Nice package for UPS pilots

Marketplace Staff Aug 31, 2006

SCOTT JAGOW: A planeload of cell phone users is one thing UPS pilots don’t have to worry about. They’re just carrying cargo. And otherwise, life is pretty good for them right now. Today, the union signed a new contract for more money, better pensions and signing bonuses. All told, UPS pilots now make more than $200 an hour. That’s much more than their peers at the passenger airlines make. More now from Nancy Marshall Genzer.

NANCY MARSHALL GENZER: The skies are looking pretty friendly to UPS pilots right now. Under the new deal, they’ll get hourly raises of about 18 to 26 percent for an average salary of more than $206,000 a year.

How’d the pilots get such a good deal? UPS could afford it. You make a lot more money flying boxes around than you do moving human beings. Aviation Industry analyst Richard Aboulafia says that’s because UPS’s customers aren’t as fickle as airline passengers.

RICHARD ABOULAFIA:“Cargo customers tend to be a bit more beholden to their cargo movement providers. They absolutely have to make these shipments happen. Whereas an awful lot of travel is simply discretionary: “Do we go away on vacation this year, or do we just drive somewhere?”

UPS also faces a lot less competition than the commercial airlines do. UPS and FedEx have most of the air cargo market to themselves. So, it’s easy for them to pass on sky-rocketing fuel costs. Aboulafia says fuel surcharges can easily be raised to cover, well, sky-high pilots’ salaries.

ABOULAFIA:“You don’t have to be incredibly transparent. You don’t have to put the aircraft up to the pump and start filling it and make sure the other guy sees the gauge.”

And another thing. Boxes won’t refuse to fly because of the latest terrorist threat. So, with little competition and customers willing to “soak up” the fuel surcharges cargo pilots will stay in the driver’s, er, pilot’s seat for the near future.

In Washington, I’m Nancy Marshall Genzer, for Marketplace.

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