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.
Read More: Brace for Impact: The Regional Pilot Shortage is Here
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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Looking at that contract – sure there was a big increase for the most junior pilots, but not really enough. $40 an hour is still pretty measly with the expense required to get those hours under your belt. I suspect $60-$80 an hour is closer to what one would need to be paid as a starting first officer. The pay increases at the top end of the scale weren’t fantastic either, but perhaps any pilot who hasn’t moved on from the regionals after 8 years doesn’t deserve much of an increase.
In the end this is a fallout from the Continental crash in Buffalo a couple of yeas ago. We want cheap flights but we also want safe, but perhaps its turns out that safe costs a bit more money which means less for Jeff Smisek and company. And I can’t seeing them letting RJET fail?
The real canary in this coal mine are Great Lakes, Silver, Seaport, and other small ULCCs. They are shrinking fast as they lose pilots, pulling out of markets and parking airplanes. The canaries are already dying, Republic is the first of the regional level to show what happens when you ignore the early warnings.
You did nail the real danger here: the resources needed are about to start retiring in large numbers, with no replacements. There are around 16,000 pilots at the regional level, and the major airlines are hiring around 3,000/year right now and increasing. With no new pilots coming in, the regionals will be shut down, along with half the domestic flying in the U.S.
The situation is more dire than that at the Majors. The number of pilots about to hit age 65 and be forced out is huge. That bubble alone could wipe out the regional operations with no pipeline running to back-fill.
Also, there are over 10,000 large corporate jets on order in the U.S. for delivery in the next ten years, and plenty of existing biz-jets with not enough pilots. Corporate pilots are getting older just like airline pilots, they have been stagnated there for just as long as regional pilots. If regional airlines cut back severely to hundreds of mid-size towns, there will be huge demand for corporate pilots, and they are likely to offer whatever it takes to get pilots. A similar situation exists in China, where corporate pilots are paid more than major airline pilots.
You mention age 65, but I suspect a lot of airline pilots would jump ship early for better pay and a decent retirement package. The major airlines have all cut their retirement packages to almost nothing, pay is nothing special, and conditions are pretty miserable. I could see major airlines losing pilots to corporate in significant numbers.