The Truth About the Profession

There are some really ugly faces to this profession that exist now and may come into play in the near future. If you’re considering a career as a professional airline pilot, you should take these things into consideration or seek the opinions of other professionals in the business to counterbalance my opinions and formulate your own future expectations. Sorry to be so negative, but you should consider the following….

Handcuffed/Starting Over

One of the ugliest things about the airline pilot profession is the fact that we usually are handcuffed to our ultimate employer for our entire career, and if our employer goes out of business, we’re forced to start over as if you’re a brand new pilot fresh out of flight school. Let me explain…let’s look at an accountant and a pilot, both working at Acme Airlines.

Let’s say you wish to ultimately become employed by Acme Airlines, which is a large, currently profitable major airline with good career prospects. You spend 15 years of your life earning your Bachelor’s Degree and accumulating thousands of hours of flight experience, and you finally make it to Acme Airlines. Fast forward 10 years down the road after you were hired by Acme, and Acme is not doing so well. It’s chronically losing money, it’s now poorly managed, and it is in danger of bankruptcy. Employees are facing yet another round of pay cuts in order to help support this struggling company.

Now if you were in any other profession (assuming normal economic conditions), when you became unhappy with Acme, you could just leave and find a healthy company to work for. And that’s exactly what the accountant does at Acme Airlines. He sees that his employer is struggling and that another round of pay cuts are on the horizon. So what does he do? He looks around for another accountant job and leaves. When he makes this move, it’s very likely that this accountant will be able to find a job at another company earning a salary resembling his old salary at Acme, or perhaps maybe even find a job that pays more because he was a great employee, worked hard as an accountant, and his accumulated experience at Acme is appreciated and rewarded by his new employer.

But what about the Acme Airlines pilot? Certainly he could do the same as the accountant and jump ship to a healthier company with better prospects? Nope. As airline pilots, when you leave your current employer for a new one, your new airline employer will start you at the bottom of the seniority list. You’re handcuffed to your current employer because leaving would cause you to have to start over at entry level wages and seniority at another airline, leaving you with really no choice but to stay and ride it out.

Let’s say you stay and “ride it out” but unfortunately Acme Airline liquidates and ceases to exist. If you were a 747 Captain at Acme Airlines when Acme liquidated, you’d now be competing for the same entry level positions at other major airlines as you were 10 years ago when you were just starting out in the profession, working your way up. And what may be worse, if the economy is poor, and only regional airlines are hiring, you’ll be competing against people fresh out of flight school for that $20,000 year regional airline job! That’s quite a long financial fall for a 747 Captain. Unfortunately, this story has been played out time and time again. In fact, this story is playing out right now at some airlines. It can be financially devastating, and I personally know pilots who have lost their homes, their marriages, and sometimes their life because of this.

The Effect of Low Pay and the Ability to Accumulate Wealth
I bring this topic up because all around my profession there are people who have spent a decade, sometimes two decades, pursing this career and they have nothing financially to show for it except debt. It’s not because they don’t know how to budget money or how to live within their means or that they were unskilled pilots incapable of obtaining a lucrative job. In fact, many are great pilots, and actually are quite good at handling money because for many years they lived on very meager salaries, as described in the “Professional Pilot Salaries” section of this site.

What is happening, however, is that between the furloughs, the recessions, the airline bankruptcies that stole away pilots’ pensions, the 5 to 10 years it takes the average pilot to actually make it to a job that pays a decent salary, many pilots aren’t accumulating the wealth that they will need eventually to retire. And they aren’t able to accumulate wealth because for the first several years of their career, they’re making a very low salary, they are typically living paycheck to paycheck, and have typically tens of thousands of dollars of debt that needs to paid off first. Many pilots approach their late 30’s and early 40’s, look at their bank accounts, look at how much they need to save in order to retire, and see some pretty big obstacles to an eventual comfortable retirement. Then the furlough hits or their employer goes bankrupt, and they have to start over (see above), making an already bad situation even worse.

