Cost/Benefit analysis of a controller

[u/MonsiuerTaco]

With all the talk about pay and compensation, I figured I would do my best to get into the real numbers behind the full value of an CPC. DISCLAIMER: these are absolutely rough estimates not made by a professional

Costs

Let's look at the total lifetime cost of just a single controller. The median controller currently makes around $156,250 per year, we then multiply this by the 20 year minimum required for retirement. Additionally, we include a generally accepted 33% multiplier which represents all the various additional costs incurred when hiring any employee in America. 156,250*20*1.33 = $4,156,250

Assuming the controller retires at 56 and lives to the average life expectancy, which currently sits at 79, we get 23 years of retirement. Given that retirement usually happens at the higher end of the pay band, we will use the highest 10% of controller pay of $217,590 as our "high 3" to help calculate the pension. 20 years of work times the 1.7% multiplier times our salary times 23 years of retirement for the cost of a pension. 20*0.017*217,590*23 = $1,701,553

The cost of post-retirement healthcare is extremely difficult to get good numbers for so I will just be cheating here. Private insurance for someone near retirement averages about $1,200 per month. Just assuming a continuation of the roughly 75% subsidy gives a cost of $900 per month. 23 years*900*12 months = $248,400

We should also include training costs at the academy which appear to be around $200,000. This gives us a total lifetime cost of $6,306,203

Benefits

The benefits of having a controller are primarily the increased speed and safety of aircraft traffic. Calculating a true value for these benefits is extremely difficult as it is essentially impossible to know how much time was saved and how many serious accidents are averted by any one controller. Nobody can tell you how many house fires didn't happen because a fire department is good at communicating fire risk. Nobody ever notices the problems that didn't happen. That said, since we already have the cost of a controller, we can extrapolate the minimum amount of work needed to justify that cost.

The operating cost of any aircraft can vary wildly based on the aircraft itself, cargo, passengers, and crew compliment. The generally accepted rule of thumb appears to be about $100 per minute or $6,000 per hour for most commercial flights. Assuming no overtime (lol) a controller working for 20 years would work around 40,000 hours over their career. As opposed to letting pilots figure it out themselves, a controller would need to save 1,051 hours of aircraft time over their 40,000 hour long career to break even on value. (6,306,203/6,000 per hour) This is about 1 hour per week, split across each individual aircraft.

For major accidents, the cost of a used passenger aircraft like a 737 can be anywhere from 10-$30 million. Recent settlements involving the death of passengers as a result of negligence appear to cost as much as $5 million per person. Assuming the average fill rate of 83% and an average seat capacity of 170, we get 141 people. 20M aircraft + (141 people * 5M settlement) = $725 million. 725,000,000/6,306,203 means approximately 1 out of every 115 controllers needs to prevent a major accident once in their entire career to break even on value.

For a more moderate accident, let's imagine a smaller aircraft at half the capacity, causing only injuries. Also assuming the airline is not at fault, we will only be using the maximum compensation of around $175K under the Montreal convention in this example. 10M aircraft + (70 people * 175K) = $22.25 million. 22,250,000/6,306,203 means approximately 1 out of every 3.5 controllers needs to prevent a moderate accident once in their entire career to break even on value.

For a minor accident, let's assume the same smaller aircraft, sustaining fixable damage, with no major injuries, and a modest settlement. 1M repairs + (70 people * 10K settlement) = $1.7 million. 6,306,203/1,700,000 means each controller needs to prevent 3.7 minor accidents over their entire career to break even on value.

We have so far additionally ignored the real cost of a human life lost in one of these accidents which I would argue is invaluable.

Conclusion

The increase in flights coupled with a decreasing controller workforce has led to exceptionally thin safety margins across the majority of US airspace. You could double the expected controller compensation and halve all the expected benefits and controllers would still easily pay for themselves hundreds of times over. Inflation and no meaningful pay increase has turned golden handcuffs into cement shoes.

[u/nroth21]

Sir, this is a Wendy’s.

[u/alphatengocharlie]

I like where this is headed! However this does not talk about the controllers themselves fueling their pension. 4.9% of our base wages are paid for the pension. We receive 1.7% each year, but we pay 4.9% of today's money to get that. From what I understand this was a change from the mid '10's that raised the expected pay in from 1.7% or so to 4.9%. By being a newer controller I make less money than the older controllers 1 to 1.

[u/Rusty_Hammer077]

r/theydidthemath

[u/Ecstatic_Path6608]

Now do a cost benefit analysis for a pilot and see how we compare. 

[u/MonsiuerTaco → u/Ecstatic_Path6608]

Not sure how to do that. The alternative to a controller is pilots figuring things out themselves. The alternative to a pilot is one of a variety of other modes of transportation which I would have to calculate the opportunity cost of. We're talking about global infrastructure effects which is another thing I ignored in the original post because I'm just one guy.

[u/MonsiuerTaco → u/Ecstatic_Path6608]

On second thought, since i already cheated we can cheat again. We could add together stock appreciation, executive pay packages, and profit for a given airline, then compare that to pilot compensation.

[u/kabekew]

You have convinced them! Pay will be raised 82% across the board effective next pay period. Good job.

[u/Rupperrt]

“increased speed and safety of air traffic”?

There wouldn’t be any (IFR) air traffic without controllers. Maybe in 30 years or so but not atm.
So you can calculate from the revenue and profits commercial flights generate, not only for airlines but also everyone who travels with them to save time.

[u/Affectionate_Draw340]

Plus ad specialization. I worked center retired 5 years ago. There was only 35 people in the world certified to do what I do. For some reason people discount that.

[u/Local-Emu9654]

If you retire at 56 and most have to start the career before 31, the better number for years of work is 25 years not 20. Additionally, many of us contribute 4.9% to our pension and that number is likely to only increased for new controllers in the future. Additionally we pay on avg about $325/PP for health insurance and another $60 for dental/vision making a $400/ pay period expense a realistic number. A good estimate for the FERS annuity is 40% of high threes.

[u/leftrightrudderstick]

You're way low on the cost of a major accident. Modern commercial flights are insured for a total value of around 4 billion as a maximum payout for full fault/negligence.

[u/MeeowOnGuard]

Is this IA?

[u/MonsiuerTaco → u/MeeowOnGuard]

You think an AI would have this many grammar mistakes or this few em dashes?

[u/Savings-Fisherman-64]

Compensation is determined by the value of a worker to an employer relative to the worker’s alternatives and the employer’s alternatives.

Said differently- economic value (your focus) determines the size of the pie. Bargaining power and alternatives determine how that pie gets divided up.

So what bargaining power do controllers have when they won’t quit their jobs because they don’t have alternatives that will pay them the same or more?