The June/July 2011 issue of Air Line Pilot, the official journal of ALPA, the largest U.S. airline pilot’s union, arrived in the mail. It contains a review of the preceding decade. Here are some interesting numbers:
- the peak of U.S. airline employment was in 2000, with more than 650,000 Americans working for an airline. “U.S. airlines have cut nearly 150,000 employees since the peak,” based on government statistics, leaving just over 500,000 employed
- the peak of U.S. airline pilot employment was in 2005, with 76,078 pilots. The numbers are down slightly since then, with 74,552 pilots working in 2010. There has been a gradual shift from major airlines to regional.
- passenger traffic in the U.S. peaked in 2007 and the current traffic levels are about 6 percent below the peak
- ticket prices during the decade, adjusted for inflation, went down 21 percent (they were flat in nominal terms; compared to a 117 percent rise in college tuition, an 82 percent rise in the cost of eggs, and a 46 percent rise in the cost of a movie ticket)
- jet fuel prices rose an average of 10 percent per year during the decade
- revenues for U.S. cargo-only airlines, such as UPS and Fedex, grew from $20 billion in 2001 to more than $30 billion in 2010 (down from a 2008 peak of more than $35 billion); these numbers are not adjusted for inflation and the 2001 number would be about $24.6 billion in 2010 dollars
- the last supersonic passenger flight, an Air France Concorde from Paris to New York, took place in 2003
- more than 30 percent of U.S. airlines filed for Chapter 11 bankruptcy protection during the decade (i.e., 30 percent of airline shareholders were wiped out)
- a lot of new jobs for pilots will be with “state-owned airlines”; under the headline “Rise of the Middle Eastern Airlines”, it is forecast that “By 2029, 68 percent of air traffic volume will be from the emerging economies in such countries and regions as Asia, Brazil, India, and the Middle East.”
Philip,
While it is interesting to look at the airline industry over the past decade from the perspective of the pilot’s union, the me the only perspective that matters is the customer’s. Here are my thoughts as a frequent flyer.
– Service has declined dramatically over the past 10 years
– Flights are much more crowded than they used to be
– I takes far longer to get to the gate (increased transaction time) at airports than ever before.
– The addition of TSA has added a lot of new costs, but I am not convinced we are any safer. We always had to send bags through the X-ray. I had my body X-rayed 5 times in the past 9 days. I was borne in the United States, and have never committed a crime. There must be some way to prove I am not a threat to civilization other than the draconian measures we are now subjected to. I am concerned about the health impact of so many X-rays.
– While ticket fees have remained flat, we are paying many additional fees for bags, food, slightly better seats, etc. All other flight related costs have increased such as airport parking, and fees charged by vendors such as rental car operators.
– In my experience, the smaller regional airports are far easier to deal with than the larger airports, and I try to utilize the smaller venues as much as possible. Southwest is a big winner here.
– This industry seems to have no comprehension of ‘customer experience’. We are just so many cattle and dollars.
My company is increasingly paying mileage for travel within 500 miles of our offices due to unreliability of service, high costs, and increasing transaction time of air travel. We are increasingly using video conferencing technology to have meetings and reduce the need for travel.
While I wouldn’t want to pay the typical price for a first class seat, I would gladly pay more for a better product, and customer experience. I don’t like wasting time and I want some basic respect.
“a lot of new jobs for pilots will be with “state-owned airlines”; under the headline “Rise of the Middle Eastern Airlines”, it is forecast that “By 2029, 68 percent of air traffic volume will be from the emerging economies in such countries and regions as Asia, Brazil, India, and the Middle East” –
And a lot of us will be standing on the side of the road trying to hitch a ride somewhere because we can ill afford the cars or the airfare (only 2-3 airlines will be left by then in the US).
Interesting. With the trend towards regional airlines, I would’ve thought we’d see more pilots employed since, presumably, the big airline hub-airport model requires fewer flights than having many regional airlines flying directly between many smaller centers.
Do pilots hate the proliferation of barbie-jets over the past ten years as much as passengers do?
How will the airlines be doing with $200 a barrel oil over the next decade? How about $300 a barrel? Can they get profitable with better fuel economy compared to ground transport or will ticket prices double and wipe air travel out?