The point of the paragraphs above is that unlike many other professions, it is very possible that the tremendous financial investment in the airline pilot career will never pay off. In fact, it’s very possible that the volatility in the airline pilot profession that we all face will make it impossible to save enough to enjoy a normal retirement for some pilots. Keep this possibility in mind as you consider becoming an airline pilot, especially if you’re a “career changer” getting started in the profession later on in life.

Flags of Convenience/Cabotage

This is one of the largest threats to the airline pilot profession in my opinion, and may ultimately relegate the U.S. airline industry to the fate of the U.S. cruise ship industry and merchant marine. If this were to happen- and make no mistake, the airline industry wants this to happen- there would be no point in pursuing an airline pilot career in the U.S.

Let me give you some background…..Have you ever been on a cruise? If you have, you most certainly would have noticed a few things. One, there weren’t many Americans working on that ship and two, the ship you were on wasn’t a U.S. flagged ship. Why, do you ask? The cruise lines are typically “American” companies, aren’t they? Certainly they would be regulated by U.S. law and hire American employees? It’s pretty simple. Why should major U.S. cruise lines deal with all those pesky U.S. laws concerning labor and maritime regulation when you can flag your ship in Liberia and deal with the much more friendly and less regulated Liberian government? And that’s exactly what the cruise ship industry does- they flag their ships in countries of convenience and follow that country’s much less restrictive labor and maritime laws. But what does this have to do with the U.S. airline industry?

Airline CEOs would want nothing more than to take their airlines, “flag” them in a 2nd or 3rd world nation, and hire foreign nationals from those countries (and others) to fly, operate, and maintain their airplanes. Certainly an Indonesian pilot could live on $20,000 a year……and probably less! Why pay a U.S. flight attendant $30,000/year when a Lithuanian flight attendant will work for $10,000/year? Why pay a U.S. A&P mechanic $60,000 a year when a Chinese one will work for $25,000 a year! See where I’m going with this?

Currently, there are laws concerning cabotage and foreign ownership that prevent this from happening. However, right now the airline industry is fighting to loosen foreign ownership of U.S. airlines and cabotage rules. This would be the beginning of the end to this industry as far as U.S. citizens are concerned, just like it was for the U.S. maritime industry. Yes, it will be great for consumers because airline tickets will be cheaper, but not so good if you hope to make a living as an airline pilot.

To give a real world example, RIGHT NOW an airline called Norwegian Air Shuttle is asking the US Department of Transportation to fly between US cities and Europe in competition again US carriers with Boeing 787s. But what this airline is doing is skirting Norwegian, US, and European labor laws by registering itself in Ireland, (remember this a NORWEGIAN carrier) because labor laws in Ireland are quite lax in comparison to the rest of the world. Then they are planning on hiring flight attendants from 2nd and 3rd world nations so that they don’t have to pay a “1st world” EU/US prevailing flight attendant wage, and they are planning on hiring their pilots from wherever they can get them and basing them in Thailand.

Now you may say to yourself, hey, competition is the American way. So what if a new airline wants to start service in competition with US and European carriers? The problem is that if Norwegian Air Shuttle is successful, then others will follow suit, driving down pay and working conditions all across the US and EU as other airlines will be forced to match these 2nd and 3rd world wages at Norwegian Air Shuttle in order to be competitive. After having spent years working for food stamp wages as a flight instructor, then a regional airline pilot, and finally making it to a major airline, do you want to see your hard earned wages and work rules under attack from a foreign carrier using “the cheapest labor the world has to offer?” Yeah, that’s great for ticket prices for consumers, but US labor usually ends up on the losing end when competing against 3rd world nations when it comes to labor costs.

You make a HUGE investment in becoming an airline pilot here in the US. Do you want to enter a career where the “top end” wages, the widebody Captain and First Officer wages, could likely be under attack by carriers like Norwegian Air Shuttle and its inevitable copy cats? And let’s be optimistic and assume that Norwegian Air Shuttle will pay its pilots a good wage…..but you have to move to Thailand because that’s where they’re basing their pilots to get around US labor laws. Do you want to live in foreign countries for the rest of your career in order to chase good paying airline pilot jobs? If you have a family someday, will your spouse want to live in Thailand? Or the Middle East?

