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Monday, February 14, 2005

As ALPA Weighs New Retirement Age, Impact on Carriers Clouded

As unionized pilots consider a campaign to boost the mandatory retirement age beyond age 60, it remains unclear what impact the change would have on regional carriers.

The Air Lines Pilots Association (ALPA) is in the midst of an effort to educate rank-and-file pilots on the pros and cons of changing the mandatory retirement age to beyond 60. Later this spring, we will poll our membership to see what they are thinking, said ALPA spokesman John Mazor. If the members want to change the rule, Mazor said, ALPA's governing body will take up the issue and map out a way to seek the change.

The Federal Aviation Administration (FAA) adopted 60 as the mandatory retirement age in 1960. The rule was applied to regional airlines as part of the 1995 upgrading to Part 121 safety rules. The FAA periodically examined the rule - the last time in 2000 - but it has never changed the rule, said FAA spokesman Les Dorr.

While the rule is part of the FAA regulations, Congress has tried to muster the votes to force FAA to move the retirement age to 65, but it has yet to succeed. A measure has again been introduced in both the House and Senate to match the mandatory retirement age to the Social Security retirement age. It has failed in the past because both the carriers and the unions have been opposed to the change. One industry observer noted that the measure could pass if it enjoys the union backing.

Even if ALPA changes it mind, the rival pilots' union, Allied Pilots Association (APA), will continue to support the age 60 rule, said Greg Overman, its spokesman. "First and foremost, we view age 60 as a safety rule. We don't think safety should be compromised in the interests of economics. We are planning on mobilizing our membership to express these views, especially to the new freshmen members of the Senate," he said. APA represents the pilots at American Airlines [AMR].

"If there are going to be any changes, we need to know that it will not harm safety," Mazor said.

"Despite what some people say, there are good safety reasons for the age 60 rule," said Tom Kassin, an airline labor law partner with Ford & Harrison, of Atlanta. "The carriers' primary concern has always been safety. For someone age 60, it is a hard rule to accept. I can understand the other side of the coin."

The trouble is no one can point to a recent definitive study of aging and flying. Age 60 was set an arbitrary age without the benefit of medical studies, Mazor said. Over the years subsequent studies noted that 60 could be too young, but the medical community lacks any tests that can be administered to pilots to identify those individuals who may have physical or cognitive health issues that could endanger a flight. "It is one of the things, we need to look at," Mazor added.

Age 60 is not the uniform pilot retirement age around the globe. An unknown number of nations permit pilots to captain a plane until age 65, or even beyond. However, no one has reviewed a study on these older pilots and their safety records.

The International Civil Aviation Organization (ICAO) rules limit pilots older than 60 to the first officer's position. It further suggests that even these first officers should not be older than 60. FAA's Dorr noted that nations are free to adopt or ignore ICAO rules. But even ICAO is considering an amendment hiking the captain's age to 65; however, the earliest that suggestion could take effect is November 2006.

Acknowledging that ALPA is again taking up the issue because some of its members are suffering financially as network carriers try to abandon their pension programs, Mazor said, "safety is one box and economics is a different box." At other carriers, such as Southwest Airlines [LUV] that lacks a traditional pension program, pilots want to fly longer because of the higher salaries.

While a change could improve the financial stability of a pilot, it remains unclear what it may do for the carrier. And in the case of the regional carrier, the water is even murkier.

"It should impact favorably the airlines by requiring less training events," said Bard Bartholomew, president of the Texas-based Newfoundland Group, a consulting firm specializing in airline-pilot relationships. One retirement at a legacy carrier with multiple aircraft types could trigger nine promotions and one new hire. Each of these would need to be trained on new aircraft and responsibilities as they move up the ladder to fill one senior captain's seat.

The Regional Airline Association (RAA) currently supports the age 60 regulation, said Deborah McElroy, its president. However, the board is expected to discuss the issue in May after ALPA's makes its decision. McElroy is seeking independent studies to present to board as it prepares to debate the issue. In addition, she may poll the member airlines.

"There are a very small number of pilots who retire from the regionals at age 60. In the old days, they moved on in their careers to airlines flying heavy iron. It is now a very different world with more pilots expected to retire from the regionals because of limited opportunities with the majors," McElroy said.

In addition to lower pay scales, the regional carriers have lower retirement costs. A retirement plan at a regional consists of a 401(k) plan that the employer may match. While it may cost a regional more to continue to contribute to a pilot's 401(k) after age 60, Vaughn Cordle, an economist at Airlineforecasts and a specialist in airline pension programs, suggested this expense would still be much less at the regional than the pension payment the mainline carrier would be making. The change, he said, would not upset the labor cost equation and thus it should not endanger a regional's relationship with its code-share partner.

The financial impact on an airline would be temporary, said ALPA's Mazor. If the FAA were to extend the retirement age to 62, the system will be back to the status quo in two years. "It will all flush out of the system so it will be back where it started," he said.

>>Contacts: John Mazor, ALPA,. (703) 481-4440; Greg Overman, APA, (800) 323-1470; Tom Kassin, Ford & Harrison, (404) 888-3841; Les Dorr, FAA, (202) 267-3883; Brad Bartholomew, Newfoundland Group, (817) 421-5076; Deborah McElroy, RAA, (202) 367-1170; Vaughn Cordle, Airlineforecasts, (703) 830-1701.<<