(Reuters) - Allegiant Air said its pilots represented by the Teamsters union ratified a new five-year contract, ending labor issues at the Las Vegas-based budget carrier at a time the U.S. airline industry is grappling with a shortage of pilots.


The contract, effective Monday, offers pilots a pay hike of up to 31 percent, paid vacation of up to four weeks, an improved scheduling system and a massive increase jump in the company's 401(k) contributions. (


More than 86 percent of the votes from pilots were in favor of the contract, the airline said on Thursday.


Allegiant Air, owned by Allegiant Travel Co <ALGT.O>, had 625 full-time pilots at the end of 2015.


The U.S. airline industry has been facing a pilot crunch after the Federal Aviation Administration ruled in 2013 that co-pilots must train for a minimum of 1,500 hours to qualify to fly a passenger or cargo plane.


The previous requirement was 250 hours.

This has significantly pushed up the cost of training for aspiring pilots at a time of slow salary growth.

Regional carrier Republic Airways Holdings Inc <RJETQ.PK> filed for bankruptcy in February, blaming several quarters of falling revenue after having to ground aircraft amid a pilot shortage.

Allegiant Air had been in unsuccessful talks with its pilots for years.

The pilots had accused the airline of failing to abide by a 2014 federal court injunction directing it to restore their benefits and work-rule protections to levels negotiated earlier.

Last year, the pilots even threatened to go on a strike but a U.S. court blocked them from taking action.

United Continental Holdings Inc's <UAL.N> pilots voted in January to approve a two-year contract extension, paving the way for a 22 percent wage hike by 2018.

(Reporting by Radhika Rukmangadhan in Bengaluru; Editing by Kirti Pandey)