This week I want to take a look back at the origins of the airline industry pay structure and the unions that helped bring it about; however,the unions did not solve all of the problems but instead created middle ground which allows both sides engage in constructive debate…..maybe.
The roller coaster years of 1927 to 1937 brought about many changes in the airline industry and the newly formed companies initially followed the Post Office formula because they had been informed that pilots were to be considered quasi-governmental employees and any airline that wanted to change the formula and cut pilot’s wages was running the risk of losing its government contract. This was a fairly simple but effective strategy, but an event in 1929 changed everything.
The pivotal event was The Great Depression.
The Depression of 1929 brought about big changes to the Post Office formula partly because of cuts in the subsidies paid to the airlines due to faster and larger airplanes, and because of the airlines abandoning the Post Office formula between 1931 and 1933. This was due partly to the cut in subsidies, but the worsening of the Depression was the primary driving force.
By 1932, three alternative methods of payment were used to pay airline pilots. The first method was a base pay plus a mileage rate, which was used at United Airlines. The second method was a base pay plus an hourly rate used at American and TWA. The third method was a flat salary which was used at Northwest and Pan AM.
The important point in all that we have brought forward here is that as long as the U.S. Government was involved then professional pilots were paid as professionals. However, as the balance of power began to shift away from the professional pilots’ true value to commercial aviation, there was another battle brewing that would shift the balance of power back to the professional pilots.
The National Recovery Administration was to hold hearings on setting a new standard covering wage, and this was presented by the Aeronautics Chamber of Commerce. The ACC was proposing wage and hour rules for all airline employees, including pilots.
In August of 1933, the ACC submitted to the NRA a code covering wages and hours for pilots. This code prescribed a minimum wage of $250.00 per month and a maximum of 110 hours per month flight time. In addition, there was a provision of the code that allowed the airlines to choose between paying an hourly or monthly rate. However, nothing was mentioned of paying a mileage rate. We can look at this as two steps forward and one step back, but there is another unexpected twist.
The Airline Pilots Association, which was formed in 1931 under the leadership of David L. Behncke, soon entered into negotiations, and by the recommendation of Fiorello LaGuardia, an ex-congressman who proved to be the star witness for the pilot’s position during the code hearings, ALPA adopted the position that the pilots should be removed from the code’s provisions.
The argument to support this position was predicated on two principals. The first was that the minimum wage provision should not apply to Airline Pilots because they were Professionals, and the proposed code excluded persons employed in a professional, managerial or executive capacity. The second was that the maximum hours a pilot can fly, on a monthly basis, were already regulated by the Department of Commerce who was in charge of airline safety. The NRA ultimately decided to exempt the pilots, and although there were a series of challenges by all concerned, on both sides, it was the NLB that finally resolved the debate and issued a ruling on May 10, 1934.
This ruling prescribed a complex wage formula which consisted of four parts:
Hazardous pay for flight over hazardous terrain
The base pay was fixed, but the hourly rate varied with the speed of the aircraft which could range from 125 to over 200 miles per hour. The mileage rate was calculated as additional pay for each mile flown over hazardous terrain and at speeds in excess of 100 miles per hour. The ruling also set limitations on hours as well establishing eighty-five hours of flying as the monthly maximum for all pilots.
This ruling granted professional pilots a generous share in productivity gains due to improved airline technology, and although an hourly rate was incorporated into the formula, the essential element was the mileage rate. By the end of the 1930s, almost every mile flown was done in excess of 100 miles per hour, and therefore entitled the pilots to considerable mileage pay.
Enjoy the video below, enjoy time with family and friends, and take care/be safe/fly safe.
January 14, 2022