“My pilots owe you big time, Sheryl.”
This was the start of a conversation I had with a Fortune 100 flight department leader at the Morristown Regional meeting this past September.
He told me that he felt his gratitude was owing to some of the analysis I provided in my blog entitled, “Pilot Shortage: How We Got Here & What’s Next”, and another, Pilot Compensation is Key to Attraction & Retention.
Both articles helped him explain to his corporate business partners that they needed to initiate a significant, across-the-board compensation increase for its pilots.
He added, “Thanks to you, I was able to make a strong business case for a $1.1M increase in pilot compensation—and I got it.”
As we’ve detailed in our blogs throughout the past year or so, the competitive landscape in business aviation has changed.
And this flight department leader hit the nail on the head with this observation: “There’s a new competitor in town and it’s the legacy carriers. They’re aggressively recruiting our talent.”
He shared with me the story of how one of his captains, furloughed many years ago, was called back by United and offered a deal he couldn’t refuse. They were willing to bring him back at the seniority level he would have been at had he not left.
The flight department leader told me: “He came to me to discuss the offer, and, knowing his goals and the number of years he had left to work pre-retirement, I told him he’d be ridiculous not to take the offer. With nine years remaining in your career, you don’t walk away from $100K more per year. That’s nearly $1M before retirement that I couldn’t match.”
That’s when this director knew he needed to do something. He reviewed the status of the remaining pilots on his team and estimated that 70 percent of them were also at risk for leaving for the airlines.
He said: “I never let a good crisis go to waste.”
So, he put a package/proposal together that would educate his company’s aviation reporting executive, HR partner and compensation department regarding the threat this situation posed.
The package contained research culled from my blog as well as compensation numbers for the legacy carriers and NetJets. The proposal reached all the way up to the Chief Administration Officer.
In his report, he had to admit to his company’s senior managers that the situation had caught him off-guard. “I knew about the pilot shortage,” he told them, “but I didn’t see it coming as hard and fast as it did. It’s real and it’s accelerating.”
He said he explained to them that they had two options. First, they could do nothing and simply deal with the outcome as it eventually would occur.
The result of choosing that path would have been rapid attrition and the prospect of having to hire in a talent shortage, which would mean rehiring at a lower level of experience.
He also explained to his management the turnover cost that resulted every time a pilot leaves the company.
“Realistically, it’s a $200K investment out the window every time a pilot leaves,” he explained, adding that his estimate was based on the cost of an aircraft type rating, plus the loss of productivity and travel expenses during training. (Note: This assumption doesn’t include in-house recruitment costs, relocation or onboarding, etc.)
The other alternative he offered was facing up to the fact that they have a serious problem, and then trying to do something about it. “Luckily for us,” he told me, “our company has a cultural mindset that we need to identify problems quickly, fix them and move on just as quickly.”
So that’s what this Fortune 100 company did.
They moved rapidly to make an average increase of $80K per pilot, thereby matching the pay of captains at legacy carriers with 10+ years of tenure.
Granted, the new compensation package didn’t equal that of the retirement at the airlines, but it was more competitive, and this company prides itself on being competitive.
So, the moral of the story?
As this aviation director said to me, “if you’re going to take a bite out of the proverbial apple, take as big a bite as you can. Don’t just nibble and wish you could go back for more, because likely you only get one bite.”
Realizing the importance of the Human Resources you have, and compensating appropriately, is the foundation of every business. In Aviation it’s not so clear-cut. Bravo to this company for realizing and taking action!