September 30, 2024
In the ongoing dispute with its pilots, NetJets says NJASAP didn’t counter its offer and declined to present the offer to union members.
As the NetJets Association of Shared Aircraft Pilots ramps its rhetoric, the world’s largest private jet operator says that an offer that would have increased cockpit compensation by 52.5% was rejected.
NJASAP has held information pickets at major sporting and cultural events since the beginning of the year, including the Super Bowl, Masters, and Art Basel Miami.
“In November, we made what we believe was an extremely generous offer to NJASAP, which included 52.5% cumulative base wage increases and other enhancements, without any additional duration to the current (contract).”
– Brad Ferrell, EVP, NetJets
It also organized a picket during the annual meeting in Omaha of NetJets’ parent, Berkshire Hathaway.
Recently, it launched an ad campaign targeting Berkshire Chairman Warren Buffett.
NJASAP has been using quotes from Buffett and alleging that NetJets is not following his words of wisdom.
Its most recent ad quoted Buffett as saying, “Lose money for the firm, and I will be understanding; lose a shred of reputation for the firm, and I will be ruthless.”
It then claimed, “NetJets is putting its reputation at risk.”
The ad concludes, “NetJets owners pay millions for luxury private air travel. Meanwhile, pilots are leaving the fractional to pursue more lucrative opportunities elsewhere.”
American, United, Delta, and Southwest Airlines have all agreed to significant raises for pilots amidst an industry shortage.
NJASAP says up to 40% of pilots could leave the private jet operator if compensation and work issues aren’t addressed.
In June, NJASAP also filed a Class Action Grievance “to address systemic deficiencies that have decimated the NetJets training program.”
NetJets has been mainly silent.
However, in a statement provided to Forbes, Brad Ferrell, EVP of Administrative Services, said, “NetJets willingly and voluntarily negotiated with NJASAP throughout 2023, despite the fact there are several years remaining on the current Collective Bargaining Agreement.”
Ferrell continued, “In November, we made what we believe was an extremely generous offer to NJASAP, which included 52.5% cumulative base wage increases and other enhancements, without any additional duration to the current CBA.”
He added, “However, NJASAP rejected the Company’s offer, never offering their members a chance to vote on the proposed terms, and instead, electing to continue under the terms of the current agreement.”
Responding to Forbes, NJASAP said, “To simply reach immediate pay parity with the major airlines, NetJets would have to agree to a 60% base pay increase on day one.”
The union also wants to move the threshold for overtime to 12 hours from 10 hours and changes to duty and rest periods, according to the report.
NetJets, which had previously declined to comment on the negotiations, provided the following summary to Private Jet Card Comparisons:
The Company agreed early in 2023 to meet with NJASAP for voluntary interim negotiations; however, neither side is under any obligation to negotiate or agree to new terms because the current contract has a full six years remaining.
• NetJets has a Collective Bargaining Agreement (CBA) with NJASAP that runs through December 2026 and can be extended by NetJets in its sole discretion for an additional three years, taking the current Agreement out until December 21, 2029.
• NetJets entered into its current CBA with NJASAP in December 2020, during the height of the pandemic. It did so despite having multiple years remaining on the then-current contract. While many airline carriers were seeking concessions from their pilot groups at that time, or pursuing furloughs, NetJets entered into a new Agreement that paid its pilots substantially more.
• Under the Railway Labor Act (“RLA”), which is the federal law that governs the CBA, the Company has no obligation to negotiate with NJASAP over possible changes to its current CBA until December 21, 2028, at the earliest.
• Despite having no obligation to negotiate for several years to come, the Company made a proposal to NJASAP in November 2023 as part of voluntary interim negotiations. The Company’s proposal included the following enhancements:
o The Company offered a 23% base wage increase, effective December 21, 2023, with the following annual increases in subsequent years of the contract: 6% in December 2024, 4% in December 2025, 4% in December 2026, 4% in December 2027, and 4% in December 2028, resulting in a compounded increase of 52.5% by the end of the term of the Agreement, which runs through 2029.
o The Company also offered to increase the amount pilots earn based on their flight hours (known as “Tour-Based Flight Pay” or “Flight Pay”). Specifically, the Company offered to increase the hourly Flight Pay rate from $150 per hour to $200 per hour for 2024.
