An Amazon Air plane called CustomAir Obsession crashed on February 23. All three people on board were killed.
The Boeing 767 cargo jet, operated by Atlas Air and contracted by Amazon, had been approaching Houston's George Bush Intercontinental Airport. The cause of the crash is still unknown.
In conversations with Business Insider in the weeks before the crash, several pilots who fly planes for Amazon Air said they thought an accident was inevitable. The rapid growth of Amazon's air-cargo empire, coupled with the low pay, had led to inexperienced pilots taking to the skies, veteran pilots said.
Business Insider had interviewed 13 current and former pilots who worked with third-party airfreight companies that fly Amazon Air-branded planes. The pilots worked for subsidiaries of Air Transport Services Group (ATSG) and Atlas Air Worldwide Holdings. All are based in the US and fly both domestically and internationally.
These airline companies provide Amazon with leasing, staffing, maintenance, and insurance. The pilot groups who work with Amazon are ABX Air, Air Transport International (ATI), and Atlas Air. ABX and ATI are owned by ATSG, and Atlas Air Worldwide Holdings owns Atlas Air.
The pilots described difficulties in attracting experienced pilots, training they considered shoddy, experience with fatigue, plummeting morale, and pay that's considerably lower than at other cargo carriers.
Of the pilots Business Insider spoke with, six worked at Atlas Air and seven worked at ATSG's ABX. All these pilots are in the Teamsters Local Union 1224.
Capt. Robert Kirchner, an Atlas Air pilot and executive council chairman of Teamsters Local 1224, said the situation at Atlas Air was a "ticking time bomb" weeks before the crash. Capt. Daniel Wells, an Atlas Air pilot and the president of Teamsters Local 1224, told Business Insider in January that the check airmen — who oversee new hires for training and safety — are forced to work at "full speed or over speed."
"I can honestly say, if you had all the check airmen in the room and we've done this, saying, who believes that it's likely that there would be an accident in the next year," Wells said, describing a hypothetical situation, "nearly 100% of the people will raise their hands."
The pilots Business Insider spoke to represent a small slither of the total number of Amazon Air pilots. ATSG employs about 500 pilots in the pilot units that work with Amazon Air, and Atlas Air employs 1,890 pilots. (Atlas does not separate its employment by pilot group numbers.)
And they have reason to be aggrieved. They said they have seen their pay and benefits erode over the past decade. Amazon Air pilots have been in contract disputes with their employers for nearly five years. Several of the pilots Business Insider spoke to are retired, and others have already left the companies.
Also, Atlas Air's union leaders emphasized in a statement after the crash that the safety concerns cited by some pilots should not be conflated with the causes of the February 23 accident, which is still under investigation.
But while the cause of the Atlas Air crash remains unknown, the pilot concerns, which were consistent across the many conversations Business Insider had, raise new questions about overall safety standards on these flights, and potential risks associated with Amazon Air's rapid expansion and outsourcing strategy.
Analysts say those factors could lead to service disruption and a serious blow to Amazon's aspirations to expand its logistics empire.
"I am concerned anytime that new entrants into aviation particularly carrying packages or goods enter a market where their background has been essentially trying to cut costs to make money," Jim Hall, who led the National Transportation Safety Board (NTSB) from 1994 to 2001, told Business Insider, referring specifically to Amazon. "Cutting costs in aviation causes deaths and accidents."
Neither Amazon nor Atlas Air responded to multiple requests for comments on pilots' claims, though both expressed interest earlier in the reporting process to provide an interview or learn more about the story. ATSG, which owns ABX and ATI, gave a statement but did not respond to specific claims. The union for ATI pilots, Air Line Pilots Association International, did not respond to requests for comment.
The cause of the Atlas Air crash remains unknown, the comments from more than a dozen pilots raise new questions about overall safety standards on these flights
An initial review of cockpit audio from Atlas Air Flight 3591, which crashed in Texas on February 23, indicated that the pilots on board had lost control of the plane.
