Pilot Shortage Is Here

[Don Hudson]

Re "Don: Airline Deregulation Act was introduced in 1978 as the brainchild of Alfred Kahn, under Jimmy Carter.", thank you for the correction, W5, much appreciated. I had forgotten when de-regulation as a policy had been implemented, just that it was growing out of the changes which first announced themselves during the Nixon presidency. (for the record, I am no fan of "Democrats", Carter or Clinton, the latter who I think is singularly responsible for clearing the way for the 2008 economic disaster by eliminating the 1933 Glass-Steagal Act).

I recall that de-regulation of the industry was delayed in Canada to ensure our own industry was protected while it adjusted to eventual de-regulation here. What I was recalling was how the airline industry fared during the Reagan-Bush years.

It would be fascinating to examine if, and to what extent if so, a de-regulated industry was responsible for the present circumstances in which the airline pilot profession finds itself. I believe it has been but the burden of "proof" is significant!

The argument might go thus; Aviation has such huge fixed, long-term capital requirements and costs beyond its control such as foreign currency exposure and fuel that the next-highest "controllable" capital investment was the industry's employees and of those, pensions and pilots became swift targets for so-called "efficiencies".

In such an examination I think it is reasonable to say that with regard to "pilots", the "free market" is starting to work and, further, that some form of regulation tends to even out the wilder swings between boom and bust cycles so that some predictive aspects remain and are not subject to a speculation economy.

Unlike the vast service industry which has grown here and in the US like a bad weed driving out (but of course not eliminating) quality jobs, aviation is based upon long-term thinking and planning only because experience can't be taught and doesn't have a degree, and B747s don't show up at an airline's door unannounced. I believe the "de-regulation experiment" was successful in eliminating "dead wood", dead wood being, in reality, someone and that someone's family's way of life and income. People are enormously and endlessly adaptive and have done so over the past fourty years in a neoliberal economy.

In answering my own question I suppose I would have to say that our industry too, has been "rationalized" according to free-market principles and has adapted in order to survive. But I would quickly ask all stakeholders, the investors, employees and passengers alike - Do we like what we see and have as an industry? Clearly, as I began saying almost two decades ago, those who would make good airline pilots would not agree and an entire generation has given "Airline Pilot" a miss.

That's what was on my mind when remembering and writing about Reagan-Bush. Again, thanks for the reminder!

[blues deville]

More of the same.

http://p.washingtontimes.com/news/2014/feb/28/pilot-shortage-could-put-strain-airline-industry/

[Don Hudson]

The difficulty is, as we know, you can't put an order in for a hundred pilots. Just-in-time thinking may work with widgets but you can't warehouse ability, training and experience. Once young people are turned off and focussed elsewhere, their course is set.

Altering that course towards a recovery towards making the profession both attractive and respected again becomes difficult and will take extraordinary effort and resources.

I remain convinced that the industry chose to ignore the problem because it wasn't difficult to see coming and ignored the significant lead-up time it takes to obtain the licences and then gain some experience before being ready for airline work. By no means would I include the MCPL in this process, not because it may not be a good program for those who are already predisposed and talented but because the industry also needs experience in the left seat and that isn't "pipeline" work, that's just "time-in".

If the US GAO got into the act and actually put out a paper on this, that must mean someone or some body that looks beyond private industry's next quarter is concerned about more than just putting a couple of 98.6's in the front seats.

[Zan Vetter]

The funny, or confounding thing is that the cost of making the lower levels livable is so dang reasonable. Paying somebody $22,000, or even less sometimes should be viewed by management as, "it was good while it lasted," because it's so ridiculous. Put another way, last month I made in one month more than I made in each of my first two years flying professionally, which were 2000 and 2001. That type of gradient just does not happen in other industries.

[Guest longtimer]

The puzzle that remains unanswered / not posed is.... Do / will we have a pilot shortage or do we have too many airlines / aircraft/ scheduled flights? Seems that we are seeing multiple hourly departures between most major cities in North America. You have to wonder if you reduced the number of departures would this have an "real" negative effect on travellers or not? Based on the posted numbers, you could drop 15% of the flights and run the remainder with an average of 5% open capacity.

