Downgraded!

It's official. The US airline industry is (back) in the crapper. With oil at $130+ per barrel, it's just a matter of time before one or more of our major airlines goes back into bankruptcy, maybe for good. The airlines have finally been able to get most of the fare increases to stick, but they'll need to increase yet more for airlines to make money... and the number of passengers willing to pay that much to fly in a less-than-stellar economy is surely less than the number flying today. Something has to give. United and Continental are taking preemptive measures by significantly cutting their capacity. USAirways and perhaps American will follow suit. The more cynical among us believe Northwest and Delta are holding off on capacity cuts for only as long as they need to secure approval of their merger.

When airlines cut capacity, the pilots most directly affected are those most recently hired. The bottom 10% or so of any seniority list is referred to as "furlough fodder," although there have been furloughs or series of furloughs that have gone halfway up the list and beyond. Getting furloughed is like getting laid off in the non-aviation world. You retain the right to your old position if the company expands again, but that's about it. You might get non-rev benefits for a while. You can get medical bennies through COBRA but it's on your nickel. Some pilots find work outside of aviation while they await recall; others take flying jobs at regional airlines or corporate gigs. Some go back on active duty with the military. Many simply move on with their careers and get hired by another airline, never to return. The ranks of SWA, JetBlue, Airtran, FedEx, and UPS are full of pilots who were furloughed by major carriers after 9/11. When airlines recall furloughees, they often find the acceptance rate to be less than 50%.

Even if a pilot avoids furlough, everyone except the very top is losing relative seniority. Many are displaced to smaller (and lower-paying) equipment. Worse yet is the Captain that gets downgraded to First Officer, sometimes taking a pay cut of up to 50%. This is on top of payrate and benefit cuts of up to 50% that were imposed in bankruptcy after 9/11.

There likely wouldn't be that many furloughs, displacements, and downgrades this time around except that the mandatory retirement age was just changed, from age 60 to age 65. Now there are far fewer retirements to absorb some of the capacity cuts. The irony, of course, is that those enjoying an extra five years at the top of the pay scale are those least likely to be impacted by capacity cuts. A guy on the top 5% of the list isn't going to be displaced, much less downgraded or furloughed. I hope the guys staying past 60 enjoy their extra five years. Their newfound freedom to "fly 'till they die" is going to set back a lot of junior guys' careers at least five years.

I've mentioned in previous posts that I don't see keeping my job beyond a year or so. With recent developments in the industry a downgrade and subsequent furlough is looking more and more likely. It'd only take a few hundred furloughs (flowdowns) from RedCo to kick me off the NewCo list, and that's on the small end of expected furloughs at many companies. The political pressure to avoid cuts until the merger is approved may be my saving grace in the short term.

In the meantime, I'm getting some good practice for my eventual downgrade by flying in the right seat. We're pretty short on FOs right now and I'm on reserve, so crew scheduling has seen fit to use me as a first officer for two weeks in a row now. It's not a super big deal - I'm being paid as a Captain, and I was an FO recently enough that I still know the duties well. That said, by the time I lose my job, I'd really like to have some decent turbine PIC under my belt. I'm seriously contemplating bidding a CDO line for next month to avoid flying as an FO on reserve. True, I'd get less sleep, but it's not like us airline pilots are sleeping that well lately anyways.