Airline Comparison – Part 3

Welcome back TPN! This is Part 3 of 3; the final installment in a series looking at how to choose between job offers from multiple airlines. In Part 1 we recommended that the single most important factor in your choice is location. If your family can be happy living at a base for your airline, your quality of life will be superior to that of the average commuter (this is of course subjective). In Part 2 we looked at some factors that could also play a part in your decision. We argue that none of them is nearly as important as location, and that some of them are outright myths. However, we leave it to you to figure out what you care about.

In this final part, we want to take a more researched, data-driven look at our major airlines. We’re only going to use publicly-available data and we can’t vouch for the absolute accuracy in all cases. We’ll try to include links to unique sources of information. If we don’t include a link we either found the data in an obvious place on the airline’s corporate website or on the always-outstanding airlinepilotcentral.com. If you read this article as part entertainment and part education you will have the right mindset going forward.

We’re choosing to discuss the airlines that we did because we consider them to be “majors,” and left others out because, well, you can only make a table so large. There are a few other players that could be worth considering, but we didn’t include them here. (If you’re dead-set on living in Colorado, You’d definitely consider Frontier. The same goes for Las Vegas and Allegiant. If you’ve already identified the importance of location enough to zero-in on these options, then you really don’t need this chart anyway.) If location doesn’t trump all for you, then there are many other factors to consider, and we invite you to revisit Part 1 to understand the premise we are operating under.

With that, We’ll give you the table first and follow it with some of the techniques we’d use it to interpret the data, assuming that any given set of airlines under comparison scores equally on our location preferences. (Please read the commentary before you start salivating over some cherry-picked piece of data. This industry information is full of red herrings!)

* As of this writing, JetBlue’s negotiating team has reached an Agreement in Principle with their company. Though details haven’t been formally announced, it looks like their pay rates will be pretty similar to the numbers we are showing here for Southwest. Watch TPN for more details in the future.

Pilots and Retirements

It’s no accident that this is at the top of the chart. All else being equal, seniority progression is probably the most important factor for airline pilot Quality of Life (QOL). The faster your seniority increases, the better.

However, if you’re in the military for a while longer due to a service commitment or because you took a pilot bonus, you will look at these numbers differently. Larger numbers on the rows for retirement mean that every year you delay costs you even more. I included a 5-year value to give you a feel for how long it’ll take to make sure you never have to bid reserve again (if you don’t want to) and to be relatively furlough-proof. This could also correlate to your ability for an early bid to captain, depending on the airline.

However, the 15-year number equates to more of a long-term QOL. Several airlines (Southwest, Alaska, Hawaiian, and JetBlue) did a lot of hiring while the three big legacy carriers were busy with mergers and bankruptcies. The pilot groups at these smaller airlines are also somewhat younger on average, meaning new hires for the next 15 years won’t see seniority progress as quickly, or as far overall, as they might at the legacy or cargo carriers. Given these numbers, it’s reasonable to think that the average pilot could have to wait until beyond the 15-year mark to upgrade to captain. That contrasts sharply to Delta where pilots have recently been awarded bids to upgrade with as little as four months in the company. (Avgeekery has an interesting discussion about how this phenomenon might be affecting companies like Southwest.)

We still assert that you’re better off giving up this seniority to work at an airline where you can live in your dream location. We’d be happy to spend longer as a right seat landing gear actuator, to not commute. However, it’s something to consider.

Pay Rate

If you were to run a statistical analysis on pay rates across this industry, you’d find that they’re actually fairly close to each other. This isn’t by accident. In a recent presentation by the Airline Pilots Association (ALPA, the world’s largest airline pilot union) they said that they try to keep these pay rates about the same across the industry. It prevents pilots at cheapskate airlines from getting screwed, and it forces the industry overall to continue raising pay rates over time.

We assert that you shouldn’t get too worked-up over pay rates in general. The maximum difference between widebody carriers is $30/hr…or roughly $30K/yr. Yes, that’s a lot of money. However, once you’re making $300K, what’s the marginal utility of another 10%? At any given airline, you’ll see a much wider range in total pay within a category based on how hard individual pilots work. Picking up extra trips, and living in base so you can get last-minute trips for premium pay will earn you far more than living in a bad location because the top-line pay rate is a few dollars higher.

It’s also important to look at the specific fleet makeup of a company, and take into consideration the size of the pilot group compared to the number of aircraft available. Delta has the highest widebody pay rates on the chart, but they have the fewest widebody aircraft, especially on a per-pilot basis. You’ll be able to bid for a seat on a widebody and start making the big bucks sooner at a different airline. More years at a slightly lower hourly rate will equate to more money earned overall. (This fact is not lost on the Delta pilot group.) If you really want to make money by flying widebodies, FedEx and UPS are by far your best bets.

Pilots occasionally get extra worked-up over first year pay or the fact that a company makes new pilots buy their own uniforms or pay for their own hotel during initial training. Please forgive the self-righteous arrogance, but shut up!

Don’t sacrifice your long-term happiness for such short-term thinking. If this situation presents your family with an existential crisis, it’s probably because you’ve lived your life with far too little long-term thinking for far too long. With a little bit of prior planning/saving and some minimally prudent living, you can make it through first year pay. Even at UPS you’ll make twice as much during your first year as Mr. Money Mustache’s whole family spends in almost two years. Don’t forget that the 1000 x Hourly Rate estimate has proven itself to be very conservative.

If you’re capable of even minimal forethought and frugality, first year pay should be so much less important than everything else that it doesn’t merit any further discussion here.

