The GenuineQS Quandary
Competing in today's marketplace requires bold action and proactive thinking. Sadly, NetJets has yet to rise to the occasion.
From destination to steppingstone
A Chilling, but not Unexpected Trend
A competitive agreement is not simply an investment in the pilots who are working every duty day to keep NetJets in flight, but it is a consequential investment in the future of the brand – in positioning the Fractional to reach the very ambitious growth goals set by the CEO and his Executive Management Team. Right now, that is not happening.
This past week, NJASAP leaders received notice after notice from NetJets, informing the Union of pilots – most of whom were in their first two years of service – who had resigned. It is difficult, but certainly expected to see both new and tenured pilot talent leave NetJets to pursue far more lucrative opportunities elsewhere. Indeed, pilots in their first few years of service who had every intention of building a career at NetJets are moving on because the dramatic financial penalty incurred across a decades-long career has made it too expensive to stay: More specifically, a NetJets pilot will make approximately 60 percent of what their peers at low-cost carriers will earn throughout a 30-year career.
NetJets’s fall in status from choice opportunity to industry steppingstone is no secret: The results of a recent membership survey indicate 72% of new hires do not view NetJets as a career destination carrier – a development NJASAP Leadership finds exceedingly disturbing. Why? Because NetJets supports the most demanding and complex operational environment on earth with pilots providing service to 5,000 airports, many of which are uncontrolled fields in remote locations with unique risks, across 200 countries and territories. Ours is not an environment for the untested, rather it demands skilled, experienced aviators who have the training and acumen to navigate an extraordinarily challenging flying environment.
Amid a sustained pilot shortage in which carriers across the industry are aggressively pursuing talented aviators, NetJets has chosen to bury its head in the sand to the realities of the marketplace. Rather than offer a competitive package of wages, benefits and working conditions, it opted to lower flight time hiring minimums, which has resulted in a 77% decrease in new hire experience on the flight deck since 2018. This is very worrisome to the Union because the training footprint for incoming pilots has not been modified to reflect the dramatic change in experience.
These very same pilots who are spending a few years honing their experience at NetJets are soon looking beyond the Fractional. In today’s edition of The Wall Street Journal, NJASAP shared one of several stories from departing pilots who planned to stay: The pilot, who accepted a position with a legacy carrier, blames NetJets for the departure. “I was looking forward to upgrading and building a career at NetJets. But management pushed me away by refusing to compete in this market. Many of my peers are making the same decision.”
Added NJASAP President Pedro Leroux, “Throughout my aviation career, I have borne witness to many things, but I do believe watching talented aviators across our seniority spectrum leave NetJets because management refuses to compete for their talent – talent it desperately needs to staff the operation – is among the most chilling.”
ABOUT
Based in Columbus, Ohio, NJASAP is the independent pilot labor organization that represents the 3,100-plus pilots who fly in the service of NetJets Aviation, Inc., a Berkshire Hathaway company.
NETJETS HAS LOST ITS COMPETITIVE EDGE
A CAREER DESTINATION LOSES ITS EDGE
Career earnings for a professional NetJets pilot are no longer competitive in the marketplace - far from it, in fact. Pilot compensation at NetJets not only trails that of the legacy carriers, but also low-cost carriers like Jet Blue and regional airlines such as SkyWest. What was once a career destination for professional aviators is slowly transitioning into a stepping stone - a place where new aviators come to build time before transitioning to more lucrative opportunities elsewhere.
NetJets, the leader in private air transportation, has long argued its product is in a class by itself based on the safety and service it provides to its ultra-wealthy clientele. NetJets executives, having turned a blind eye to the pilot labor crisis, have seemingly concluded attracting and retaining talented aviators is inconsequential to delivering the product for which owners and customers pay a premium. The history of our industry would suggest otherwise.
THE CALCULATION
The earnings values featured in the charts above include base wages and retirement contributions for typical new hires across a 30-year career and are calculated assuming a career progression through equipment types and positions at each air carrier shown. Upgrade times are calculated based on current pilot headcount, estimated attrition, expected fleet growth and other related factors. Wage rates and retirement contributions as given at the final known rate level within each pilot agreement; first officer and captain pay rates were annualized at 78 credit hours per month at Delta, 88 hours per month at JetBlue, and 85 hours per month at SkyWest. Base pay values exclude pay premia and open time. NetJets base pay was calculated using the 7&7 Schedule, excluding base-to-gross override.
Bold Steps Amid a Labor Crisis
As the sustained pilot labor crisis tightens its stranglehold on the industry, NJASAP shares a powerful video that not only emphasizes the truth of the continuing crisis, but also celebrates the power of lawful collective activity: NJASAP members are undeterred in their efforts to restore the luster that once distinguished NetJets as a career destination carrier.
Watch it here ... https://bit.ly/42sv0Nw
The Pilot Shortage is Real
crisis is dramatically changing the competitive landscape for pilots
What is happening ...
For more than a decade, we have watched the rapidly tightening supply of qualified pilots reshape flight deck staffing requirements. In response, carriers have sought an advantage, resulting in record growth in pilot compensation. NetJets has remained competitive for pilot talent in this turbulent market by agreeing to adjust pilot compensation above contract rates in 2018 and 2020. Dramatic changes in the market since that time, however, now require the global leader in fractional air transportation to adjust pilot compensation to remain competitive for pilots as detailed below.
