How US pilots negotiated salaries as good as the Golden Age

The new deal has industry-wide implications and marks the highest pay rates for pilots seen in decades – perhaps ever. Based on monetary value alone (adjusted for inflation), the rates of the 2023 pilot bargaining agreements nearly match the rate that was on offer in 1970, though I draw that comparison with caution given the average house price in the USA in 1970 was US$17,000, or around $133,000 in today’s money.

The lifestyle on offer to pilots in the early jet age was second to none. Peter Gall, a former airline pilot, says that when he was growing up in the 1960s and ’70s, the job of an airline pilot was considered a highly prestigious career. “The job offered not only high salaries and nice schedules with many days off but also a respected position in society,” Gall says. You may know the adage in aviation circles that back in the “good old days”, an experienced airline pilot earned enough money to buy himself a Cadillac every month.

Pilots hit turbulence

However, deregulation and economic turbulence in the 1970s – and again in the ’90s – saw wages and allowances take a significant hit, according to Gall. “Then, the 9/11 attacks left the airlines in poor financial condition. Five of the six major legacy airlines in the US declared bankruptcy,” he adds. “Many pilots, like myself, were forced to vacate their captain position and go back to first officer, resulting in their pay dropping from roughly US$190,000 per year to $75,000.” The downturn forced many aviators out of the industry and created a new ground floor for expected pay and conditions for incoming pilots.

Since then, the industry has yet to see quite the same prosperity that it did during those ‘golden’ years – though not for lack of trying by the pilot unions, collectively representing 100,000 pilots across the United States. “The unions have always worked hard, but this new deal is unlike anything I’ve seen in the last 15 years,” one seasoned commercial airline pilot, Allen*, tells Australian Aviation.

“The American Airlines pilot deal included a clause to say that if United’s contract – which was still in negotiation at the time – achieved higher pay rates, then American would have to match it. And so they did. It almost brings us back to before deregulation when the airlines had to pay people equally.”

After the approval of the United deal, American’s contract worth increased by an additional 2 per cent, while Delta was also forced to price-match, meaning three of the Big Four airlines now pay their pilots the same rate. With pay essentially standardised across the major airlines – for the next four years at least – it shows us that these contract negotiations were about a lot more than just money.

Fun fact: By the 1950s, pay rates for pilots were largely standardised across the industry, and pilot wages accounted for about one-sixth of all airline expenses.

“Quality-of-life assurances were a big talking point throughout the community during these rounds of negotiations, so things like paid vacation days, scheduling requirements, per diems, overnight hotel allowances, even down to the little things,” Allen explains. “For example, it’s written into some airline’s pay agreements that pilots aren’t allowed to be offered a middle seat when being flown to a different base for work purposes. It’s the aisle, window, or cockpit jumpseat only!”

American Airlines captain and president of the Allied Pilots Association, Ed Sicher, acknowledges that the newly approved contracts constitute “substantial monetary gains and quality-of-life improvements”, the likes of which haven’t been seen in the industry in decades. “This contract is a big first step toward restoring the wages, benefits, and work rules that were lost during the past two decades while our profession was under continuous assault,” he says.

In tandem with recognising the highly specialised training required, wages and prestige in years gone by were in acknowledgement of the personal responsibility that pilots take for the passengers onboard their aircraft. Sicher says the new agreements swing the pendulum back towards something reminiscent of the ‘golden age’ in acknowledging a pilot’s skill and duty. “As pilots, we hold a tremendous amount of responsibility with every flight we take. It’s a responsibility we take seriously, as evidenced by the US airline industry’s unrivalled safety record, and it’s time for our profession to provide rewards commensurate with its unique demands,” he says.

Allen, somewhat cautiously, agrees. “Even today, pilots are kept to very high physical and mental standards,” he says, in a nod to a 1960s-era notion that pilots were expected to be the peak of the human condition. “At any point, we’re one diagnosis – one that might be insignificant to anybody else – away from potentially losing our license and ability to work. It could happen to anyone. So, I do think that it’s fair for that to be acknowledged in our rates and allowances, on top of the responsibility that pilots take on each day. That is something that we all certainly respect and feel deeply in this job.”

The path to gold

It’s easy to assume that these record-breaking collective bargaining agreements are a direct result of – dare I say it – a shortage of qualified pilots. It’s a phenomenon that is well-documented here and elsewhere. It dictates that market trends, coupled with an ageing cohort, suggest that demand for additional pilots will outpace new pilot training output in a meaningful way both now and into the future.