Another review showed that the aircraft reached an airspeed of 430 knots (nearly 500 mph) during descent before it crashed. One pilot told Business Insider that broke pilot-safety norms to not exceed 250 knots (288 mph) when below 10,000 feet.
The NTSB reportedly suspects pilot error as the cause of the crash.
Atlas Air pilots Capt. Ricky Blakely and First Officer Conrad Jules Aska, as well as Mesa Airlines Capt. Sean Archuleta, who was riding in the jump seat, died in the crash.
According to company records reported by the NTSB, both pilots were qualified and current in the Boeing 767. Blakely, the captain, had worked for Atlas Air since September 2015, with 11,000 hours flight experience and 1,250 hours of experience with the Boeing 767.
Aska, the first officer, or copilot, had 5,000 hours total flight experience and about 520 hours of experience with the Boeing 767.
Wells said in a statement: "The legitimate concerns we raised in interviews done well before the accident have not changed. However, we want to caution everyone that our comments should not be misconstrued so as to imply any connections to or to speculate as to the cause of the tragic crash of GTI 3591."
The people maintaining and flying these jumbo jets aren't Amazon employees, but Amazon is a key customer of the companies that employ them
Amazon doesn't employ these pilots directly, nor does it own the planes, but the e-commerce behemoth is a key customer of both ATSG and Atlas.
Twenty, soon to be 30, of ATSG's 90 aircraft are leased to Amazon. Amazon comprised 27% of ATSG's revenue in 2018, down from 44% the year before. Amazon is also authorized to increase its ownership of ATSG this year to 39.9% by increasing its warrant rights. ATSG's two other major customers are the US military and DHL.
Twenty of Atlas' 112 aircraft are leased to the Seattle-based e-commerce company, which owns 20% of Atlas' stock warrants. Amazon is also authorized to designate a nonvoting observer to Atlas' board. Atlas' other major customers include Asiana, DHL Express, and Nippon Cargo Airlines.
Both companies' bottom lines and flying hours have grown since onboarding Amazon as a customer. And it's helped the C-suite's take-home pay at ATSG; the four executives' combined pay more than doubled from 2015 to 2017. (Atlas executives are making slightly less after a massive payout from their nonequity incentive plan.)
Pilots claim the airlines were having difficulty finding new hires, even as Amazon demanded more flights
Eleven of the pilots Business Insider spoke with had been with Atlas and ATSG for more than a decade. Each told Business Insider that the airlines were having difficulty finding new hires, even as Amazon demands more flights. The pilots coming to Atlas and ATSG today aren't as experienced as the ones in the past, pilots said.
Kirchner said he was left speechless when flying one of Amazon's new Prime Air planes with a new hire. They had just broken 30,000 feet when the "young fellow" turned to Kirchner.
"You know, Bob, this is the highest I've ever been as a pilot in any airplane at all," the first officer said, according to Kirchner.
"I didn't know what to say," Kirchner told Business Insider in January. "You're on a 747, the second-largest airplane in the world, and you've never been up here at this altitude."
An ABX pilot with 23 years' experience at the company said: "We have guys in the right seats [first-officer seats] who have no business flying airplanes, and certainly no business flying heavy jets."
Ross Aimer, the CEO of AeroConsulting Experts, said "explosive growth" at Atlas and ATSG could be unsustainable and dampen safety standards at the two airlines.
"Atlas and ATSG are having a hard time finding experienced pilots," Aimer, an aviation-consulting expert with 53 years in the industry, told Business Insider. "They're not getting the right talent as fast as they're expanding."
ATSG sent Business Insider the following statement in response to a list of claims pilots made. They did not respond to each individual claim nor address questions relating to its business strategy:
ATSG has always been and will remain committed to the highest standards of safety throughout all of our operations. Our airlines are in compliance with the rules of their current Collective Bargaining Agreements, including day/night transition rules. Regarding staffing, ATSG has had no issues in finding qualified candidates to support its growth. Contract negotiations continue to be conducted under the auspices of the National Mediation Board, and we look forward to their satisfactory conclusion.
