If pilots were actually taking nearly all airline earnings, why are there airlines at all? Running an airline requires a substantial capital investment, and if the return on those investments is effectively zero (or much smaller than other businesses), then there shouldn't be airlines because it's just not a profitable business, right?
The other thing is, given the rules he outlines, an airline could drastically reduce its costs by hiring more junior pilots and firing senior pilots. How would they hire more junior pilots? By paying them slightly more than competing airlines. So there should be pressure in the market to increase the salary of junior pilots, which long term should lead to higher salaries for juniors. This seems to contradict the authors experience.
> then there shouldn't be airlines because it's just not a profitable business, right?
Hence the constant bankruptcy / bailout cycle. They are in effect subsidized by the government. I believe American Airlines is the only legacy carrier not to have been through bankruptcy.
If pilots were actually taking nearly all airline earnings, why are there airlines at all? Running an airline requires a substantial capital investment, and if the return on those investments is effectively zero (or much smaller than other businesses), then there shouldn't be airlines because it's just not a profitable business, right?
The other thing is, given the rules he outlines, an airline could drastically reduce its costs by hiring more junior pilots and firing senior pilots. How would they hire more junior pilots? By paying them slightly more than competing airlines. So there should be pressure in the market to increase the salary of junior pilots, which long term should lead to higher salaries for juniors. This seems to contradict the authors experience.