However, the unions take a slightly different stance, suggesting that the inability of airlines to locate and secure qualified pilots is not due to a lack of available workers but due to other matters entirely, such as expensive out-of-pocket training programs, poor entry-level wages and conditions, and “bad business decisions” made during COVID-19 lockdowns.

ALPA argues that many airlines were too quick to cut regular services, reduce fleet sizes, and stand down staff in 2020, knowing that aviation regulations dictate a long, costly and rigorous re-training regime for pilots that have spent too much time on the ground. Airlines are also accused by some of awarding too many early retirements to their longest-standing – and therefore most expensive – pilots.

In recent years, airlines have pushed for numerous stopgap methods to fix their understaffing issue, such as raising the mandatory retirement age by two years to 67 or lowering the minimum flight hour requirement for airline roles from 1,500 to 750 hours – both of which flagged major safety concerns for the unions.

“Past practice proves that if you pay airline pilots commensurate with their training and experience, not only will you get qualified candidates but also a robust pipeline of future aviators,” an ALPA spokesperson tells Australian Aviation. “Over the past decade, the United States has produced more than enough certificated pilots to meet airline hiring demands and compensate for retirements, even as new and more rigorous pilot training standards were enacted to enhance safety,” the spokesperson says.

Fun fact: By the 1950s, pay rates for pilots were largely standardised across the industry, and pilot wages accounted for about one-sixth of all airline expenses.

“So, although we don’t have a pilot shortage, we do have a shortage of airline executives willing to stand by their business decisions to cut air service and be upfront about their intentions to skirt safety rules and hire inexperienced workers for less pay.”

Regardless of whether there is or is not an underlying shortage of pilots, US airlines and unions agree that training and re-training pipeline backlogs are contributing to the symptoms of today’s aviation market. Allen explains that the post-COVID-19 boom time saw legacy carriers scoop up experienced pilots from smaller regional airlines.

“The result was that regional airlines were actually the first to introduce wildly larger pay packets for first-year pilots to try and entice new hires in. Many regional and budget carriers immediately doubled their first-year pay rates, which basically brought them in line with, if not slightly above, what first-year pilots were getting at legacy airlines.”

Allen said the pay proposals garnered a lot of attention throughout the industry as regional airlines offered rates previously not seen at that level of the market. However, he notes that perhaps for the smaller carriers, such high pilot wages are not a sustainable move. “We’ve already heard rumblings that some smaller airlines that took that road are getting themselves into hot water. Paying their staff that much just isn’t sustainable for them in the way that it is for the bigger players.” Luckily, three of the Big Four were able to make generous, industry-leading concessions to retain a competitive edge and maintain their status.

Worth your weight in gold

It’s an interesting duality to see such major multi-billion-dollar strides being taken by US airlines just three years after receiving government bailouts to the tune of $62 billion to avoid total bankruptcy. “I have to admit, it’s hard for me to fathom where the money has come from,” Allen shares. “The scales that these companies work at is insane, but with fuel costs, inflation, and COVID-19 along with everything else, the fact that the major airlines agreed to these deals tells me they are extremely motivated to keep hold of their staff.”

Unexpectedly, major US airlines have ended up with slightly more money in their pockets than anyone perhaps intended at this stage, given the lay of the land just three years ago. The US was the first market to benefit from a total return to pre-pandemic flight capacity across its domestic and international sectors. Coupled with higher airfares across the board and stabilising fuel costs, many airlines are in better stead than predicted.

In September, American Airlines reported an adjusted profit of 38 cents per share, compared to estimates of around 25 cents per share. Notably, the company downgraded its forecast of future profits due to increased labour costs at the hands of its pilot agreement. United and Delta similarly posted profits in September but warned of slower gains amid rising costs.

“It’s important to note that these are four-year agreements, and it’s impossible to know what will happen on the other side of those four years,” Allen says. “The work that was done here is so important for that reason. It’s similar to what I said about how a pilot could face an unexpected diagnosis at any time,” Allen says. “Pay and conditions have taken a beating for years due to greater economic conditions. So right now, when the airlines are willing and able to pay for these contracts, it’s important that the unions push for the best.”

“This industry is cyclical, and the tides will turn again. At least for now, a new benchmark has been set, and that’s hard to backtrack from without very good reason.”

With that, let a new ‘golden age’ begin.

*Name has been changed at the request of the interviewee.