A Dramatic Move- Will Airfares Drop?
American Airlines tries to solve shortage
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You want to fly off somewhere as the pandemic seems to wane. I have some good news and some bad news. Ticket prices dropped from their level of a month ago. The bad news, you are still paying nearly 20% more than last year.
The travel website Hopper says the average domestic fare today stands at $390. A month ago that fare was $20 higher at $410. If you want to travel overseas, the differential is even higher. A round-trip ticket is a thousand dollars, which is 22% higher than a year ago. Summer demand is slowing and Hopper thinks prices will moderate further as we move deeper into the season.
This summer TSA expects to handle passenger levels at or above those seen before the pandemic.
Higher airfares are being driven, in large part, by a shortage of pilots. Many took early retirement in the pandemic. When the major airlines go searching for replacements, they look at the regional airlines to promote pilots.
REGIONAL PILOT SHORTAGE
The regionals then scramble to fill those open positions. According to Professor Ken Byrnes of Embry Riddle Aerospace University, a decade ago regional airline pilots were “starting below $20,000 a year, begging for a job.”
(Credit: Envoy Air)
Capt. Joe DePete, President of the Air Line Pilots Association (ALPA), described recent history this way; “For years, regional airlines have tried to skimp and save on the most important safety feature on any flight: experienced, well-trained and rested pilots on the flight deck.”
BIG RAISES IN UNION CONTRACTS
All that changed last week when American Airlines struck a dramatic new agreement with the 4,500 pilots of the three regional airlines it owns. Pilot salaries will more than double, at least for a while. The base pay was increased by 13%. But AA agreed to pay another 50% in salary for more than two years.
Marketing photo for Envoy Air in its effort to attract new pilots. (Credit: Envoy Air)
“The increase is going to probably immediately draw from people who are out of the game. Now it's a viable option for them to stop whatever job they are in and take that first year pay,” says Byrnes, adding, “They are looking at a starting salary of $90,000. That will get some people to move for sure.”
ALPA’s DePete called the deals at Envoy, Piedmont, and PSA, “groundbreaking,” adding the deals, “are an acknowledgement that this approach of shortchanging frontline workers is not working and that airlines must offer competitive compensation packages and work rules to attract and retain pilots,”
PSA Airlines, and the other AA regionals, quickly updated the salary table for pilots. (Credit: PSA Airlines)
AMERICAN MAKES FIRST MOVE
Byrnes says the AA move was aimed, “to increase that draw to that airline to make them the premier one right now… the competition among regional airlines to capture talent… is very, very competitive. They wanted to step out in front of everybody else and this certainly does that.”
Many other regional airlines are independents; they are not owned by the other big carriers United, Southwest and Delta. But, as Professor Byrnes says, “we will have to see what happens. They will have to respond.”
Let’s take this back to how we started, ticket prices. Will you see any relief in high airfares this summer because of the move by AA? The simple answer is, no.
Envoy Air promotional video to attract new pilots. (Credit: Envoy Air)
“It's not going to immediately produce more pilots because it takes time to do that,” says Byrnes.
What about next summer? Even with more pilots coming into the system for higher pay, don’t forget, someone has to pay that bigger salary. Who might that be?
(Cover photo credit: Envoy Air)