[Don Hudson]

Hi Longtimer - good question and one well worth investigating on a number of levels. I wonder if there are formal studies around and if so, by whom? These days universities are rarely as academically independent as they may claim and we're not going to find unadorned answers from either the Cato Institute, the Fraser Institute or the Canadian Centre for Policy Alternatives.

Is the word, "shortage" a negotiating word or an assessment or a bit of both? We could say, as has a recently-pointed-out article, that "miserly" airlines have done this to themselves. They have, but that's not a complete answer from which effective responses could be made.

As we have heard, is the "shortage" possibly the result of the levels of retiring pilots in an industry that is otherwise matched more or less to demand? Not so in China I realize, given the stories of growth there, but I'm thinking mainly of the US and far less so, Canada.

On the other hand we could indeed wonder about reducing the supply of scheduled flights but in a de-regulated industry how would that be done and by whom or what agency? Isn't de-regulatiion supposed to look after supply according to "invisible hand" of the free market? In a free market, an airline is supposedly free to give up unprofitable routes yet as those changes do occur, here we are.

Another word for "shortage" is "market demand". Such familiar forces can either emerge or be manufactured as anyone who deals in the stock market will understand. In any system in which there are forces and reactions, is demand for services sufficient to sustain actual service levels or increase growth from which the forces of demand emerge to grow say, pilot supply?

I think the industry could shrink-fit itself to match anticipated pilot supply without material effects to service levels, and I only say that because both "convenience" and "inconvenience" are always and already present in our system and the public mentality quite readily accepts "the trade".

If the shortage is real, as a result of current and predicted demand as well as retirements, reducing schedule would not solve the problem as demand would theoretically grow the industry past current excess.

[Guest longtimer]

Don:

Other non regulated retail businesses have come to realize that "consumer convenience" quite often adds up to large losses and retail closures that reduce the number of venders but don't have any real effect on the supply of product other than fewer outlets. I suspect if there is a pilot shortage that is what we will see in our industry.

You have to wonder if an airline reduced it's frequency in the North American market, if that would have a negative or positive effect on it's prices or revenue. Perhaps instead of 1 737 every hour, a larger aircraft every 2 hours would be the fix. However I don't think we should hold our breath waiting for an airline to lead that parade until the time there are not enough pilots to fly the hourly frequency.

As far as any study, I also doubt that any exist.

[Guest longtimer]

Regarding capacity vs demand, I did find a document published by Boeing, here is the link

http://www.boeing.com/assets/pdf/commercial/pdf/AirTransportCapacitySupplyDemandBalance.pdf.

I will have to give it a good read one night this week. ‎

[Don Hudson]

Wow, thanks very much longtimer! I'll give it a similar read this week.

[MURRAY]

Don Hudson: Do you think there could be at least a casual correlation between many points brought up in this thread and the conversation we had via PM last summer?

[Don Hudson]

My impression is yes, it is more likely that there is some correlation.

[Don Hudson]

Hi longtimer;

I agree with you - the industry will deal with such shortages as they deal with weather - triage the problems and target the resources to profitable routes; use de-regulation for what it was intended.

Aviation is an odd duck - people tolerate a $5 coffee and waiting interminably at Tim's but find an air carrier's $20 price gap and a mechanical or weather delay less acceptable. Odd.

One effect of being solidly "bricks-and-mortar" so to speak, is not being light on one's feet. The industry by nature is physical, technical, political, financial and economic "inertia" defined. It just takes a long time to do anything, whether it is getting to the gate in bad weather, planning for seat capacity for 2025 or attracting and then keeping suitable candidates to fly their aircraft.

Target has recently discovered that P.O.'d customers make an immediate difference in both public perception and the bottom line by just walking "next door". One can't necessarily do that with air carriers, partly because of the inertia described above and partly because with airlines, I think there is more latitude built into the system and customers have, very grudgingly over the years of getting accustomed to thin staffing and thinner resources, given large benefit of the doubt that other businesses might envy.

[Don Hudson]

From AW&ST, (where it occurs in the article itself, any bolding is mine, for emphasis)

U.S. Regional Airlines Struggle To Attract Pilots

May 5, 2015

Brian Sumers | Aviation Week & Space Technology

North American regional airlines fear pilot shortage

To preview an annual gathering of the North American regional airline community, the Regional Airline Association (RAA) asked top executives at 15 carriers to name the three most pressing issues facing the industry. All but three cited a possible pilot shortage, which remains one of their most vexing problems.

