In most industries, it is understood by prospective employees that pay rates will be based on either a defined salary or an hourly wage, but usually not both. This makes a comparison or calculation of compensation relatively straightforward because in most cases the salaried employee will receive the same compensation regardless of hours worked, while the hourly employee’s compensation will be on a sliding scale based on hours worked.
The airline industry typically uses a combination of the two methods that isn’t always as straight forward to predict or understand.
The typical form of compensation in the airline industry is a base monthly salary (regardless of hours worked) with additional pay calculated at a prescribed hourly rate above the minimum number of hours. This concept is called Minimum Monthly Guarantee on the basis that the pilot will be compensated with at least the guaranteed salary portion of their pay regardless how few hours they work.
It will depend on the particular airline’s contract, but in most cases, the normal number of guarantee hours is based on 75 hours per month. The guarantee is then a simple multiplication of the guarantee hours (75 in our example) times the hourly compensation (say $30 an hour). This is important to understand for a couple of reasons. First, it will determine the least amount a pilot will be compensated under all conditions. Second, it is important to note that while the hourly wage seems high, it is actually only paid at about half as many hours per month as a “normal” 40 hour job, so it doesn’t really provide the normal value of $30 an hour, which is important to consider when making the transition from other fields or careers.
If the pilot works enough credit hours to exceed the minimum guarantee (75.1 hours or more in our example), they will be paid based on the number of hours they actually worked, at their hourly rate. However, if the pilot only works 5 hours that month, sitting on reserve for instance, they will still be compensated the full 75 hours for the month.
When comparing contracts or pay rates, it is important to consider both the number of hours guaranteed per month as well as the hourly rate. In some cases, airlines will offer higher hourly compensation, but lower guarantee or vice versa.
Beyond the minimum guarantee hours airline compensation has a lot more consider depending on the form of compensation, so other work rules start to play a larger role (deadhead pay percentage for instance), but the Minimum Guarantee provides a good starting point for compensation amount based on the reality that it will be the least amount paid as long as the pilot is an active pilot for the company.
