Avelo Airlines is raising pay and offering a $20,000 sign-on bonus to attract pilots amid an industry-wide staffing shortage

• Low-cost startup Avelo Airlines is offering increased pay and sign-on bonuses to first-year pilots.
• Avelo's effort comes as airlines continue to struggle to find and retain crews amid the pilot shortage.

The pilot shortage is once again plaguing airlines as travel rebounds to normal levels, and low-cost carriers are approaching the issue with increased pay and enticing bonuses.

Avelo Airlines announced on Thursday that it is upping pilot compensation by nearly 50% for captains and about 30% for first officers, effective February 1.

In addition to the bolstered pay, the airline will also offer a $20,000 sign-on bonus for pilots hired before June 1, 2022, as well as a monthly commuter stipend for all pilots. Avelo plans to employ 120 new pilots in 2022, according to the company.

"We're committed to attracting and retaining the industry's best pilots," Avelo CEO Andrew Levy said in a press release. "In addition to our enhanced pay scale, Avelo supports quality of life initiatives such as an additional $1,800 per month to help offset the cost of commuting. And, if a pilot chooses to live in base, they'll keep the $1,800 per month."

According to the carrier, the added pay will make Avelo's first-year pilots the highest-paid crews of any ultra-low-cost or regional airline in the US. At a minimum, captains will now make $209,600 and first officers will make $117,200 in their first year, including bonuses and stipends.

The increased pay scale comes as airlines struggle to attract and retain pilots amid the looming pilot shortage. The issue was temporarily alleviated as travel slowed during the pandemic, but has returned as travel reaches more normal levels.

Avelo is not the only airline feeling the impact. New budget carrier Breeze Airways also upped its pay rates this month, with first-year Embraer captains and first officers receiving a bump of $12 and $6 per hour, respectively. The company needs to hire about 280 pilots to fill its growing fleet of Embraer 190, Embraer 195, and Airbus A220 aircraft.

"The reason for that was the overwhelming feedback that we received back from the pilots," Christopher Owens, Breeze's vice president of flight operations, told Insider. "Their three top priorities were: pay rates, pay rates, and pay rates."

According to Henry Harteveldt, travel analyst and president of Atmosphere Research Group, low-cost carriers like Avelo and Breeze were able to scoop up furloughed or laid-off pilots during the pandemic, but are now at risk of losing them over pay.

"One of the risks I see for the budget airlines right now is keeping their employees, particularly their more-recently hired flight attendants and pilots with lower seniority because they could get better pay or benefits at some of the larger carriers," he told Insider.

In addition to paying more, carriers are also offering incentives to new pilots, lowering education requirements, or hiring from abroad. For example, Missouri-based regional airline GoJet is offering a $20,000 bonus to new first officers and $40,000 to pilots hired on as captains, the airline announced in December.

Meanwhile, Delta changed its hiring qualifications for pilots, removing the requirement to have a four-year college degree. The airline explained eliminating the degree "removes unintentional barriers to our Delta flight decks."

Moreover, Breeze is opening its doors to Australian pilots who apply to work at the carrier through the E-3 work visa program, which has also been used by regional carriers like CommutAir and ExpressJet Airlines.