Race to the Bottom

[Bede]

I hear the phrase "race to the bottom" mentioned a lot of times on this forum. Forgive my ignorance, but what exactly does this mean?

[ross1]

Hi Bede...as an example these names come to mind:

Pacific Western, Wardair, Canadian, Pan Am, Western, Eastern, TWA, Continental, Hughes Airwest, Republic, Northwest

and its not over yet....

Happy New year all

Ross

[Cobra64]

Ya that response really doesn't answer his question. Basically what it means is the every worsening pay that pilots are willing to accept from companies just to be able to fly. There are lots of people on here with lots of experience and have been involved in the race for decades. They are more qualified to offer an explanation but it comes down to basically every part of being a professional pilot sold to the lowest bidder. The operators know they can get away with lowering wages, elimination benefits and all this because they know if someone leaves there will be someone else with shiny jet syndrome willing to accept the terms offered.

[Just another canuck]

Actually, I think Ross' explanation was better. It refers to the airlines operating in such a way that they will inevitably end up "at the bottom." And they're being so reckless about it, one might guess they were in a "race" to get there.

That's my understanding anyway. I suppose pilots have something to do with it as hiring low timers and paying them less can only contribute to the race as you are affecting safety. Personally, I think 80 dollar flights across 1000 miles hold the largest contribution.

[JigglyBus]

I sell a ticket for $100.

You sell it for $80, and cut 'costs'.

I further cut 'costs' and sell it for $60.

You sell it for $50 and I match it.

We both go out of business....

Race to the bottom.

[old_man]

http://en.wikipedia.org/wiki/Race_to_the_bottom
http://lexicon.ft.com/Term?term=race-to-the-bottom
http://dictionary.cambridge.org/diction ... the-bottom

www.google.com

[co-joe]

Why Wardair? If not for regulation in the day, they'd probably be our national airline today.

[ross1]

Hi co-jo...It was sad to see Wardair change and then disappear...they were a class act.

wikipedia:"The airline changed from charter to scheduled service in 1986. Rapid expansion, problems with their computer booking system, and failure to attract business customers, who had developed customer loyalty to frequent flier programs on competing airlines, led the airline into financial difficulties, ultimately resulting in the sale to Canadian Airlines in 1989."

Ross

[Jimmy_Hoffa]

Here is the video difiniton of "Race To The Bottom"

http://video.pbs.org/video/2168338617/

Nothing changes in this industry without a body count. It's only a matter of time...

[JMACK]

1900 plus posts ExJazz now Westjet! What is race to the bottom???

Come on man really? Really?

I understand trying to stimulate dialogue but come on I know that you know what that means. I've read your posts you're a smart dude.

J

[Mig29]

Bede,

As JMAC said, you should know by now. Just look under your WestJet forum under Encore, look under SkyReg thread and look at the poll you created few posts below. Which by the way was a good discussion topic from everyone.

race to three bottom? You and I both know the answer.

I would add to Ross's list: SkyReg, Encore and Air Canada Rouge.

[ross1]

...and its not really new or unique....been going on in Canada since the first aviation companies popped up in the 1920's.

There's some great reading and an unbelievable collection of photos of it all in Larry Milberry's books.

cheers all
Ross

[Bede]

Mig29,

Sorry for playing stupid.

Can anyone actually give me any hard evidence that this race to the bottom nonsense is happening in this industry? I don't want to hear anecdotal clap-trap about your last contract paid $X and now it pays $Y. I want someone to cite some reasonable research indicating that this phenomenon is happening in our industry.

Quite frankly, I don't see it. AC used to pay more than what it does now, but WJ pays more than Canadian did and Air Transat pays more than C3. The proliferation of regional flying was unheard of during the '70's. 703 companies pay much better these days. There are also more jobs for pilots.

To me it just seems that the race to the bottom charge is something thrown out by whoever has a job which may be put under some pressure by some other external force (new entrants, etc.) to discourage someone from taking a job. AC pilots say it to Jazz, AT to Sunwing, Jazz to WJE and SR, etc.