The 11 pilots said training standards have also eroded as Amazon's business demands have increased and pressure mounts to onboard more pilots.
ABX has received at least two warnings from the Federal Aviation Administration for "a disruptive and confrontational atmosphere" during pilot-training sessions. One ABX pilot told Business Insider that ABX president David Soaper regularly came to training to "just babble and berate and try to scare the hell out of everybody."
In the most recent incident, Soaper interrupted training to yell at crew members, one of whom walked out of training, according to a letter the FAA sent ABX that Business Insider received through a Freedom of Information Act request.
"This letter serves as an additional reminder that ABXA should keep training environments free of distractions," Lawrence Ward, the principal operations inspector at the FAA's East Michigan unit, wrote in a February 20, 2018, letter to Soaper. "This should include the avoidance of controversial topics by instructors and speakers."
ATSG, the parent company for ABX, did not respond to a request for comment on the letter.
Many of the pilots shared stories of flights that they thought could have become dangerous
Nearly all the pilots with whom we spoke shared stories of flights they experienced where they felt it could have become dangerous. ABX Capt. Stephen Page, who retired in February after 26 years at the airline, said a first officer he flew with in the last year "wiped the power," or took off the throttles and decreased the power at 100 feet, a technique not advised in large cargo jets.
"It was like he was flying his father's Cessna around the cabbage patch," Page told Business Insider. "Everyone who knows anything about swept-wing jets, you don't do that. You fly that aircraft to the runway; otherwise, you can have really catastrophic results."
Page quickly took control of the aircraft. He decided to train the first officer in landing the day after, but a similar incident arose. "It was just a total cluster," Page said.
ATSG, the parent company for ABX, did not respond to a request for comment on Page's comments.
An Atlas Air pilot, who has been with the company for 20 years, said his safety concerns were so strong that he doesn't feel comfortable sleeping during international flights when he's flying with pilots he thinks were "pushed" through training.
"I will not go in the back, or if I go in the back I won't go in the bunk, I'll stay up in the seat, I'll take little catnaps," he said. "I don't rest very well because you're looking to make sure everything is OK."
Asked how he gets through those long flights, the pilot responded, "Lots of coffee."
Exhausted pilots are fueling Amazon's delivery aspirations
All but one pilot said they experienced forced overtime and fatigue while employed at Atlas Air and ATSG. The one pilot who said he had not experienced forced overtime joined Atlas less than three years ago.
"The problems predate Amazon, but Amazon created such a rapid expansion with 20 airplanes, plus a lot of the airplanes that they were getting for other customers, have just amplified the situation," Kirchner said. "These 20 airplanes that were flying for Amazon really put them under more stress to keep hiring and hiring."
Under FAA safety laws, pilots cannot work more than 290 hours a month and cannot exceed 100 hours a month in flight time. But it's not exactly a 25-hour workweek; pilots often spend downtime at hotels or airports waiting for their next job or have to commute by flying to other airports.
Some pilots, particularly those who work for prestigious airlines like Delta or Southwest, are able to spend a lot of their time at home, while others — including Amazon Air pilots — might go weeks or even months without getting back to their families.
Amazon Air pilots with whom we spoke said they don't have a set schedule and, because of the lack of workers, they're often asked just hours before flights to come into work, on days they'd scheduled off. One pilot told Business Insider he was offered four days' overtime pay to fly a two-hour flight. The catch was that it was on a Saturday, and he'd have to fly to and from the job instead of spending his weekend with his children.
Further, cargo pilots don't have the same rest periods that passenger pilots have. Under safety laws that came into effect in 2014, passenger pilots are allocated 10-hour rest breaks between trips, which allow them to get at least eight hours' sleep, but cargo pilots only have eight hours between trips.
