BusinessWeek has an interesting article about the economics of regional airlines — the smaller companies that are subcontracted to operate the less profitable routes for major airlines. Some were stunned to find out that first officer on the flight that crashed in Buffalo, NY only made $23,900 a year. Is this too little?
The airlines are quick to stress that there’s no connection between salary and safety, and that the amount a pilot or first officer makes is determined by the marketplace:
Yet, anyone horrified by Shaw’s salary must also confront their own primary motivation when booking an airline ticket: finding the lowest possible fare. The two are connected, say airline executives and pilots. “People will spend three hours on the Internet to save $8,” says Arne Haak, vice-president for finance at AirTran Airways (AAI). “You know this! You do it yourself.”
Airline economics changed dramatically with the deregulation of U.S. airlines in the late 1970s. The industry responded by evolving into hubs and spokes. Gradually, and far more in recent years, regional airlines have come to dominate most of the places where mainline flying is no longer economical. Smaller “regional” jets have become popular to handle busy routes that were once the exclusive domain of mainline pilots-even some Chicago-to-New York flights, for example. Air travel has become a commodity product, affordable for the masses, with the only difference on most flights being what you pay for the ticket. This fact drives nearly every revenue and cost decision. “Congress made a decision in 1978,” says Roger Cohen, president of the Regional Airline Assn., which represents the smaller airlines. “It is what it is.”
Just how low can a cockpit salary go?