After losing an unprecedented number of pilots to mainline carriers last summer, regional airlines were forced to park more than 100 jets, leading to service reductions across the country. American Airlines Group (AAG) initiated the first definitive response to this crisis in June 2022 by dramatically boosting pilot pay and bonuses at Envoy, Piedmont and PSA, their wholly-owned regional subsidiaries. To remain competitive, other regional carriers quickly followed suit by offering unprecedented pilot pay increases of 70 to 100-plus percent.
By 2022’s end, AAG’s bold action in the regional space had dramatically reshaped the competitive market and the career choices available for pilots – both new to the profession and longer tenured aviators.
The industry-wide pursuit of qualified pilots that led to these unprecedented pay improvements at regional carriers has now spilled over to mainline carriers: In many cases, their regional partners are offering entry-level pilot pay rates that exceed their own. Undeniably, the pilot labor crisis is forcing all carriers in the commercial airline industry to offer dramatically improved pilot compensation, work rules and benefits to recruit and to secure qualified personnel in this increasingly tight market.
Since last October, all five mainline carriers that have concluded negotiations with their pilot groups have produced contracts that feature large pay increases and other significant improvements. Consider the following …
- Alaska Airlines | 23% increase in pilot pay scales in two years plus scheduling improvements. | October 2022
- Spirit Airlines | 30% increase in pilot pay scales over three years plus other benefits | January 2023
- JetBlue | 21.5% increase in pilot pay rates in an 18-month contract extension. | January 2023
- Hawaiian Airlines | 32% increase in average pilot pay rates over four years. | February 2023
- Delta Airlines | 34% increase in average pilot pay rates over four years plus significant improvements to scheduling, benefits and job protection language. | March 2023
Market forces in combination with newly ratified agreements on their competitors’ properties will undoubtedly force the remaining mainline carriers in pilot contract negotiations – American, Allegiant, United and Southwest – to follow suit. Indeed, a pattern has emerged as carriers in every industry sector seek to retain and to attract qualified pilots in an increasingly compressed market.
Moreover, it would be incorrect to assume these packages are targeted at pilots entering the profession as that is most assuredly not the case. While some carriers have reduced their traditional education and experience minimums for new pilots, they are also offering large incentive bonuses in the form of direct-entry captain programs that allow more experienced aviators to retain status and pay longevity to join another carrier.
Importantly, the pilot shortage is not expected to end in the near term. Quite the contrary, the shortfall in the pilot supply is only expected to intensify throughout the next several years.
Proper Staffing + SAFETY
Proper Staffing
NetJets has long relied on a supply of pilots from the regional carriers to fill its new hire classes, however, we expect this pipeline to contract dramatically as higher pay rates are negotiated across this industry sector. Moreover, mainline carriers have prioritized the development of branded flow and pathway programs for pilots at their regional affiliates to secure pilots for their own operation. It would be far more lucrative for a regional pilot to stay at their current carrier and move on to an affiliated mainline partner than to consider NetJets as a viable option. Currently, NetJets, in contrast, has no regional affiliates or flow deals with mainline carriers. More and more frequently, NetJets is emerging as a prime target for Part 121 carriers, who are hungry for experienced pilots with an unprecedented safety pedigree and commitment to customer service.
The Safety Consideration
Operational tempo is at warp speed: Flight demand records are continually being set, resulting in very fatiguing duty days. Toward the end of 2020 as we began to slowly emerge from the pandemic, NJASAP recognized increasing pilot fatigue was unavoidable, and this is why our Safety experts proposed a Fatigue Risk Management Program like those in place at American Airlines, Southwest and UPS. We viewed a science-based approach to continuously monitoring and managing safety risks associated with fatigue-related errors would result in less fatiguing duty days for the pilots and improve schedule integrity for management and the owners: It seemed like a win-win-win.
NJASAP was correct in its assessment: Flight demand returned to NetJets with a vengeance: Demand on a random Tuesday can exceed 550 flights, which is almost 200 above the norm. And this is occurring as supply chain issues continue to wreak havoc on life on the road.
Professional aviators are not only juggling day-of issues (e.g., winter operations, minimal FBO staff, weather, fuel planning, de-icing, ATC delays, international handling requirements, early passengers, late or no-show catering), but our rest periods are filled with numerous challenges: Is food outside of a vending machine available? How long will it take to get to the hotel? Can I hope to get a decent night sleep in a quality hotel?
While we may not log as many flight hours as our Part 121 peers in a given year, the length of our duty days, on average, is much longer, which one would expect with an unscheduled carrier. Our ad-hoc operation leads to wild shifts in a pilot’s duty schedule: It is not uncommon for a pilot to start duty at 10 a.m. on a Tuesday duty and gradually see that start time shift to 10 p.m. by Friday. Obviously, that will wear someone down over a seven-day period.
Looking at each of these factors in the aggregate, the calculus is very simple: Pilots are flying at a fast and furious pace amid a landscape rife with lingering challenges from the pandemic. And NetJets management refuses to participate in an industry-standard program that benefits the pilot, the operation and the owner.