Flying Careers Part 6: Benefits & Retirement
With the skyrocketing cost of health care these days, insurance coverage is an increasingly important consideration. As a pilot, there is the added motivation that keeping yourself healthy is a requirement of the job.
Unfortunately, coverage is pretty spotty for most entry-level flying jobs. Very few FBOs or small flight schools offer insurance to their instructors at any cost; the same goes for smaller freight or charter outfits. Some large schools and universities do offer medical insurance to their instructors, though, and bigger FAR 135 operators like Ameriflight and Airnet. With these programs the employee often pays part of the premiums via paycheck withholding.
In the corporate and airline world, comprehensive medical coverage is the norm, with medical, dental, vision, and sometimes long-term disability plans. Usually the employer pays the premiums on the employee's policy, with low-cost coverage available for spouse and children. The plans do vary, though; with some employers, particularly regional airlines, deductibles can be a little steep and coverage spotty. Note that the concessionary contracts in place at many major carriers included erosion of their insurance benefits.
For most entry-level positions, getting sick means you don't get paid. At the freight dog level and up, though, sick pay is pretty standard. You'll typically accrue X number of sick hours for X hours worked, with a limit on the number of hours that roll over each year. Sick time can often be used towards short-term or even long-term disability benefits, as well as maternal leave for both sexes. As a side note, excessive use of sick time is a great way to get the unwanted attention of the chief pilot, particularly at smaller carriers. Calling in sick on Thanksgiving or Christmas is particularly frowned upon and won't make you any friends among your fellow pilots.
Vacation Pay & Time Off
Getting time off is probably the easiest when you're just starting out, which is ironic because it's when you can afford it the least. As a new instructor, I once went six weeks straight without a day off. Paid vacation is almost unheard of for instructors and other entry-level flying jobs.
If you do the freight or charter thing, scoring time off can be trickier, especially with smaller operations. They often have set schedules for their pilots, with few reserves to cover sickness, to say nothing of vacation. Even those who have paid vacation programs will be pretty restrictive about when you can use it. At Ameriflight, first year captains got one week of paid vacation per year plus two days off without pay per month. Both of these were subject to company approval, and were impossible to use during Peak (Thanksgiving to Christmas) or when the base was understaffed.
Most airlines do offer paid vacation benefits, with between two and four weeks of vacation accrued per year. Vacation weeks are usually bid on for the entire year; obviously, holiday weeks go fairly senior, as does much of the summer. Note that 7 days of vacation pay usually gets you more than a week of vacation, since it is used only for days on which you were originally scheduled to work. A week of vacation that drops only a 4-day trip will result in 4 days being deducted from your vacation pay account. Besides the weeks you bid for, vacation time can often be used for individual days off, staffing levels permitting. You could also elect to save your vacation by taking days off without pay, which may result in a reduction in your monthly minimum guarantee. This also requires approval from crew scheduling and/or the chief pilot's office, and is entirely dependent on how reserve coverage is looking.
One alternative for lengthy periods off is a leave of absence. These are typically awarded for military service, long-term sickness, maternity, or family care, but personal LOA's from one month to a year may be awarded on a case-by-case basis. At most airlines, seniority continues to accrue during a LOA, although longevity (for pay purposes) may not. When airlines are overstaffed and about to furlough pilots, they will offer personal LOA's first. It's a good way to keep your seniority and have fun trying your hand at something else.
One of the big draws that airlines have over other flying jobs is the ability to offer free or nearly free air travel to employees and their families (spouse, kids, parents). Most airlines have "interline agreements," so not only can you fly on your airline, you can get cheap transportation on over a hundred carriers around the world.
The catch? You only ride if there is room. These days the planes are absolutely packed with folks flying on $99 coast-to-coast fares, with little room left over for the non-revs. Many airline employees just buy cheap tickets off the internet rather than risk being bumped. Of course, as a pilot you may be able to jumpseat on an otherwise full flight, but this doesn't help if anyone is traveling with you. It's also unavailable on international flights.
In a non-airline job, you probably won't have travel benefits. You may get a discounted aircraft rental rate as a flight instructor. A few airlines do allow FAR 135 pilots to jumpseat.
Yes, there are profitable aviation companies out there. Some of them have profit sharing benefits so employees can share in the bounty. Usually something like 10% of the net income goes to the employees, divided up according to longevity and hours worked. At consistently profitable companies like Southwest, profit sharing can form a sizeable part of the compensation package.
This is another area that has taken a severe beating at the major airlines the past few years. United and USAirways terminated their pilot pensions while in bankruptcy court, and Northwest and Delta are looking to do the same. Their pension plans are underfunded by $6 billion and $10 billion, respectively. It seems unlikely that retirement pensions will be standard for professional pilots anytime soon. In any case, it would be prudent to plan for retirement as though you will not have a pension, by starting in early with a 401(k) or IRA.
Most airlines and many fractionals, charter, and freight companies offer their employees a 401(k) plan with company matching. The generousness of the match varies quite a bit, and it may or may not include company issued stock.My company's 401(k) is one of the best I've seen. The company will match 100% of employee contributions up to 10% of pretax income; 50% of the company match is in our parent company's stock, but this can be sold after the employee is fully vested (5 years' service).
Many companies allow their employees to buy company stock at a significant discount, or issue them stock options as part of the retirement package. I generally shy away from airline stock, and would try to keep it under 10% of my portfolio, but that's just my opinion. SWA stock has certainly worked out well for many Southwest pilots.
If you do end up retiring with a pension system in place, consider yourself lucky. Most pensions will take the highest-grossing year of your last 3-5 years and pay you a certain percentage (say, 60%) of that. Some plans allow for a lump-sum payout; others have the option of a survivor (spouse) benefit for after your death.
Most flight schools and many smaller freight and charter operators do not provide retirement benefits. The same goes for most jobs in bush flying, traffic watch, aerial firefighting, etc. If you find yourself in one of these jobs for the long term, it goes without saying that you'll be on your own for retirement planning and saving.
My next post will be regarding lifestyle expectations for various flying jobs.