Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

From pilots to ramp agents - U.S. airlines go all out to staff up

Stock MarketsNov 23, 2021 11:51AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: A Delta Connection Embraer ERJ-175LR plane lands as a United Express Embraer ERJ-175LR plane waits to take off at LAX airport in Los Angeles, California U.S. January 10, 2018. REUTERS/Lucy Nicholson

By Rajesh Kumar Singh

CHICAGO (Reuters) -From offering premium pay to hefty signing bonuses or poaching workers from other airlines, American carriers are scrambling to ramp up staffing for the holiday season and prevent disruptions that marred air travel this summer. After reducing headcount by thousands during the depths of the pandemic, the industry is grappling with shortages of pilots, flight attendants and customer service agents. Critics say the staff crunch is of the airline industry's own making as the deep job cuts last year, despite an infusion of $54 billion in federal aid to help cover payroll expenses, left it ill-equipped to handle the snapback in air travel.

Airlines have said the bailouts saved thousands of jobs, prevented bankruptcy and put them in a position to support the economy's recovery from the pandemic.

A Delta Air Lines (NYSE:DAL) spokesperson said the company had no furloughs or job losses related to the pandemic. However, the company did have about 18,000 staff departures last year in the form of retirements or voluntary separations.

With willing workers in short supply across the United States and companies frantically vying for them, carriers are being forced to spend more to attract talent. "The reality is that the hiring environment has changed as a result of the pandemic," American Airlines (NASDAQ:AAL)' chief operating officer, David Seymour, told employees in a memo this month. Piedmont Airlines, American's subsidiary, is trying to lure pilots with a $180,000 bonus offer. United Airlines is offering a $5,000 signing bonus for a ramp agent position in Boston. Spirit Airlines (NYSE:SAVE) has bumped up wages for its ramp agents by 30%. The ultra-low-cost carrier is offering a one-time graduation bonus of $1,250 and up to $4,500 a year in tuition reimbursement to flight attendants. The rush to hire in a tight labor market is driving up costs at a time when soaring jet fuel prices and higher airport charges are also squeezing profits. Southwest Airlines (NYSE:LUV)' wage expense as a percentage of revenue is up by 14 points this year versus 2019. There have been similar increases in salary costs at other carriers including United and American.

Yet headcount at U.S. scheduled air carriers in October was 14.3% below the pre-pandemic peak. By contrast, employment at restaurants and bars, struck equally hard by pandemic lockdowns, is just 6.4% below its peak before the COVID-19 outbreak. FADING ALLURE Industry experts attribute the sluggish recovery to the fading attraction of jobs with passenger airlines. Wages for some entry-level airline jobs, particularly low-skilled ones, pale in comparison with those in other industries even as the work has become more challenging. The situation is worse at regional carriers, which operate 43% of the flights of American, United and Delta. These companies provide connectivity to low-density networks, but their pilots and crews are paid far less. Even at the regional airlines that are subsidiaries of American and Delta, the wage gap is huge. For example, entry-level flight dispatchers at American earn more than twice the amount made by their counterparts at Piedmont Airlines. There is a similar gap between pay scales at Delta and its regional unit Endeavor Air. Keturah Johnson, who heads the union for Piedmont's flight attendants, said a lot of workers have been forced to pick up a second job as the wages at the regional carrier are not high enough to cover living costs. Piedmont's flight attendants last month voted to authorize a strike, demanding better pay and benefits. "We are fighting for a livable wage," said Johnson. A CRISIS LONG IN THE MAKING Analysts say the labor crisis was in the making long before COVID-19 hit the industry. They trace its genesis to a wave of bankruptcies and consolidations after the 9/11 attacks, which made carriers too cost-conscious and excessively focused on productivity.

As airlines slimmed down, they became more reliant on employees logging more hours. The Association of Flight Attendants estimates the workload of flight attendants increased by at least 25% after 9/11. The pandemic-induced plunge in air travel prompted the industry to double down on cost cuts, leaving it with the lowest headcount in more than three decades. Meanwhile, quarantine requirements or illness further depleted its resources. "COVID was the tipping point," said Henry Harteveldt, founder of travel consultancy Atmosphere Research Group. "It ripped the protective layer of the airline industry and exposed many of its underlying challenges." Airlines resumed hiring this spring as dipping COVID-19 cases brought passengers back. But the supply of new pilots is limited, and cargo carriers of Amazon.com Inc (NASDAQ:AMZN), United Parcel Service Inc (NYSE:UPS) and FedEx Corp (NYSE:FDX) are also vying for them. Faye Malarkey Black, head of the Regional Airline Association, said the supply of new pilots fell 60% in 2020. This year, it is about 36% below pre-pandemic levels, she said. Worries about a looming pilot shortage have dogged the industry for years. That did not stop carriers last year from pausing hiring and offering buyouts and retirement packages to thousands of aviators. SOARING ATTRITION RATE Faced with a crunch, they are now heavily poaching from regional carriers. SkyWest (NASDAQ:SKYW) Inc, which operates flights for Delta, American and United, last month said its attrition rate is running into double digits. To be sure, regional airlines have been losing pilots to major carriers for years. But Black said that trend is now "on steroids."

Subodh Karnik, chief executive of Georgia-based ExpressJet Airlines, likened the demand for pilots to the frenzy in the U.S. housing market where houses are getting flooded with offers within days of their listing. He said one-fifth of the pilots at regional airlines are getting snatched away by big passenger and cargo carriers even before they can complete their mandatory training. Inadequate staffing runs the risk of causing operational meltdowns of the kind that have led to a spate of high-profile flight cancellations in recent months. Carriers such as American and JetBlue are offering bonuses, higher pay and other incentives to ensure they have enough workers for what is shaping up as the busiest holiday season in two years. If the shortages persist, Karnik warned that major carriers could stop servicing less profitable routes. United has decided to drop eight routes in the U.S. Midwest and South from its network. The airline's chief executive, Scott Kirby (NYSE:KEX), told travel news industry website Skift last week that the cuts were the result of a pilot shortage. "We don't have enough pilots to fly all the airplanes," he said.

From pilots to ramp agents - U.S. airlines go all out to staff up
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Felipe Daniel
Felipe Daniel Nov 23, 2021 12:53PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Direct result of vaccine mandate
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email