The Demand for Pilots Has Reached New Heights
More than 1,200 Delta pilots have been picketing at 7 major airports over pay issues while pilots at Piedmont and Envoy Air will see their salaries increase by an additional 50%. Pilots at United Airlines will see a 17% pay bump over the next few years while 95% of Alaska Airlines pilots have authorized a legal strike if their issues aren’t addressed. Airlines around the country are responding (or not) to the same underlying issue in a variety of ways.
Executives at US airlines are dealing with pilot staffing issues at the same time as travelers are returning to pre-pandemic travel patterns. The Transportation Security Administration screened 2.49 million passengers at airport security checkpoints last Friday — the most since Feb. 11, 2020, when it screened about 2.5 million passengers.
At first blush, some may believe that the surge in demand for air travel is being driven by increasing gas prices. Despite record-high prices at the pump, AAA expects Americans to break car travel records with 42 million people hitting the road, a 1.1% increase from 2019. There are actually fewer people flying this summer than in previous years because of increased prices for airline tickets. The chaos at airports is only making the whole situation worse and spilling into the pilot industry because the demand for pilots, like most other occupations, is a derived demand. Airlines don’t inherently demand pilots, but airlines need pilots to sell their final product: flights. As travelers increase their demand for air travel, airlines increase their demand for pilots’ service.
Increased demand for products or workers results in higher prices As long as the supply of those items is somewhat responsive to price changes, we should also see increases in quantity. The increased demand for air travel can be seen in the price of airline tickets. Since May of last year, the consumer price index for airline tickets has increased by 37% and there has been a 20% increase in the number of passengers in June 2022 compared to June 2021. The average cost of a “good deal” round-trip domestic flight at the end of June was $360, according to Hopper. That’s about $70 more than the same time in 2021.
The increased demand for flights should result in an increase in demand for pilots as well. The easiest way to think about this connection is that all those increased passengers have to be flown by someone. If passengers are willing to pay more, pilots should also get a share of that increased price. This application plays out nice when we see announcements from Piedmont, Envoy, and United Airlines that they’re increasing their pilots’ salaries.
The fact that pilot pay hasn’t been increasing at Delta and Alaska Airlines is part of the reason for their protests and eminent strikes. When demand increases, there should be an increase in the price of the product or input. When those prices don’t adjust upward, a true shortage is created. At the lower, original pay there aren’t enough pilots to meet the quantity demanded from the airlines. The industry-wide pilot shortage has been brewing for the past 3 years, but only some companies have taken the steps necessary to fix the issues.
While we tend to pay a lot of focus to salaries, labor decisions include a lot of nonmonetary options as well. Things like retirement accounts, work-life balance, and prestige are all part of the decision for people to choose where to work. For Delta, their pilot shortage has resulted in pilots flying more overtime than ever before. One Delta pilot shared with NPR that “so far in 2022, Delta pilots are on pace by the end of the summer to have clocked more overtime hours than in 2018 and 2019 combined.” Instead of paying passengers $10,000 to give up their seats on an overbooked flight, perhaps it’s time to more seriously address their protesting pilots. Delta and the pilots’ union haven’t negotiated a new contract since 2016.
The average domestic airfare in the US’s busiest airport (LAX) last year was $322.20 [Bureau of Transportation Statistics]
In April alone, airfares increased by 18.6% from March [Bureau of Labor Statistics]
Delta Airlines finished Fiscal Year 2021 with $280 million in profit [Delta]
The Air Line Pilots Association represents more than 65,000 pilots at 40 U.S. and Canadian airlines, making it the world’s largest airline pilot union [Air Line Pilots Association]
FedEx is the largest employer in the airline industry with 199,828 full-time employees [Bureau of Transportation Statistics]