Fleet Makeup

We already discussed the fact that airline flying is generally the same no matter what kind of aircraft you’re in. Yes, the 737 still has a 1960s-era overhead panel while the A321 is gorgeous and comparably modern. (And if you like that, just wait for the CS100!) That still doesn’t matter though. After a few hundred legs, your habit patterns and flows will be etched into your soul no matter what you fly. New hotness makes no difference at that point.

If you really want to fly internationally, it actually appears that FedEx is by far your best bet with UPS close behind. Delta does have the fewest widebodies of the five big international players, though it was surprising at how close its fleet size is to its competitors.

Financials

Times are great right now, but we’d be foolish to assume that this will never change. As we’ve seen, all it takes is one tragic day to turn this industry on its head. While the rather unfortunate US tax code makes it useful for a large corporation to carry some debt, there’s a limit to what makes sense.

If you know someone with an MBA and some time on their hands they could run a much more detailed (and potentially meaningful) analysis of the financial situations of these companies. (we’re big fans of Seeking Alpha.) However, we see a few important indicators here.

JetBlue and Hawaiian could pay off almost their entire debt with one year of profits. Delta and Southwest could do it in about two years. American could pour every penny of profit it has into debt and not climb out of the hole for nearly six years. United is closer to ten!

If, or more likely when, the next bad day comes, the companies with crushing debt will have no energy left to maneuver. They’ll be a lot closer to “the stall margin” than the companies with less debt. They’ll be parking more jets, cutting more service, and they’ll have to furlough more pilots.

This line of thinking is reflected in the numbers included here for Market Cap. This number is basically what investors (yes Wall Street, but also private investors) think each of these companies is worth. The companies with low debt and high profit are worth the most. It is surprising to see that UPS and FedEx ranked at #1 and #2 here, respectively. It helps that they have more to their business than just flying airplanes, not to mention they’re fueled by a culture of consumerism. If you look at the top three most valuable companies, each one is essentially worth the next two competitors combined. Southwest only misses that arbitrary statistic by a small margin as well.

All locations being equal, generally go with the company with the strongest possible financial situation. (If you’re going to make this a higher-priority factor in your choice, get some super smart person to do a professional analysis of the airlines that you have to choose from.)

Last Merger

Simply put, mergers are messy. A pretty good merger is one where you are hearing equal amounts of complaining from both sides. Yuck! Mergers cause all kinds of internal strife and waste a lot of time trying to blend two enormous administrative and operational systems into one.

If you look at which airlines are potentially in better shape than others in the chart, you may notice that time since most recent merger appears to have some correlation. If you’re looking for a stable company with minimal strife, you might want to choose one that completed its merger a while ago.

However, if you’re still trapped in the military, those companies may be your worst options. One of the trends in our industry is that companies who merged more recently have been forced to slow pilot hiring. Those companies missed out on some of the best pilots in a very large, back-logged pool, and they’re going to be playing catch-up to find the best pilots that become available in the future.

“Hey Emet, I’m a great pilot. That means this could be great news for me!”

Congrats, you figured it out!

American Airlines might still be wading through the depths of post-merger drama, but when they finally make it out they’re likely going to need to hire like crazy. Hopefully, they won’t hit cruise speed on that effort until you’re finally free of your military obligations. American starting in 2020 might look a lot like Delta did starting in 2014.

If we were looking at a wait of 5-10 years before getting out of the military (and location didn’t make a difference) we might lean toward an airline that has been slower on hiring for the last few years.

Conclusion

So, there you have it. Barring discussions and in-depth comparison with pilots at each individual airline, this is about the best pilot-centric comparison you can make of the major US airlines.

If you still want more information, you could hit up ALPA. Every time they renegotiate another pilot contract, they have to compare the new product to current and past contracts across the industry. They probably have a better set of professionally-assembled data.

That said, we still don’t think it matters. If you actually talk to pilots at these airlines, you’ll hear that most of them love where they are and that they’re confident in their company’s future. You may have to temper that if you’re talking to the eternal whiner who is never happy with anything in life, or the naïve optimist who also thought Bitcoin was a good investment at $19,000 (or an investment of any kind in the first place).

Our recommendation…if you are just starting to apply for airline jobs today, figure out first where you want to live. Match location priorities with all qualifying airlines and apply to each of them. Look at some of the data and thoughts in these posts, but spend a lot more time talking to people who actually work at these companies. By the time you end up with more than one offer, (assuming you are so lucky), all of this should be good enough to make sure you end up at a company where you can enjoy a great second career.

In the absolutely worst case, if you got to your new airline and decided you hated it for some reason, consider the possibility of leaving to work somewhere else. The chart in this post tells the story on seniority progression. As long as there’s still room to progress at another airline, you might not lose anything by moving. Your company would rather have you leave for greener pastures than spend the next 20-30 years dragging everyone else down, constantly whining about how much you hate where you work!

No matter where you go, don’t forget how great times are right now. A senior captain at an all-narrowbody startup like JetBlue can expect to make more than $219,000 per year (and they just started the endgame in negotiations that should raise this to somewhere above $250,000.) That puts you at the 97.9th percentile for income in the United States, and top pay rates at other airlines equate to $100,000 per year more than that! Some of these airlines will see seniority progress quicker than others, but in all cases the progression will be much faster than it’s been for the past 10-20 years. As long as you don’t spend like a fool, a job at any of these airlines will provide you with more than enough money to retire years ahead of your friends from high school, having covered all of your needs and a plethora of wants in life. We’re lucky to be in this industry at such an exciting time. Find a place to settle down and enjoy!

< Part 1 | Part 2 | Part 3

BogiDope is a proud sponsor of The Pilot Network, and this post is republished from their site with permission. You can read the original post here. You can also get more great TPN content on the TPN Community Website, on their free TPN-Go app (iPhone or Android), in their quarterly TPNQ magazine, and on their Podcast.

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