The union representing the pilots for Republic Airways will not put the latest contract proposal to a vote. This is a major setback for the company which, as recently as two days ago, was harboring optimism that the latest iteration would finally bring to an end the acrimonious negotiations. Previously company executives suggested that it would seek reorganization under bankruptcy protection laws if the negotiations were unsuccessful. It remains to be seen if or when that actually happens.
Speaking at the International Airline Forecast Summit earlier this week Jeff Jones, VP for Strategic Planning, acknowledged that the pay scale problems were very real and that his company had a long way to go. He also suggested that a major component of that problem comes from the rates negotiated with the mainline carriers and that revisiting those will be part of the upcoming efforts,
Our whole basis of dealing with the [mainline] partners that we have is based on low profit margins which are based on long-held rates. The next step for us is dealing with our major partners in how can we get down to help share in the right costs, raising the starting pay enough that [young pilots] can see their student loans being paid in the long run.
And, of course, ultimately it is the passengers on those mainline partners who will potentially be displaced by the ongoing contract challenges. Republic Airways operates two brands, Republic Airlines and Shuttle America, with a combined fleet of nearly 280 aircraft. More than 85% of these planes are the larger, 70-seat type which airlines are increasing usage of and that flying may ultimately be affected, depending on just how the negotiations and possible bankruptcy play out in terms of pilot utilization and contract terms.
Looking at an upcoming Monday schedule Delta Air Lines has 625 flights scheduled to be operated by the Republic Airways brands; 420 of these are on the 50-seat aircraft. United Airlines has 686 flights scheduled to be operated by Republic and American Airlines is the most exposed with 1,019 flights on the schedule. That’s more than 150,000 seats flying each day which have the potential to be affected by this unrest.
The shell game of operating companies and contract negotiations between mainline and regional operators is nothing new. It has been going on for more than a decade. But with record profits at the top, increased training costs for pilots and fewer people willing to pursue the regional pilot lifestyle there is a very real chance that the house of cards may start to tumble. It is not unreasonable to see Republic Airways’ current situation as a canary in the coal mine. Should this canary die, however, it is not clear that there will be sufficient time or resources for everyone else to escape.
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