As the pay gap between Amazon’s (AMZN) core staff and its fulfillment center workers grows, one more group has added its voice to the mix — the pilots.
Pilots flying cargo for companies like Amazon Air — including operators like ABX Air, Atlas Air, and Southern Air who have ongoing delivery contracts with Amazon — and DHL are protesting today over what they call poor pay and working conditions.
The protest was scheduled for the Cincinnati/Northern Kentucky International Airport on Thursday from 10 AM to 2 PM EST.
Low pay and sinking morale has made it a question of “whether or not they’re able to basically keep the airplanes moving,” Atlas Air pilot and Teamsters Local 1224 President Daniel C. Wells told Yahoo Finance. “And it’s only going to get worse as the weeks, months, years go on.”
A photo from Thursday's protest. (Source: Teamsters Local 1224)
Despite the e-commerce giant raking in billions in profits while paying $0 in taxes, workers in Amazon’s supply chain have been feeling the pressure to keep costs low. The pressure has resulted in sometimes rough working conditions. And on the cargo delivery side, there’s an exodus of pilots who are joining more attractive and better-paying positions with commercial airlines.
Wells said companies like DHL are also at fault, saying that these companies were “trying to take away pay and benefits” and laid out an “implied threat that if you don't keep doing it this, they can take it away and give somebody else.”
Overall, he added, “Amazon is negative for the pilots.”
‘We’ve already hit that breaking point’
While a global pilot shortage rages on and is expected to worsen in the coming years, the industry is recruiting aggressively and bumping up wages significantly to stay afloat in a tight labor market.
At the same time, pilots who fly for cargo airlines which are specifically contracted by Amazon Air say they are staring at stagnant wages and low morale.
Based on a survey of 1,236 pilots from the union protesting at ABX, nearly 90% of pilots felt low morale among staff. At Atlas, the number was around 80%.
A Boeing 767 with an Amazon.com "Prime Air" livery flies over Lake Washington, Friday, Aug. 5, 2016, as part of the Boeing Seafair Air Show. (Photo credit: Ted S. Warren)
Satisfaction over pay and benefits at their current job was also low, with over 70% of respondents from all three companies registering discontentment.
“We don’t really have a pilot shortage or skills gap,” Wells said. “What we really have is a pay gap. ... People are leaving because there are other opportunities.”
The contract between Amazon and Atlas, signed in 2016, detailed that Amazon would “dry lease” 20 freighters from Atlas’ subsidiary for a duration of 10 years. The planes would be operated for Amazon in terms of crew, maintenance, and insurance. Amazon also took a 20% stake in Atlas’ common shares.
“At least several of our companies, we’ve already hit that breaking point,” said Wells. “Airlines that we work for — Atlas, Southern, ABX… are experiencing turnover that is that is record-setting and unsustainable.”
Pilots at Atlas and ABX make 33% less than other pilots in the cargo industry — like UPS and FedEx — for flying the same plane, according to the union.
“We are paid a fraction of what the other carriers are,” Wells said.
A captain such as Wells, flying an Atlas Air 767 cargo jet, makes $179 an hour in their 12th year, for example, according to data compiled by the website Airline Pilot Central. But they would make $305 at FedEx Express with the same level of experience (albeit flying a 767-300). And at a commercial airline like Delta, they would make $296.
A pilot sits inside the cockpit of a Bombardier Inc. Global 6000 business jet during a media event at Seletar Aerospace Heights in Singapore, on Wednesday, Feb. 27, 2019. (Photo credit: Nicky Loh/Bloomberg via Getty Images)
“Pilots at the large cargo airlines — FedEx, UPS, and Atlas — that fly multi-engine or widebody aircraft can make as much as their counterparts at passenger airlines,” Skift Airline Weekly Editor Madhu Unnikrishnan told Yahoo Finance. “But these are the few pilots at the top. Pilots at smaller cargo carriers may not make as much.”
There was also a perception that flying cargo was temporary, added Unnikrishnan. Pilots who have yet to meet the minimum requirements to fly passenger flights often used flight hours “earned to work up to a passenger-license and then seek higher-paying work elsewhere,” he explained.
‘Incredible waste of time and money’
Wells also stressed that the high turnover was hurting performance, creating uncertainty for the three companies involved.
According to Wells, more than half the pilots who are trained to fly cargo or freight left within the same year — 180 out of 351 — which was already an “incredible waste of time and money for the company to have to do all the training which is very expensive and timely” On top of that, he added, 60% of the remaining group are seeking work at competitors like UPS and FedEx.
And the problem still didn’t end there.
“In addition, we have a huge amount of retirement in the industry in the next 10 years,” Well said. “Something like 75% of all the big airlines, FedEx … would be retired by 2028.”
Aarthi is a writer for Yahoo Finance. Follow her on Twitter @aarthiswami.
