A Conundrum

For those of you that know me, you know that I don't take many decisions lightly (except traveling abroad apparently).  When I first decided to make the leap into aviation, I spent hours upon hours each day researching flight schools, loans, and the airline industry as a whole.  After several weeks of scouring the internet, I made the decision to attend flight school and eventually ended up instructing in New Smyrna Beach.

Now, I face another incredibly important decision, one with so many unknowns and an overwhelming amount of information and variables that my head is spinning.  As my Aunt used to say, write it down...get it off your mind.  So, I'm going to do just that. It would also help to have an outside opinion as well, so feel free to give me your 2 cents! 

History

Following September 11th, 2001, the airline industry took a major hit, understandably.  With a combination of an unprecedented drop in passenger demand combined with an equally unprecedented rise in fuel prices, one-by-one, major airlines (Delta, Continental, United, Northwest, etc) fell into bankruptcy.  For those that remember, it wasn't unheard of to get on a plane outside of busy travel seasons and have them be half empty.  

As the major carriers started to fall into the red by the hundreds of millions, many analysts said the demand would never rebound and that small jets would the wave of the future.  Before 9/11, very few regional jets existed and most regional airlines comprised a very small fraction of air travel in the United States using mostly propeller driven aircraft.  Then, there was the explosion in the regional jet market.  Major airlines began furloughing pilots and subcontracting out some of the short-haul flying in small markets to regional airlines. 

Odds are, very few of you have actually heard of many of them (Expressjet, Skywest, Trans States, etc) because when you fly, you just think of them as the name on their tail (United Express, US Airways Express, Delta Connection, etc).  In reality, the major airlines have contracted out flying based on a bid produced by the regional carrier.  Because regional pilots are less experienced, they are able to provide the flying for much cheaper than the more experienced pilots in larger airplanes at a major carrier. The plummeting profits combined with the lack in demand accelerated this "out-sourcing" of flying over the past 10 years.  

At first, most of the regional airlines used 50-seat or fewer jets.  Prior to the economic collapse in 2008 and subsequent record high fuel prices, these jets were fiscally more reasonable with the extreme lack in demand.  It made more sense to fly a mostly full 50-seat jet compared to flying a half-empty 130 seat jet, even if the former was less fuel efficient per seat.  As the industry began to recover, regional airlines kept taking a larger and larger share of the flying (50% of all flying today is done by a regional carrier under the name of a major one).  Financially, it only made sense.  A regional airline could pay a 300-hour first officer $16,000 a year and back the incredibly low wages by saying the pilot had to "pay for his training and experience."  Some regional airlines even had a pay-to-fly contract where the co-pilot would pay $24,000 a year to sit in the right seat and gain experience.  It's a stepping stone to the majors, they would say.  Suck it up. 

Unfortunately, these low wages combined with a staggeringly low amount of experience in regional airline cockpits caused the underlying problem to become exposed.  In the late 2000s, there were several fatal crashes involving inexperienced regional airline pilots.  Now, Congress has mandated that anyone occupying a flight crew member position at an airline have an Airline Transport Pilot rating (many requirements, 1500 total hours being one of them).  This has driven demand way up and supply way down but regionals are slow to react.  Facing a potential pilot shortage, 5 years ago, Congress extended the mandatory retirement age for pilots from 60 to 65.   This bought the airlines a few years to try and come up with a plan.  Unfortunately, this also halted all retirements from the major airlines.  Stagnation ensued.  Without retirements, very few people were being hired by major airlines.  As a result, the average age of regional pilots began to increase, and with that came an increase in wages paid to those pilots (the longer a pilot is with a company, the more he is paid).  This is combined with what some analysts were saying when regional airlines were buying 50-seats by the hundreds; that they were not financial viable over the long term.

So, where does that leave us now?  With a conundrum.  There is an incredible amount of instability right now in the regional airline industry.  As regional airlines become less competitive due to seniority, the major airlines pit the contracts against other regional airlines.  Since a pilot is paid solely on seniority, many are continuing to accept pay cuts in exchange for not having to start over.  This has created a "race to the bottom."

Most major airlines are forcing or giving benefits to those regionals whom park their 50-seat jets in exchange for much more efficient 76-seat jets (thus reducing the demand for pilots--more seats = less flying needed).  US Airways and American Airways are merging and with any merger comes lots of changes.  Below I will have listed the pros and cons of many of the regional airlines I am considering including the one I have an offer from, American Eagle.  Keep in mind the following in terms of quality of time.  

-Captain time is considered much better than co-pilot time.  A quick "upgrade time" is critical.

-Jet time is considered more valuable, depending on which source you talk to, than propeller time.  It also pays better.

-Being on reserve (aka a back-up) does not guarantee any flying at all and if you don't fly, you don't get per diem (could lower pay by as much as $600 a month)--you also don't get the coveted "jet time."  

-Flow-through agreement is with pilots currently at the regional allowing them to move up to the major it is owned by as needed, no interview required.  This isn't a big deal for me, but would drastically shorten upgrade time and time on reserve.  Without a flow through, the top of the seniority list because crowded and stagnation ensues.  

