Flags of Convenience/Cabotage
This is one of the largest threats to the airline pilot profession in my opinion, and may ultimately relegate the U.S. airline industry to the fate of the U.S. cruise ship industry and merchant marine. If this were to happen- and make no mistake, the airline industry wants this to happen- there would be no point in pursuing an airline pilot career in the U.S.
Let me give you some background.....Have you ever been on a cruise? If you have, you most certainly would have noticed a few things. One, there weren't many Americans working on that ship and two, the ship you were on wasn't a U.S. flagged ship. Why, do you ask? The cruise lines are typically "American" companies, aren't they? Certainly they would be regulated by U.S. law and hire American employees? It's pretty simple. Why should major U.S. cruise lines deal with all those pesky U.S. laws concerning labor and maritime regulation when you can flag your ship in Liberia and deal with the much more friendly and less regulated Liberian government? And that's exactly what the cruise ship industry does- they flag their ships in countries of convenience and follow that country's much less restrictive labor and maritime laws. But what does this have to do with the U.S. airline industry?
Airline CEOs would want nothing more than to take their airlines, "flag" them in a 2nd or 3rd world nation, and hire foreign nationals from those countries (and others) to fly, operate, and maintain their airplanes. Certainly an Indonesian pilot could live on $20,000 a year......and probably less! Why pay a U.S. flight attendant $30,000/year when a Lithuanian flight attednant will work for $10,000/year? Why pay a U.S. A&P mechanic $60,000 a year when a Chinese one will work for $25,000 a year! See where I'm going with this?
Currently, there are laws concerning cabotage and foreign ownership that prevent this from happening. However, right now the airline industry is fighting to loosen foreign ownership of U.S. airlines and cabotage rules. This would be the beginning of the end to this industry as far as U.S. citizens are concerned, just like it was for the U.S. maritime industry. Yes, it will be great for consumers because airline tickets will be cheaper, but not so good if you hope to make a living as an airline pilot.
Narrow Profit Margins....and Labor is an Airline's Largest Controllable Cost!
The vast majority of companies that make up the U.S. airline industry are not like other "normal" companies in the U.S. Airlines operate on extremely, and I mean extremely, narrow profit margins. A net profit margin of 1% is a good year for most airlines, whereas healthy companies in other industries on average earn margins 5 times higher! The reasons for this are beyond the scope of this narrative, but the narrow margins that airlines earn, and the fact that the airline industry is extremely volatile due to these virtually nonexistent profits, means that the ills of the industry get taken out on you, the employee pilot.
Why you, the pilot? Well, because labor is an airline's highest controllable cost. And of the airline's labor costs, you, the pilot, as a highly trained professional, are their highest earning employees. So who do you think airline management goes to FIRST when it's time to tighten the airline's belt? You, the pilot!
So what does this mean to you? It means that every time the U.S. economy sneezes, the airlines catch a cold. It means that when your company does catch that cold, through no fault of your own, you as an airline employee pilot will be expected to "cough up" some dough to help your airline through it's difficult economic times- which will happen often, trust me. Airline management knows that you can't go anywhere (see "handcuffed" above), and they know that you know that you'll have to start over at another airline at the bottom rung, so you don't want your existing airline to fail. Therefore, it's likely your airline's management will come to visit the pilot group, hat in hand, first. And more than likely, you will give.
Another way this manifests itself is with new, domestic airlines. It's very difficult for a new airline to make it in this dog-eat-dog industry. The management teams at these upstart airlines know there even during good economic times, there is a persistent, large oversupply of pilots available for employment in the U.S. So when they start a new airline, what do they do? They take their largest controllable cost (labor) and cut it to the bone! They offer extremely low wages, sometimes 50% below the "going rate" in the industry. They then use those low wages to undercut the competition in an attempt to steal market share. This has a tendency to drag down wages at other airlines, and the downward spiral in airline pilot wages, benefits, and working conditions deteriorate. The advent of the "low cost airline" that we have seen over the past decade have been wonderful for consumers, as they have driven down average airfares. Unfortunately, they haven't been so good to the airline pilot profession. Decades of hard fought gains on behalf of the profession have eroded over the years, and with yet another new generation of "low cost carriers" starting operations in recent years, the downward pressure on wages, benefits, and quality of life will probably continue.