Keep this threat in mind as you consider entering the profession.

Narrow Profit Margins….and Labor is an Airline’s Largest Controllable Cost!
The vast majority of companies that make up the U.S. airline industry are not like other “normal” companies in the U.S. Airlines operate on extremely, and I mean extremely, narrow profit margins. A net profit margin of 1% is a good year for most airlines, whereas healthy companies in other industries on average earn margins 5 times higher! The reasons for this are beyond the scope of this narrative, but the narrow margins that airlines earn, and the fact that the airline industry is extremely volatile due to these virtually nonexistent profits, means that the ills of the industry get taken out on you, the employee pilot.

Why you, the pilot? Well, because labor is an airline’s highest controllable cost. And of the airline’s labor costs, you, the pilot, as a highly trained professional, are their highest earning employees. So who do you think airline management goes to FIRST when it’s time to tighten the airline’s belt? You, the pilot!

So what does this mean to you? It means that every time the U.S. economy sneezes, the airlines catch a cold. It means that when your company does catch that cold, through no fault of your own, you as an airline employee pilot will be expected to “cough up” some dough to help your airline through it’s difficult economic times- which will happen often, trust me. Airline management knows that you can’t go anywhere (see “handcuffed” above), and they know that you know that you’ll have to start over at another airline at the bottom rung, so you don’t want your existing airline to fail. Therefore, it’s likely your airline’s management will come to visit the pilot group, hat in hand, first. And more than likely, you will give.

Another way this manifests itself is with new, domestic airlines. It’s very difficult for a new airline to make it in this dog-eat-dog industry. The management teams at these upstart airlines know there even during good economic times, there is a persistent, large oversupply of pilots available for employment in the U.S. So when they start a new airline, what do they do? They take their largest controllable cost (labor) and cut it to the bone! They offer extremely low wages, sometimes 50% below the “going rate” in the industry. They then use those low wages to undercut the competition in an attempt to steal market share. This has a tendency to drag down wages at other airlines, and the downward spiral in airline pilot wages, benefits, and working conditions deteriorate. The advent of the “low cost airline” that we have seen over the past decade have been wonderful for consumers, as they have driven down average airfares. Unfortunately, they haven’t been so good to the airline pilot profession. Decades of hard fought gains on behalf of the profession have eroded over the years, and with yet another new generation of “low cost carriers” starting operations in recent years, the downward pressure on wages, benefits, and quality of life will probably continue.

Pay for Your Job?
There’s an ugly practice rearing its head again in Europe, something we in the U.S. have largely been able to do away with in the past 10 years or so. That practice is paying for your own job. Here’s how it works with a major low cost carrier in Western Europe.

The management of this low cost carrier in Europe knows that the economy is bad and that there are 1000’s of pilots on the street looking for a job- supply and demand is certainly in airline management’s favor. Normally, as an expensive cost of doing business, airlines train their pilots when they are hired. Newly hired pilots go through an indoctrination course, and are provided training, usually a type rating, in the aircraft they are going to fly for their employer. The employer also provides the pilot employee with a salary, per diem, lodging, etc., while going through training.

However, airline management got “smart.” They thought to themselves, “Why pay for all this expensive training when pilots can pay for this themselves!” So what do they do? They’ll advertise employment opportunities for pilots at their airline, but they ask the applicants to first pay for their own interview screening. If a pilot is hired, he is then required to pay for his own training! Of course, this training amounts to tens of thousands of additional dollars over and above the tens of thousands of dollars they have already paid for their initial flight training and their college education.

You would think that any airline would have a hard time finding pilots willing to risk taking on all that additional debt for an airline pilot job. However, this airline has no problem finding applicants willing to pay tens of thousands of dollars for this entry level first officer job. Supply and demand rears its ugly head again. So much for that pilot shortage we keep hearing about!