American Eagle

Pros: Excellent pay and benefits; flow-through agreement; decent bases (Chi, Dallas); good reputation; advertising a need for 500 more pilots this year (get in early, get pushed to the top); owned by American Airlines; Recently added larger 76-seat jets;

Cons: 5 year upgrade time; very senior; fly many older 40/50-seat jets (only regional with jets that hold less than 50 seats); not able to hire as many as expected; bases in NY and MIA make living very expensive.

Rumors:  new CEO of American says they are too expensive (looking for contract concessions); American looking to buy more larger regional jets (may go to Eagle);  American may shrink the airline instead of replacing jets and give away flying to cheaper regional airlines.

PSA Airlines (US Airways Express)

Pros: Owned by US Airways; so-so pay/benefits;  bases in Ohio

Cons: Mostly inefficient, old 50-seat jets; future uncertain in merger; no future aircraft agreements; 4-5 year upgrade; no flow-through.

CommutAir (United Express)

Pros: Youngest crew force/2-3 year upgrade; bases in Ohio

Cons: Prop-planes only; very low pay; no flow-through; no expansion or new planes.

Compass Airlines (Delta Connection)

Pros: Good pay/benefits; flow-through; youngest of the regional airlines; large regional jet fleet (only regional without 50 seat jets); expansion possible if Delta gives them more flying.

Cons: Very high minimums; not very active hiring (perhaps much longer reserve);

Air Wisconson (US Airways Express)

Pros:  Great company (only privately owned regional); great pay and work rules; been around for 40 years (lots of cash on hand and best suited to retool their fleet, if needed); considered by some to be one of the top 3.

Cons: Only flies older 50-seat jets; unable to get any new flying in the last few years; senior and expensive pilot group (perhaps longer reserve, prime for contract renegotiation to lower pilot pay); contract with US Airways expires in a year with no negotiations for renewing.

Trans States (United Express)

Pros: Decent pay/work rules; Signed agreement for large regional jets (delivery TBA); decent bases (DC/STL)

Cons: Very active hiring recently (last class of 20--might put me at the bottom of reserve list); only 50-seat jets (newer and more fuel efficient but still 50 seats).

Republic Airways (United Express, Delta Connection, American Eagle)

Pros: Signed big agreements with American for additional flying; majority of large 76-seat jets currently in demand by major airlines

Cons: Incredibly poor work rules and labor relations (haven't signed a contract in 5 years with management); low wages; canceling flights due to lack of crews (could lead to a loss of flying contracts); very negative reviews from other pilots (taken with a grain of salt since most of this info comes from message boards)

Skywest (United Express, Delta Connection, Alaska, American Eagle)

Pros: Considered the best regional to work for; variety of aircraft; dominates the entire West; signed big agreement with United for large regional jets

Cons: Not hiring hardly at all; 2-3 year reserve; very long upgrade times; when they start hiring, might hire only into prop aircraft, not jets.

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So, where does that leave me now?  Each day I scour the message boards and news to find out the latest and greatest.  What I've decided it comes down to for me is the following:

1) Pick a semi-stable regional even if it means reserve.  Many analysts say that the top is going to blow off this stagnation any minute.  When it starts, I'll move up the seniority list quick.  I won't, however, move up any list if the company goes bankrupt.
                    Good: American Eagle, Skywest, Compass, Republic

2) Choose a regional with bases in a place I want and can afford to live.  While I'd love to live near NY for a little while, the pay at a first year in a regional would be brutal.  I'd be forced to commute to work (live in another city and fly to work to start my trips) which is expensive and exhausting for a junior pilot.  

                     Good: Trans States, Skywest, Compass, Republic, PSA, Air Wisconsin, CommutAir

3) Get in early.  A seniority number is everything, so I'm told.  Every airline pilot I talk to emphasizes this.  That means, it would be better to go now than wait 6 months for my "dream job" to open up.  So, that leaves me with options that I already have been offered a job, been in contact with, or have connections at.
                      Good: Air Wisconsin, American Eagle, Republic, Trans States, CommutAir

So, here I am.  Sitting in a Starbucks chasing my tail.  With as much negative that is around, it make decision-making difficult.  Let's be honest, most pilots that have never held any other job whine and complain a lot.  They want glitz and glamour and want to do very little work to get there.  So, I have to take everything that everyone says with a large grain of salt.  Enough people shouting, however, and I start to listen.

In reality, I am still leaning pretty heavily toward American Eagle.  I could start training right away and they still are looking to hire many more.  That's good for me.  The others that are seriously in the race for me are Trans States (my former instructor is there), Republic (two coworkers went there and are okay with it even though lots of anger coming from pilots there), and Air Wisconsin (another coworker went there and seems really positive about it.)

So, what do you think?  I know most of you are hearing this for the first time, but a dialogue from an outsider's viewpoint could be useful.  Feel free to comment on the facebook post or inline below and share your thoughts.  Let's have a discussion!