NetJets Europe aims to keep pilots happy with voluntary schemes

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It has been a rough ride through the economic recession for Europe's business aircraft operator community.

Abandoned by droves of cost and image conscious customers, many companies have floundered or have been forced to make drastic cuts to their fleet and flightcrew numbers to stay afloat - swelling the sizeable ranks of unemployed pilots.

Pilots' duty hours cutback options
  • Voluntary redundancy - taken up by 87 pilots

Pilots are entitled to a payment equal to 10 months of reference salary. Those with one year or more of continuous service will be entitled to an additional sum equal to four months of reference salary for each full year of continuous service. The total enhanced redundancy payment is capped at a sum equal to 24 months of reference salary.

  • Long-term leave of absence - taken up by 10 pilots

Pilots remain employed by NetJets but can take a leave of absence for up to three years, during which time they will receive the following:

Months 1-6: 50% of reference salary

Months 7-24: 20% of reference salary

Months 25-36: 10% of reference salary

  • Job sharing - taken up by 381 pilots

A four-year programme where pilots share normal full-time duties on a year-on/year-off basis and will receive 60% of reference salary, which will be paid throughout the off and on years.

  • Leave of absence - taken up by 31 pilots

Pilots remain employed by NetJets, but are permitted to take a leave of absence of between one and 24 months and paid at the following rates:

Between one and three months: 0%

Between three and six months: 15% of reference salary

Between six and 12 months: 20% of reference salary

Between 12 and 24 months: 33% of reference salary

  • Temporary part-time - taken up by five pilots

A cut in pilot duty days from 200 to between 120 and 150 - available for one year and managed according to business needs.

 

Even NetJets - Europe's largest business aircraft operator and sole business jet fractional ownership provider - has not been immune to the effects of the downturn, but it has turned this financial crisis into an opportunity to bolster its relationship with its 1,050-strong pilot population while positioning itself auspiciously for the market rebound.

Faced with a continuing fall in flight hours and a growing number of on-call pilots with empty schedules, NetJets was forced in April to slash 60,000 excess duty hours from its roster - equivalent to 300 full-time pilots.

"This was a huge challenge for us," says NetJets Europe chief financial officer Robert Dranitzke. "The crisis hit us last September when we recorded a sharp drop in flight hours compared with the previous year. We waited for a V-shaped recovery to come, but soon realised it was going to be U-shaped," he says

In an effort to stave-off job cuts, the Lisbon-based operator introduced cost-cutting initiatives - notably slashing aircraft delivery schedule by around 60% - and "eliminating waste" from day-to-day operations, such as excess catering and cutting the company travel budget.

But these measures did not go far enough, Dranitzke admits. "Our customers were continuing to fly less and taking a lot longer to use up their hours, so we had to rebalance the business in the best interest of everyone. We needed to come up with a solution that would have little impact on the lives of our pilots."

Dranitzke admits the easiest and cheapest resolution would have been to force compulsory redundancy on around 300 pilots. "But this would have damaged our company culture. We always ask our pilots to go above and beyond the call of duty for us, so it would be wrong to just get rid of them when the business was going through a rough patch."

NetJets set up a pilot working group, tasked with drawing up a number of ideas for cutting the excess duty days. "We needed workable solutions that could be applied to our business over a number of years as we do not know when the economy will pick up and demand will start to grow again," says Dranitzke.

The working group came up with 20 proposals originally, some of which turned out to be "unworkable and too expensive", says David Pastoor, NetJets' Dassault Falcon 900D captain and working group member. "They were eventually whittled down to five [voluntary employment programmes] that were well received and the take-up rate was very high," he says.

Demand for the programmes exceeded the 60,000 excess duty-day target by nearly 6,000 and the Berkshire Hathaway-owned company was forced to turn down a number of applications.

A total of 514 pilots have signed up for the voluntary programmes "and most importantly, we have managed to avoid any compulsory redundancies", Dranitzke says. "Plenty of cushion has been built into the system allowing us complete flexibility to call pilots back to work if we need to." The voluntary programme will be implemented over the next five months.

He says these measures are unique to the aviation industry and set a benchmark for other operators. "We have cut a significant [yet undisclosed] chunk from our €100 million [$142 million] annual pilot salary bill, but it is still more expensive that making sweeping job cuts, which are typical in this industry."

NetJets is confident this paradigm shift in its employment strategy will also reinforce loyalty among its pilot community. "The mindset among our employees is not one of 'us and them'. Their relationship with NetJets is one that is inclusive, familial and built on trust."

Pastoor, a former airline pilot with 17 years experience of commercial flying, agrees: "When times are good you ride the high, but the true test of a good company is how they treat you when business is suffering. NetJets' personal approach is unique to the industry and will reinforce loyalty from its pilots."