My favorite trend is fees. Baggage fees, legroom fees, telephone booking fees, meal fees. I love them all because I don’t pay them. Let somebody else buy frills; I just want to get where I’m going.
Brian: Pilots overall should love smaller jets because it means the airlines need more pilots. I personally liked flying a regional jet because the legs were short and there was a lot to do. Sitting for six hours in cruise watching the autopilot do its job is not my idea of fun flying.
How will higher oil prices affect airlines? I think that we know what will happen as air travel gets more expensive relative to average income. The experiment has already been run in Latin America and Africa. The average person will fly less and there will be fewer flights per week between any given city pair. As noted by Scott (above), companies can substitute video conferences for a lot of the trips that are currently being made. Individual Americans can cut back on personal travel by taking fewer trips or vacationing closer to home.
I’m curious to see you do a blog post on the 117% rise in college tuition. Are colleges in general providing an education which is 117% better? That would imply that a degree which took 8 years in 2000 should only take 4 years today. Or that a student spending the same amount of time in college starting in 2010 would be twice as likely to get a job and be twice as valuable to employers as one from 2000.
Somehow I doubt that’s the case 😉
The shrinking airline industry is an example of the dramatic decline in certain areas of the economy.Pharma is another example of dramatic job cuts, a total of ~300,000 job cuts over the past decade:
Source: http://blogs.forbes.com/matthewherper/2011/04/13/a-decade-in-drug-industry-layoffs/
That’s not to say the entire industry has shrunken by that much.
DT: According to some news I saw, college tuition has climbed 400% since the 1980’s: http://www.youtube.com/watch?v=aGUD-CBo6AQ
If you need to know how much cash you will have to find to pay for your first year of college as an 18 year old out of state student, check here:
http://nces.ed.gov/collegenavigator/?q=University+of+California&s=all&id=110635#expenses
UC Berkeley is supposed to be $53,000 in total expenses. And, it’s supposed to go up! It’s going to take a lot of elbow grease at Martha’s Vineyard to pay that off. But let’s stay on the subject of air travel, seems more fun.
Scott, re: radiation from scanners read this sobering report from Boston. Maybe unions for TSA isn’t such a bad thing with such management indifference http://www.infowars.com/cancer-surges-in-body-scanner-operators-tsa-launches-cover-up/
I really wish pilots were paid more. I would like to see a chart showing how the salaries of airline pilots have decreased over the decade. Even Captain Sullenberger went before congress about it recently.
DT: http://philip.greenspun.com/book-reviews/ has a couple of recent book reviews on the subject of whether students are getting their money’s worth out of American colleges.
Brian: As a $19,000 per year regional jet pilot, it certainly would have been nice to get paid more. On the other hand, the industry has not had any difficult attracting qualified and dedicated workers. As noted in http://philip.greenspun.com/flying/unions-and-airlines , the overall percentage of airline revenue that goes to paying workers is about as high as it can be. The fact that there is a more than 10:1 ratio between salaries for workers doing similar jobs is an artifact of union agreements negotiated by senior workers.
I wish the airlines would use an a la carte method for charges, base price and then the add-ons, like widow or aisle seat, extra leg room, WiFi, etc. If they did that, then I would have a customized flight, the way rental car companies have it set up. I would check my boxes, and then see my total price.
Joe Rouse: the whole idea of airline ticket pricing is to make it difficult to do price discovery. A la carte methods are thus unlikely to be implemented.
You may be interested in this on Freakonomics.com:
“Why Do Airlines Always Lose Money? Hint: It’s Not Due to Taxes or Fuel Costs”
http://www.freakonomics.com/2011/06/24/why-do-airlines-always-lose-money-hint-its-not-due-to-taxes-or-fuel-costs/
[T]he experience of the last decade suggests that until legacy carriers can either close the cost gap with LCCs [low-cost carriers] or increase the price premium they maintain, they will likely have difficulty earning consistent profits through the typical cycles in the airline business environment.
