Continental crash shows safety may have price

By Justin Bachman

updated 3:08 p.m. ET May 18, 2009

Selling paint at Home Depot can be more lucrative than flying a commercial airplane. That startling fact emerged last week after three days of hearings by the National Transportation Safety Board into the crash of Continental Express Flight 3407 on Feb. 12 near Buffalo, which killed 50 people.

Among the headlines: The flight's 24-year-old first officer, Rebecca Shaw, earned less than $17,000 in 2008, her first year on the job with Colgan Airlines, the Manassas, Va.-based carrier that flies regionally for Continental, US Airways, and United. (The company later said the pay figure was reported incorrectly during the hearings, and that Shaw actually made $23,900.) Her pay wasn't the only part of the crash narrative that raised warning flags for some. Testimony also described the captain's prior failings on inspection flights and Shaw's overnight "red-eye" commute to work.

Yet it was Shaw's situation that seemed the most gripping, raising these questions: With so many costs squeezed out of airlines in recent years, just how low can a cockpit salary go? And is the airline industry reaching the limits of an economic model that seems to have more in common with Wal-Mart than with a highly trained profession where safety must come before all else?

There is a rightful reluctance in the airline industry to draw connections between safety and salaries. Indeed, the period between 2001 and 2008 was among the safest in U.S. airline history, despite the fiscal nightmares many airlines were enduring. For two years before the Colgan crash, the U.S. industry was fatality-free.

Yet, anyone horrified by Shaw's salary must also confront their own primary motivation when booking an airline ticket: finding the lowest possible fare. The two are connected, say airline executives and pilots. "People will spend three hours on the Internet to save $8," says Arne Haak, vice-president for finance at AirTran Airways. "You know this! You do it yourself."

Airline economics changed dramatically with the deregulation of U.S. airlines in the late 1970s. The industry responded by evolving into hubs and spokes. Gradually, and far more in recent years, regional airlines have come to dominate most of the places where mainline flying is no longer economical. Smaller "regional" jets have become popular to handle busy routes that were once the exclusive domain of mainline pilots — even some Chicago-to-New York flights, for example. Air travel has become a commodity product, affordable for the masses, with the only difference on most flights being what you pay for the ticket. This fact drives nearly every revenue and cost decision. "Congress made a decision in 1978," says Roger Cohen, president of the Regional Airline Assn., which represents the smaller airlines. "It is what it is."

Colgan, which is owned by Memphis-based Pinnacle Airlines, says it pays industry-competitive salaries. The average pay for captains is $67,000 annually; first officers average $24,000. "We pay wages that are competitive within the industry," Pinnacle spokesman Joe Williams said May 16 in an e-mail. "We periodically review wages to ensure that we remain competitive." Colgan's 450 pilots voted last December to join the Air Line Pilots Assn., the nation's largest pilots union. Colgan captains make $78 per hour after 15 years, while a mainline jumbo-jet captain can top $200. The industry's highest rates are $238 hourly at FedEx and $239 at cargo carrier ABX Air, according to AirlinePilotCentral.com, which compiles pilot wage data. At a large airline, pilot salaries over $100,000 annually are not uncommon.

Regional flying is governed by contracts hashed out between the regional players and mainline carriers. It is the mainline airlines that dictate large portions of regional carrier operations, from scheduling flights to selling tickets, often buying fuel for regional planes, and deciding when a particular flight must be delayed or canceled. Contract negotiations between mainline and regional can turn contentious — the usually cash-strapped mainline airline wants to keep a tight lid on what it pays for flights, while the regional must cover its own costs and try to wring a profit.

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