to sue the Teamsters for their website RAHcontractNow.org. Why would you ask? Because it is causing problems with RAH hiring new pilots. “As a result of these inaccurate statements,” the airlines said, “Republic has had an increase in the number of pilots who have not called back for interviews and dropped out of the application process (1).” RAH is working to quickly hire enough pilots to continue operations if and when the union goes on strike. The Teamsters are just telling the prospective applicants what it is really like working for RAH.
***Disclaimer–I used to work there.*** The union leadership has no idea what they are talking about. Republic offers the same $5,000 signing bonus Envoy offers but includes a massive stick in the form of a two-year, $20,000 training contract. The website the union mentions (which induced a lawsuit) now has this message only:
— Site Off Line —
In a good faith gesture to
Republic Airways Holdings,
We have taken this site off line
We regularly participate in Recruiting Events for Pilots and Flight Attendants. PLease see below: Recruiting Events Pilot Recruiting Events
Naturally, five years of contract negotiations has become eight.
The airlines have entered a full-throttle staffing disaster. Republic is leading the way:
Republic Airways warned investors Tuesday that a shortage of qualified pilots will force it to ground 27 airplanes. That includes 15 airplanes it flies for American Airlines Inc.
Though the Dallas Morning News also noticed the Republic move was strategic:
The news doesn’t affect Republic’s contract with American to fly 76-seat Embraer E175 jets under the American Eagle brand. That deal, signed last year, provides that Republic will operate 47 of those jets on behalf of American.
The jig is almost up. One of the three Republic regional carriers, Chautauqua, is being subsumed into another certificate–S5. The remaining two carriers, Republic Airlines (YX) and Shuttle America Airlines (S5), are primarily EMB-170-100/-200 operators with a Q400 and EMB-145 operation on the side at each respective certificate. The CEO of the holding company has already announced the -145s will cease to operate in 2016:
Republic plans to move to just one operating certificate, which would involve combining its Republic Airlines and Shuttle America operations, by the end of 2015.
In addition to combining certificates, the airline also plans to reduce its fleet to just the Bombardier Dash 8 Q400 and the Embraer 170/175 by the end of 2016. This involves both selling and returning to lessors its fleet of ERJ-145s and Embraer 190s.
The Q400s will be next on the chopping block, after which the regional industry will run out of wiggle room. The pilot shortage dates from the 2008 financial crisis, masked by the phase in (from December 2007 to 2012) of the age 65 rule over the age 60 rule. The industry relies on the hope that students will resume taking out loans for $100,000 to $250,000 for flight training for the prospect of taking a job that pays less than $50,000 a year (no U.S.-flagged regional carrier pays first officers more than that threshold, and starting pay averages less than 50% of the top rate). Issuing these loans comes with an extreme risk of default, a lesson banks took to heart after the fall of Lehman.
The shortage will worsen as majors such as American, Delta and United pick up hiring in 2015, probably destroying the regional jet industry. The model only “works” if wages remain frozen in aggregate (the airline industry managed to lose more than $50 billion while the RJ industry boomed in the early to mid-2000s), hence the demand for wage cuts in the face of a severe staffing shortage. Brilliant, eh?
Unfortunately, only AMR’s management is having a Merry Christmas:
“We do have a new tentative agreement,” said James Magee, spokesman for the Envoy chapter of the Air Line Pilots Association. “But for us, it’s not a time to celebrate.”
Merry Christmas, you guys. Wish reality would set in more rapidly.