That's what cargo pilots call the "cargo carve-out" — rest-break rules that cargo pilots have been carved out of and can't benefit from.
"Cargo aircraft and the operations around cargo aircraft are second class citizens in the FAA, and many times have been treated as second class citizens by their operators," Hall, the former NTSB head, said.
"The fact of the matter is, because they're very few souls aboard, they do not get the media attention or the regulatory action that a commercial aircraft does," Hall added. "And that's regrettable. They're a very important part of our commercial aviation operations in the country."
And Amazon Air operates during the day, the pilots told Business Insider, even as most cargo airlines operate at night. Since ATSG and Atlas also service DHL and other customers, they sometimes find themselves shuffling their circadian rhythm around.
One pilot said that fatigue calls, in which pilots can call their employer and tell them they are too tired to safely work, have peaked in the past 1 1/2 years because of the nighttime flying. He said it's common to have a week of normal daytime flying capped off with a red-eye. "Your body is completely on the opposite side of the clock," he said.
"We're staying up all night and then flying over your house the next day," an ABX pilot with 23 years' experience told Business Insider.
"It allows Amazon as well as ABX to get more productivity out of the airplanes," that same pilot added in a later interview. "It also, unfortunately, allows them to get more productivity out of you — your circadian rhythm be damned."
Forced overtime, which pilots say has decreased in the past year, hurt ABX pilots in ways beyond their work productivity and morale. One ABX pilot said he was sometimes gone for two months at a time during 2016 and 2017.
"I'm going through a divorce, and I attribute that 100% to the way our flying schedules have changed," the pilot told Business Insider. "They wouldn't let us go home."
Capt. Tim Jewell, an ABX pilot who has been with the company for 25 years and is the secretary treasurer of Teamsters Local 1224, said the forced overtime caused unrest in his personal life too. He said he missed birthdays of his grandchildren and important school functions and games.
"It almost more affects your family members than it affects yourself, because your family counts on you to be there for certain things," Jewell told Business Insider. "You keep telling them, 'Well, I don't know, don't plan this, I may be there, I may not,' and so forth and so on."
Above all, morale at both ABX and Atlas have plummeted. One Atlas pilot said he routinely has to ensure his coworkers are mentally sound enough to work. "Pilots show up and they're so disturbed I have to pull them aside," he said.
Lower pilot pay is helping Amazon keep its air venture economical
Pilots are almost universally unionized. Even pilots at FedEx, whose labor force is not completely unionized, are in a union. Meanwhile, an ongoing pilot shortage has forced airlines across the spectrum to raise wages. "In the last two to three years, we've seen really significant salary increases," Bob Seidel, the chief executive of Alerion Aviation, previously told Business Insider. "People are desperate to keep their airplanes staffed."
But ATSG and Atlas Air pilots earn considerably less than their peers flying the same planes with the same years of experience at other companies. According to their union contracts, ABX and Atlas Air pilots have not received a raise in nearly a decade.
The union contracts at ABX and Atlas have been amenable since 2015, meaning they are still in effect but available to be negotiated. Negotiations, which are reaching their fifth year, have been challenging, according to each pilot Business Insider spoke with. Pilot union negotiations are often lengthy — FedEx's most recent pilot labor negotiations lasted two years, while UPS' went on for 3 1/2 years.
However, the ABX and Atlas contracts now in place were negotiated during the financial crisis, and pilots said the contract was "concessionary" in many ways. They allowed their pensions and healthcare matches to freeze, gave up vacation days, and took a pay cut. Pilots said that was to save the airlines, which were financially struggling. Atlas Air had declared bankruptcy several years prior.
Boeing 767 captains with the maximum years of company tenure at ATSG and Atlas now earn up to $246 an hour.
Those captains with the same credentials earn $313 an hour at FedEx and $309 at UPS. Even smaller cargo airlines, like Kalitta Air, pay better than ATSG or Atlas. Kalitta 767 captains earn $273.