• Additional enhancements were offered in 2023, including a signing bonus of between $15,000 and $30,000 per pilot, depending on tenure.
• In exchange for these compensation increases, among other enhancements, the Company removed a bonus plan tied to exceptional overall Company performance, which was to be distributed by NJASAP based on seniority.
• Under the Company’s proposal, the average estimated overall compensation of a NetJets pilot in 2024 would be $288,000, a year-over-year increase of more than 26%.
• NJASAP rejected the Company’s proposal without making a counterproposal.
Additionally, NetJets provided the following comparison of proposed increases:
NetJets said it provides a wide variety of benefits to pilots:
NetJets offers compensation, health and retirement benefits, and work rules that are unapparelled in the private aviation industry, including …
• Some of the most advanced aircraft in the skies.
• Best-in-class safety and training programs.
• Swift advancement, with upgrades to captain now averaging just 19 months.
• More than 200 bases to provide pilots great flexibility in where they live, as opposed to needing to relocate or be constricted to an assigned base, as is common with major commercial carriers.
Compensation
• NetJets pilots are among the top 10% of wage earners in the country.
• The average NetJets pilot in 2023 under the current contract will earn approximately
$228,000 in total compensation.• Pilots can volunteer for Extended Days at their discretion and are paid 2.5x their applicable daily rate for those days.
Flying Time
• In the past 12 months, the average NetJets pilot worked 135 duty days, including their paid travel days.
o Adding voluntary Extended Days to total duty days, the average NetJets pilot worked 142 days over the past 12 months.
o Including Training Days (in addition to voluntary Extended Days), the average NetJets pilot worked 157 days.
• In the past 12 months, the average duty day for a NetJets pilot was 9.9 hours, which has been consistent for many years and is, in fact, trending downward in recent months (9.5 in November, for instance).
Turnover
• Because of the above, turnover rates at NetJets remain below the national average.
Specifically, for the 12 months ending November 30, 2023, NetJets had a turnover rate of 7.3% when only considering voluntary, non-retirement separations.o A post-pandemic hiring boom at the airlines did prompt a slight increase in turnover, with approximately 213 of more than 3,000 pilots departing this year as voluntary, non-retirement separations.
Growth
• In response to our planned fleet growth and the aforementioned departures, the Company has hired 649 pilots and has received nearly 5,000 applications from qualified candidates. NetJets will meet its pilot hiring target in 2023 and is confident it will do so again in 2024. As a result, the number of pilots NetJets employs for each aircraft in its fleet is fully sufficient to meet operational needs.
• The ancillary benefits, such as retaining their hotel, airline, and credit card points, along with FBO fuel incentives, are meaningful, as is the ability for immediate family members to fly on the NetJets fleet as a nontaxable benefit under the Company’s “ferry flight” program.
We asked NJASAP if they wished to respond to any of the points made by NetJets. The following is from NJASAP President Capt. Pedro Leroux:
NetJets is attempting to blatantly mislead its pilots when it comes to proposed wage increases: Right now, NetJets pilot pay trails market-rate wages so significantly that the percent increase it has proposed would not even move pilots into parity with their airline peers.
Simply stated, to reach immediate pay parity with the major airlines, NetJets would have to agree to an approximately 60% base pay increase on day one.
And that 60% today does nothing to ensure NetJets pilot salaries continue to keep pace with market-rate wages through the term of our agreement.
NJASAP has repeatedly emphasized the new contract must contain quality of life improvements that would, as examples, reduce the current 12-hour overtime threshold to 10 hours, and adjust duty and rest periods based on duty start times and circadian rhythms.
The latter proposal is a direct effort to help prevent pilot burnout and fatigue. At commercial air carriers, these duty and rest periods are federally regulated. NetJets, however, has refused to adopt any of these measures, claiming the financial cost was too high.
Importantly, NetJets has never offered a fully formed proposal, but a concept sheet that, amid a generational labor shortage, also seeks concessions in economics and job protection language.
If NetJets and Berkshire Hathaway are serious about addressing the pilot labor crisis at this company, then they would agree to negotiate a competitive contract for their hardworking, experienced pilots who deliver their luxury service.
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