Bypass pay - expectation management
I read the latest HKAOA newsletter with interest. I see now that "we" are considering compromising with management over the considerable bypass pay burden they will endure with the implementation of RA65.
Here is a simple fact about bypass pay. It does not, repeat, does not fully compensate you for a career of lost earnings.
Simple example but first the assumptions.
Time to command
Current time to command (for those that joined 9 years ago) is 9 years. Future time to command is likely to be 12-14years - that is assuming a growth rate we have had over the last 6 years....but bear in mind that all the current orders in place give a future growth rate below what we have had for the last 6 years.
Retirement Age
"But not everyone will work till 65!". True! But if everyone works just to 60, then for the first five years of the introduction of RA65 there will be 100% extending. Then five years from now we will resume our more than normal 50 or so retirees a year. So whether everyone works to 60 or 65 is open to conjecture. For every 2 years of extension it costs one year to command to an SO or junior FO.
The example.
With the introduction of RA65, if you joined this decade then your command time will be extended beyond what you would have expected. If you are a recent joiner(you get no bypass pay if you joined 1/1/08 onwards - basically screwed!) it will be by 3-5 years by the introduction of RA65. So if you had been a SFO3 after 9 years, you will get bypass pay taking your salary up to CN1. Then when you are SFO4 you get the difference up to CN1 etc. So if your command is delayed say 3 years, you will then finally 'earn' CN1 pay. Without RA65(or any extendees) you would have been on SCN2 at that point. So for the rest of your career you will be 3 increments lower than before the introduction of RA65.
The financial effect of RA65.
When you get to 55, you will have earnt approx a years less salary assuming you got full bypass pay at SO and FO levels. If you don't get any bypass pay you are 3 years behind! So you will work between 1 and 3 years for free from 55onwards to recover the lost earnings.
AOA- CX compromise.
We all joined knowing it was RA55 - that gave us a relatively 'quick' time to command of around 9 years. The goal posts have moved but CX is definitely happy with their movement! Bypass pay ameliorates the pay loss but does not fully compensate for it. So if you are not happy with losing some of this compensation I would let your GC know before it gets 'compromised' to a lower amount.
RA65 is not a win.
Why move it to 65 -why not until 100? Assuming we all die on the job we don't need any money for retirement and so we can save CX the 15.5% PF contributions. I hope to retire one day on or before 55. I have not done all this time in CX a/c so that I can die in one. I hope to have many years in retirement - presumably many share the same intent! So every year you work beyond your original planned retirement date is a year closer to death when you ultimately retire!
This is not an A scale thing - although if RA65 is forced in it should be on your conditions as they existed before your 55th birthday.
I see now the zoologist has finally worked out that RA65 may delay to command - although he says it will not "unduly slow" it. Glad to see someone has explained that to our hierarchy. It was getting a little tiresome over the last five years hearing that RA60 would accelerate time to command - anyone ever heard of Goebells? Last year there were about 100 pax commands planned...this year it is closer to 50!
We all joined on a contract - both parties agreed to its conditions. In that contract was RA55. Normally a contract is only varied with the agreement of both parties(yes we 'agreed' to the paycuts in 99 as we didn't like the alternative). So please make sure that any deal 'negotiated' by your GC is in your best interests before accepting it.
In the current environment of pilot shortages I thought CX should 'compromise' on bypass pay and increase it to reflect the rank you would have been and then promoted you into the increment you would have been. Only in that scenario would you not lose money. So basically, in my example above, the 3 year delayed FO would be paid bypass pay of CN1, CN2, SCN1 and then become SCN2 when he finally gets his command course! Its not hard to work out - but it might take some explaining to our leaders since they are still recovering from the shock of RA65 actually not decreasing time to command!