[visavi]

I do not know how to take the messages on this thread , but for a newbe about to start training , I guess it doesnt look to attractive , what ever race to bottom means , be it wages or the performances of airlines

[ajet32]

Not flying in Canada, making more money flying a narrow-body than I could ever dream of making in Canada.
The race to the bottom. Only if you want to be in that race. there is work out there that pays very well, has good time off benefits etc.. You might have to be away for 6-9 weeks at a time but I think many would agree it is worth the trouble. The fact that you get treated like a person and treated well just makes it even better.
My 2 cents worth. After 25 years it is a real pleasure to be treated well and respected.
Cheers

[cgzro]

To me it just seems that the race to the bottom charge is something thrown out by whoever has a job which may be put under some pressure by some other external force

Agreed. I'm not sure most people understand that buisness is essentially war and that all over the world millions of people want your money, job and lifestyle.

[Changes in Latitudes]

I think Bede is more or less playing devil's advocate here and I must agree, "race to the bottom" is an over-used, under-explained euphemism that we haphazardly toss out when we don't like the direction that things are going.

Perhaps the real race to the bottom is the race between companies and employees. I see us both doing goofy things and often enough its a deserved marriage of equal stupidity in this industry.

[Stu Pidasso]

Wardair's demise, was bad management. They left a market they were experts at and entered the mine field of "sked service.' which took them out of business. Max Ward ended up the biggest winner of deregulation, pocketed a Quarter of a Billion for a bankrupt Airline and laughed all the way to the bank.

C3 was another class outfit, who's management was stupid enough to purchase Royal and they tanked.

....and the beat goes on.

[young grasshopper]

I don't have anything more statistical than historical McDonalds pricing for ya...but here is my best explanation:

25 years ago, an experienced C-185 guy would make around $30,000 for a year of work (or so I'm told). In 2012, a C-185 guy would probably make about the same. In 1986, that guy would go to McDonalds and buy a Big Mac for $1.89. In 2011, that guy would walk into McDonalds and buy the same (relatively speaking) Big Mac for $4.73. Change that Big Mac into a case of beer, a truck, or a house- and I think you'll see what I'm getting at. The wages don't change, but the cost of living continues to climb. That's how it was explained to me by an old Bush guy almost 10 years ago. Funny how everything can be related to a Big Mac!

FYI- I'm happy with my current job and pay! Just thought I'd throw this out there for discussion!

http://bigmacindex.org/2011-big-mac-index.html

[iflybigjetz]

ajet32, I think the point is we should all be able to have a decent life in Canada, I have done the rotational gig myself, was making big bucks but that is not my idea of a healthy, ''normal'' family life. I strongly believe and hope that all canadian pilots should not have to expatriate themselves to make a reasonable living as a pilot. To me, the ''race to the bottom'' is exactly that: years ago, being a pilot was a desirable trade. Wages were good, lifestyles, benefits, schedules were decent. One could have a ''normal'' family life doing it. These days, those jobs are harder and harder to come across. The salaries are the same but the conditions are worse and cost of living has gone way up. Sadly piloting as a profession is just not what is use to be and the ''good'' jobs ( decent salaries, conditions, etc. ) are getting scarcer every year in Canada.

[Bede]

I sell a ticket for $100.

You sell it for $80, and cut 'costs'.

I further cut 'costs' and sell it for $60.

You sell it for $50 and I match it.

We both go out of business....

Race to the bottom.

Why would both go out of business? Wouldn't one company go out of business first leaving the remainder of demand to the survivor thus increasing the stronger business' revenue while the consumer has a decent price? What's the alternative? Collusion to keep prices high. That's illegal.

iflybigjetz,
See herein lies the problem. Everyone talks about the good old days but it's just waxing nostalgic with little basis in fact. The "good" jobs were incredibly difficult to get even back then (anyone remember the 80's?). I have kept track of what I actually made in my career and compared what I made 15 years ago with what similar positions are paying now. In real terms (corrected for inflation), pilot pay for smaller operators is considerably higher.

