U.S. airlines are offering premium pay and signing bonuses to staff up

American carriers are scrambling to ramp up staffing for the holiday season and prevent disruptions that marred air travel this summer, offering premium pay to hefty signing bonuses or poaching workers from other airlines.

After sacking thousands of workers during the depths of the pandemic, the industry is grappling with shortages of pilots, flight attendants and customer service agents. Critics say the staff crunch is of the airline industry’s own making as the savage job cuts last year, despite an infusion of $54 billion in federal aid to help cover payroll expenses, left it ill-equipped to handle the snapback in air travel.

With willing workers in short supply across the United States and companies frantically vying for them, carriers are being forced to spend more to attract talent. “The reality is that the hiring environment has changed as a result of the pandemic,” American Airlines’ chief operating officer, David Seymour, told employees in a memo this month.

Piedmont Airlines, American’s subsidiary, is trying to lure pilots with a $180,000 bonus offer. United Airlines is offering a $5,000 signing bonus for a ramp agent position in Boston.

Spirit Airlines has bumped up wages for its ramp agents by 30%. The ultra-low-cost carrier is offering a one-time graduation bonus of $1,250 and up to $4,500 a year in tuition reimbursement to flight attendants.

The rush to hire in a tight labor market is driving up costs at a time when soaring jet fuel prices and higher airport charges are also squeezing profits.

Southwest Airlines’ wage expense as a percentage of revenue is up by 14 points this year versus 2019. There have been similar increases in salary costs at other carriers including United and American.

Yet headcount at U.S. scheduled air carriers in October was 14.3% below the pre-pandemic peak. By contrast, employment at restaurants and bars, struck equally hard by pandemic lockdowns, is just 6.4% below its peak before the COVID-19 outbreak.

Inadequate staffing runs the risk of causing operational meltdowns of the kind that have led to a spate of high-profile flight cancellations in recent months.

Carriers such as American and JetBlue are offering bonuses, higher pay and other incentives to ensure they have enough workers for what is shaping up as the busiest holiday season in two years.

If the shortages persist, Karnik warned that major carriers could stop servicing less profitable routes.

United has decided to drop eight routes in the U.S. Midwest and South from its network. The airline’s chief executive, Scott Kirby, told travel news industry website Skift last week that the cuts were the result of a pilot shortage.

“We don’t have enough pilots to fly all the airplanes,” he said.