Yesterday on a short flight I sat with a United 747 Captain. 20k hours, 65 years old. He was complaining about pay. My only experience here is with Southwest and Delta pilots. I remarked that SWA pilots I know are making between 250-300k. He said “I know, their company treats them well. I’m making $160k.” In the overall view of costs of an airline, it doesn’t seem like paying senior pilots better would be that dramatic.
Bob: According to the Bureau of Labor Statistics, the average private American wage is $23 per hour. For 2000 hours per year, then, that is $46,000 per year. The guy you were sitting next to was complaining that he earns only 3.6X the average American wage (and maybe 4-5X the median, since the average is inflated by medical doctors, Wall Streeters, etc.). http://www.payscale.com/research/US/Country=United_States/Hourly_Rate/by_Gender shows that the median wage is closer to $17 per hour.
In a planned economy, of course, an expert in Washington, D.C. could decide to pay this guy more than $160,000 per year. In a market economy (i.e., one without laws requiring United Airlines to recognize a union, requiring workers to pay union dues, and forbidding United to hire replacement pilots in the event of a strike), his wage would fall to a market-clearing level. Given that it takes just a few weeks to get a Boeing 747 type rating, there are quite a few regional airline pilots who would be delighted to take his job at $100,000 per year, even if they had to pay for their own training.
In the past decade, ticket prices have dropped over 20%, and jet fuel has risen 10%/year. Where do you think the airlines made the savings?
Yep…labor. Either through bankruptcy, or threats of bankruptcy, the average airline worker has taken drastic pay and benefit cuts so that airlines can reduce ticket prices. Labor is always the boogeyman. Yet people wonder why their airline experience has become worse.
To the folks who want to compare an airline pilot’s relatively “high” wages to the average American, forget it. The average American has no clue how to safely guide jets, day and night, good weather and bad, five miles in the air at the speed of a bullet, with a near-zero failure rate. This is NOT the result of rules or laws…it’s the result of the dedication of those same airline professionals. It’s the result of many of them spending a large portion of their adult lives fighting wars, living on aircraft carriers, living in the desert in foreign lands, and giving up simple freedoms every American takes for granted every day to acquire that very skillset.
I can’t really think of a less patriotic act than large corporations stealing pay and retirements from these men and women and then handsomely rewarding themselves.
I don’t see complaints about $300/hour lawyers or $500k/year surgeons. An airline pilot’s skillset cannot be replaced…period.
A saying in the industry…if the pilots didn’t come to work, the U.S. would come to a stand-still. If the corporate managements didn’t come to work, it’d be called a weekend.
David: I don’t think anyone was “complaining” about pilot salaries, except maybe airline shareholders and pilots complaining that they are too low. You mention lawyer compensation… http://www.bls.gov/oco/ocos053.htm shows that the median wage of a lawyer in the U.S. was $110,590 (though lawyers working for the federal government did better at $126,080/year). A major airline pilot who went to law school for three years and then was fortunate enough to land a job as a lawyer (not easy in the Obamaconomy) would be taking a substantial pay cut.
The jugglers who entertain in Harvard Square on Friday and Saturday nights certainly have a skill that is less common than being able to fly an Airbus. Yet I don’t think that their financial reward for their many years of hard work is very great. The market does not always reward those who have worked very hard developing an unusual skill. If your argument is that pilots should be rewarded because a lot of lives depend on them, the highest paid people in the U.S. should be city water department workers. Without clean water, most of us would be dead. Isn’t not be killed by cholera worth $1 million per year to every hard working clerk and pump mechanic in your town’s water department?
“if [American] pilots didn’t come to work, the U.S. would come to a stand-still”? Actually, even without American pilots, Americans would have no trouble getting around if the government would relax the laws that prevent foreign airlines from operating here. As Ryanair’s costs are 25 percent lower than those of Southwest Airlines, American consumers would be financially better off if U.S. carriers and workers were replaced by foreigners (as is typical in the cruise ship industry). [In case you want to argue that American carriers have a monopoly on safe practice due to all of the wars that we’ve started and our expensive aircraft carriers, http://en.wikipedia.org/wiki/Ryanair#Accidents_and_incidents shows that Ryanair, despite its low prices, has never had a fatal accident.
So it is technically the case that American airline pilots are irreplaceable, but that is only because of government regulations preventing foreign carriers from operating here.