[Shiny Side Up]

Why would both go out of business? Wouldn't one company go out of business first leaving the remainder of demand to the survivor thus increasing the stronger business' revenue while the consumer has a decent price?

The problem occurs when the product/service is being sold for less than it costs to provide. Neither side can survive this way for long, but they often hope to to just outlast their competition, and gain market share like you suggest. Frequently doesn't work though, you can only run in the red so long, its a game of chicken. The customer loses as well if rather than run in the red one of the companies decides to cut their costs in a more drastic means. Safety issues often abound one way or another. In some cases they may opt to do both. Either way, the winner will often be in too weak of a position to regain what they've lost in the race.

Now I can't comment much on how its played out in the airline industry, but I see it frequently in the flight training business. Schools often percieve that they are in competition with one another. Frequently the main place to cut costs is on the quality of the help - most often the instructors, though also content of the training. The pushes for stuff like integrated courses is a prime example, where the customer often has the illusion of getting a better price or product.

[ajet32]

iflybigjetz: Don't take this the wrong way. I get what your saying about making a decent living in Canada.
Here is the problem as I see it. I am looking at this from an outside Canada view and how it impacts Canada as part of the worldwide market which is I think a big factor.
I am presently working in Indonesia, 270-280 million people spread over 1760 islands or so and they have no roads. So along come Lion Air and Air Asia and they tell people that everyone can fly. The income levels are not what they are in Canada,USA, or Europe.
Crew working for these carriers make very good money by local standards and for some very good money by their home standards. I acknowledge that at least one of the mentioned carriers has a pay to fly program.(I know nothing of the details as I don't work there).
My point in all of this is we are in a global market whether we like it or not. Will this affect Canadian pilots and their salaries in Canada; maybe. I know that the crew hired locally do not make what some of the crew make from contract companies. The local crew are considered to be very well off. This will impact Canadian business as has happened with the pilots working for Canjet and Sunwing. At the present time those Captains /FO's are making more than the local Captains/FO's. What happens if they bring in crew from Asia who make a 1/3 of what Canadians do? This will just exacerbate the "race".
World wide market, we have to be competitive or we will be forced out of the market. A lot of foreign markets are very regulated and protected, and we don't seem to be very well protected in Canada.
Mostly food for thought as the "Bintang" has been consumed tonight.
"Happy New Year" and a prosperous and safe one to "ALL" in 2013.

[complexintentions]

To me, the ''race to the bottom'' is exactly that: years ago, being a pilot was a desirable trade. Wages were good, lifestyles, benefits, schedules were decent. One could have a ''normal'' family life doing it. These days, those jobs are harder and harder to come across. The salaries are the same but the conditions are worse and cost of living has gone way up. Sadly piloting as a profession is just not what is use to be and the ''good'' jobs ( decent salaries, conditions, etc. ) are getting scarcer every year in Canada.

This is not exactly a phenomenon limited to aviation. It's happening in all professions and industries. Sure, there are niche jobs that may enjoy some insulation for now from globalization, but in a world that can add a billion people to the population in 13 years now, no employment is truly safe.

ajet32 is totally correct, aviation is a global business, like all businesses now. The eight-hundred pound gorilla in the room is the fact of too many people chasing too few jobs, and the world's cheapest commodity now isn't coal, or gold, or oil, or pork bellies.

It's labour.

That's the race to the bottom. My advice would be to position yourself as best you can, as it is only likely to get worse moving forward, not better. Lamenting the past won't change the future.

[ettw]

To me the "race to the bottom" in our industry is indicated by the fact that there are Captains out there driving turboprop aircraft (maybe even up to 19 seats) that would be envious of the total remuneration package of this guy....

"The TTC (Toronto Transit Commision - ie. bus drivers) offers competitive wages and benefits including: Healthcare and Dental plans, Group Life Insurance and a Pension Plan. As per the Local 113 ATU Collective Agreement, the starting hourly wage rate for this position is $23.59 (rate after successful completion of training). "

And he drives a bus.....

ETTW