Allegiant Soars

[SeanD]

The local news here in LAS reported on this today. I didnt know an airline was already charging for seat placement. They charge extra for rows in the front of the plane. Velo in 5..4...3...

http://www.kvbc.com/Global/story.asp?S=8195249

[SeanD]

Originally Posted by SeanD

The local news here in LAS reported on this today. I didnt know an airline had already been charging for seat placement. They charge extra for rows in the front of the plane. They are adding Santa Barbara and Monterey in a few months. Velo in 5..4...3...

http://www.kvbc.com/Global/story.asp?S=8195249

[SpiraMirabilis]

Where you can fly a MD80 for almost as much pay as a CRJ-200!

[WacoFan]

Allegiant may not pay what some consider to be a fare wage to their pilots, but they do seem to be the one start-up that has successfully navigated the troubled times so far. They have weathered 9-11, the recent economic slow down and fuel prices, and they are still plugging away. As their success continues, I would expect the pilot group to get better wages and work rules, but so far they are doing well as a business. They have avoided over expansion and worked their plan - continued good luck.

SWA was a bottom feeder for years. My Grandpa and all his TWA buddies would mock them and their pilots for "lowering the bar". Look at them now. No start-up, particularly one in a volatile industry, can pay industry leading wages from day one. Some here seem to think Skybus/Virgin America/Jetblue et al should have paid legacy or better wages from inception which is an unreasonable expectation.

[PCL_128]

It's never unreasonable to expect fair compensation in exchange for labor performed.

[WacoFan]

Originally Posted by PCL_128

It's never unreasonable to expect fair compensation in exchange for labor performed.

That is a good answer. I guess I have always struggled with balancing the needs of a start-up enterprise with the union aspect of full pay from day one. I am not sure the two are compatible. As I said, SWA was a bottom feeder for years. One thing I would be interested in would be your opinion of airlines that have "done it right" regarding start-up and pay/treatment of pilots. You obviously have a great deal of union and industry knowledge - would be interested in your insights. Thanks.

[Maximillian_Jenius]

Allegiant soars, just not on Tuesdays!

[PCL_128]

Originally Posted by WacoFan

I guess I have always struggled with balancing the needs of a start-up enterprise with the union aspect of full pay from day one. I am not sure the two are compatible.

Part of the problem is that many people overestimate the impact of pilot compensation on the bottom line of an airline's balance sheet. Many people cite the statistic that labor is the second highest cost that an airline has. That's true, but it's also somewhat deceiving. Delta Airlines has 50,000 employees (the current Delta, not the "new" Delta). But only 7,000 of those employees are pilots. So, 14% of the labor force is composed of pilots. Now, let's say that the pilots demand a 20% increase in their compensation package. Sounds like a lot, doesn't it? But consider, how much does it really affect the bottom line for just 14% of the employee force to get a 20% raise? ALPA always does the figures for these things at the Economics & Financial Analysis Department. The answer is enlightening. At Pinnacle, ALPA E & FA calculated that every single pilot, FA, dispatcher, and mechanic could receive a 100% increase in their total compensation package, and the net affect to the airline's costs would be less than 1/2 of one penny on the cost-per-available-seat-mile (CASM). To give you an idea, Pinnacle's seat-mile costs are roughly 16 cents. So, to double everyone pay would take Pinnacle's seat-mile costs from $0.160 to $0.164. So, how much do you really think it would affect Allegiant's business viability to pay their pilots at least close to normal market wages?

[Soul Brotha']

[quote=WacoFan;853408] As I said, SWA was a bottom feeder for years. [quote]

Is not the reason why SWA is now a top paying airline, is all of the legacy airlines have cut pilot's salaries to compete with the SWAs?JB/etc.? I remember hearing stories of Legacy airline pilot's making between 200-300/hr in the glory days.

[PCL_128]

More than that. DAL's Contract '01 had 777 Captains topping out at $320/hr. Even a 737 Captain made $231/hr in that contract. Now everyone salivates over the $200/hr that SWA Captains top out at. Sad.

[WacoFan]

Originally Posted by PCL_128

Part of the problem is that many people overestimate the impact of pilot compensation on the bottom line of an airline's balance sheet. Many people cite the statistic that labor is the second highest cost that an airline has. That's true, but it's also somewhat deceiving. Delta Airlines has 50,000 employees (the current Delta, not the "new" Delta). But only 7,000 of those employees are pilots. So, 14% of the labor force is composed of pilots. Now, let's say that the pilots demand a 20% increase in their compensation package. Sounds like a lot, doesn't it? But consider, how much does it really affect the bottom line for just 14% of the employee force to get a 20% raise? ALPA always does the figures for these things at the Economics & Financial Analysis Department. The answer is enlightening. At Pinnacle, ALPA E & FA calculated that every single pilot, FA, dispatcher, and mechanic could receive a 100% increase in their total compensation package, and the net affect to the airline's costs would be less than 1/2 of one penny on the cost-per-available-seat-mile (CASM). To give you an idea, Pinnacle's seat-mile costs are roughly 16 cents. So, to double everyone pay would take Pinnacle's seat-mile costs from $0.160 to $0.164. So, how much do you really think it would affect Allegiant's business viability to pay their pilots at least close to normal market wages?

Excellent, excellent response - just what I was hoping for. I would be very interested in seeing that data. Actually, I would be interested in seeing a 20% raise for the current pilot group of an airline, vs. a comparison of current pay at VP and above at any airline. I am sure ALPA would have this data available -- sounds like they have a great team.

[PCL_128]

Unfortunately, ALPA doesn't publicly release that data. They charge airlines and independent unions millions of dollars to compile that data, so it doesn't really make much sense to give it out for free.

[Murdoughnut]

I like how every company attributes their success to a "unique business model"

[Firebird2XC]

Originally Posted by Murdoughnut

I like how every company attributes their success to a "unique business model"

There's some truth to it.

From what I've seen, at least some part of every company is randomly screwed up somehow.

[armani]

A great first quarter hopefully we can keep it up.