Even a first-year captain at FedEx earns more than a captain at Amazon Air who has been with the company for decades ($258 an hour at FedEx).
So, the average Amazon Air captain makes about 33% less than the average FedEx and UPS captain for flying the same plane once reaching the maximum years of experience. (Maximum experience at UPS and FedEx is 15 years, while it's capped at 12 years at Kalitta, Atlas, ABX, and ATI.)
"You have a bunch of pilots that were not happy to begin with, and now you see the company willfully and intentionally disenfranchising them and trying to basically crush or limit their careers going forward," Wells, the president of Teamsters Local 1224, said. "And that's never a good environment to work in, especially with pilots or with the kind of work that we do."
"This is another headache that Amazon just doesn't want, and why they don't want to get into the airline business," Kevin Sterling, the managing director of Seaport Global Securities, told Business Insider. His theory is that "there's no way around unions in airlines, which is why Amazon will continue to outsource this function."
Outsourcing pilot labor to low-wage airliners is part of Amazon's strategy to keep its ever-increasing shipping costs low. Amazon's worldwide shipping costs have grown fifteenfold from 2009 to 2018. Net sales increased by sevenfold in the same time.
"Amazon is doing everything possible to keep their shipping expense low because it's ballooning," Marc Wulfraat, the president and founder of supply-chain consultancy MWPVL International, told Business Insider.
To keep Amazon as a customer, the pressure is high on Atlas and ATSG to keep labor costs minimal. (Amazon recently hit the headlines for ditching another third-party logistics company.)
It could be that cheap labor is the key thing keeping Amazon's air venture affordable. David Vernon, a Bernstein senior analyst and vice president, wrote in a December note that Amazon pilots' low wages allowed Amazon to carry goods more cheaply than UPS and FedEx airport to airport.
But Amazon Air has problems with crew scheduling and operations "dis-synergies." So Amazon Air's service is ultimately much more expensive than that of UPS or FedEx when looking door to door.
"Pilot pay at low-cost charter operations is lower, creating a cost advantage for Prime Air in airport-to-airport service — this does not mean, however, that they can deliver a 2-day box door-to-door cheaper than a commercial operator," Vernon wrote.
Service disruptions — meaning delayed packages — may be next
So far, the paucity of pilots has not caused a major issue for Amazon.
Satish Jindel, a supply-chain expert and SJ Consulting Group's principal consultant, said ATSG and Atlas have maintained their services; the two airlines also fly for big-name customers like DHL and the US military. But every pilot Business Insider spoke with said they suspect service disruptions are almost definitely coming.
ABX pilots already went on strike in late 2016, though that was quickly struck down. The 200-plus pilots were ordered back to work when a judge said the matter needed to be resolved through arbitration and under the terms of the labor agreement between ABX and their union. Continued disruptions could cause issues for Amazon's plan to overhaul airfreight, Wulfraat said.
"If it ends up that the service level becomes inconsistent because you can't find the labor to fly the planes and you're constantly having labor-disruption issues, that's going to have a direct impact on their ability to provide that two-day delivery," Wulfraat said.
"At some point in time, if you're moving such a great percentage of your outbound volume into this transportation channel, then you're going to have a regular supplier, consistent supplier capabilities, to do the delivery," he added. "This could potentially have big disruptive impacts on Amazon's ability to deliver product to customers unless they figure out how to deal with this issue."
"You have a whole bunch of morale issues," one Atlas pilot who spoke on condition of anonymity said. "Guys are getting tired; they're getting sick. There's a lot of stress involved in it, too, because they're pushing everyone to their limit. When you do that, especially at these very safety-sensitive jobs, most guys are going to err to safety, which means that something is not going to move at some point. It's a matter of time before stuff stops moving or stops moving with any consistency.
"Right now, they're barely keeping it together," the person said. "And when I say 'barely,' it's right there. They're going to run out of people."
Áine Cain contributed reporting.
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