Friday, April 04, 2014

Republic Airways Pilots Overwhelmingly Reject Tentative Labor Contract: Regional Airlines Are Struggling To Recruit, Keep Pilots

The Wall Street Journal 
By  Susan Carey 
April 4, 2014 4:30 p.m. ET

Republic Airways Holdings Inc. on Friday said its pilots didn't ratify a proposed four-year labor contract that it said would have significantly improved pay and work rules for the 2,200 aviators at the company's three regional airlines.

The Indianapolis company didn't disclose the vote breakdown, but said it was "extremely disappointed."

The International Brotherhood of Teamsters, which represents the pilots, said the tentative agreement reached in mid-February was overwhelmingly defeated, with only 289 voting for the accord and 1,643 against. Capt. David Bourne, director of the Teamsters Airline Division, had recommended the aviators accept the deal, which was reached after nearly seven years of negotiations.

The rejection came on the heels of another regional pilot group nixing a contract proposal. In late March, 70% of the pilots at American Airlines Group Inc.'s American Eagle unit voted against a 10-year contract that would have frozen their pay scales until 2018. While the accord was seen as concessionary, it would have put the 2,700 Eagle pilots on a firmer path to jobs at American Airlines—offering the change to fly bigger jets and earn more money—and would have committed American to keep at least 170 aircraft in the Eagle fleet.

The evident pilot dissatisfaction comes at a time when regional airlines are struggling to recruit new pilots and are losing many of their experienced aviators to the major airlines, which are hiring to make up for mandatory retirements of their senior pilots. Starting regional-pilot pay is the range of $24,000 a year on average, and new federal rules now require beginner pilots to have 1,500 hours of experience before they can fly passengers, up from a minimum of 250 hours before. That extra training adds tens of thousands of dollars to the novice pilots' training expenses, so fewer candidates are interested in the career.

Some smaller regional carriers are being forced to offer large signing bonuses and retention bonuses just to keep enough pilots to satisfy the work they have contracted to provide to the major airlines. And some large airlines are finding their regional affiliates can't meet their commitments, leading to schedule cutbacks. United Continental HoldingsInc. recently announced a big pullback in its small Cleveland hub, blaming both the pilot shortage and its continuing losses in that market.

Wayne Heller, Republic Airways' chief operating officer, said in a statement Friday that the failed tentative agreement would have given his company's pilots "an industry-leading contract" at a time "when other regional airlines have been negotiation concessionary agreements for their pilots." The company said it would work with the Teamsters union to determine how to proceed.

Capt. Bourne, the Teamster official, said Friday "the membership has spoken and we will respect their wishes." Normally, after a contract rejection, the pilots are polled on why they voted no and the company and union try to hammer out a new agreement that meets more of the pilots' needs but doesn't blow the airline's budget.

In the case of the Eagle pilots, American Airlines said it would contract other regional airlines to fly new regional jets it has on order, and begin retiring some of the smaller, less efficient aircraft the Eagle pilots currently fly. That shrinkage will reduce the number of pilot positions at Eagle. But the pilot shortage should give those aviators some leverage in finding jobs at other carriers.