“The continued flow of future aviators—both pilots and mechanics—is a big focus for RAA,” says Kelly Murphy, the group’s spokeswoman. But there likely will not be any panaceas at the RAA’s Convention May 11-14 in Cleveland. By now, regional airlines know how to cope, with many taking a two-pronged approach. One is to be more aggressive in recruiting and paying pilots. The second is to work with legacy carriers to make sure they have reasonable expectations about the schedules the regionals can fly.

Major airlines are also aware of this problem. United Airlines, for example, told analysts in April that it was drawing down its 50-seat fleet in part because its partners were having difficulty staffing the jets. “The reduction in availability of pilots for smaller airplanes is clearly affecting us, as it’s affecting all of our competitors,” United CEO Jeff Smisek said.

On an April 30 earnings call, SkyWest Airlines President Chip Childs said his carrier is “fortunate” to have enough pilots for its 2015 plan. But SkyWest is also shrinking slightly, going from a total fleet of 717 aircraft at the end of 2014, to 693 at the end of the first quarter. By year-end, it will have 633 aircraft.

“It’s not as easy as it has been in the past,” Childs said. “We fundamentally believe that with an issue as big as this pilot shortage you have to be very proactive and plan with the partners so we can make sure we can deliver what the partners want to deliver to their customers.”

SkyWest is generally in good shape —the carrier was named one of “America’s Best Employers” by Forbes earlier in April—but attracting qualified pilots is a problem elsewhere.

After starting with Cape Air as interns, many become captains and move on to JetBlue Airways. Credit: Cape Air

Pay remains a major issue, and while it has improved—many carriers offer lucrative signing bonuses—it is not yet high enough across the board to alleviate concerns. Airlines also continue to complain about the FAA’s rules requiring 1,500 flight hours and an Airline Transport Pilot certificate for most new first officers.

In his pre-conference note to the RAA, PSA Airlines President Dion Flannery blames the new rules for resulting “in a multitude of unintended consequences throughout the industry.” He calls on regional carriers to lobby for changes to make it easier for smaller airlines to attract pilots. In his note, Horizon Air President David Campbell states that “other challenges pale in comparison” to the pilot problem.

At the conference, industry leaders will hear from Kent Lovelace, a professor in the University of North Dakota’s Department of Aviation. Lovelace tells Aviation Week the industry is on the right track with pay but says his research suggests prospective first officers are less concerned about compensation than airline executives might expect. “We did one qualitative study, and all but one of the students said they wanted a salary that is comparable to another college graduate,” Lovelace says. “If a social worker is making $38,000 or a nurse is making $42,000, students want to earn that much. They are not asking for the Moon.”

But Lovelace says some regional carriers may underestimate how much lifestyle factors affect whether a prospective pilot chooses an airline job or a corporate one. He says many ask themselves, “Where will I be based?” before making that decision.

“In my generation, you did whatever you needed to do to get the job you wanted,” Lovelace says. “That attitude doesn’t exist now. They are more concerned about friends and family.”

Regional airline executives can’t always base pilots in desirable places, but Lovelace recommends trying low-risk strategies to improve morale. He credits one airline for giving pilots four free hotel room nights per month at their base, so pilots living elsewhere won’t have to rent a crash pad. Lovelace also suggests regional carriers work with major airlines to set pilot schedules to accommodate work/life balance. “There’s no short-term fix,” he says.

Some carriers are already moving in that direction. When Republic Airways told pilots in April that Delta Air Lines had extended a contract for 38 Embraer ERJ 145s until 2021, five years beyond what was initially planned, Republic promised pilots their work days would improve. In the note, executives underscored that Republic wants to be an “industry leader” in quality of life.

Other approaches work, too. Young pilots look for favorable flow-through agreements that improve their chances of working at a major carrier. Pilots also appreciate bonuses—Endeavor Air offers up to $80,000 in retention bonuses for a long-term commitment—as well as financial support for their loans.

Formal programs are another option. The most effective one, Lovelace says, is JetBlue’s agreement with Cape Air called the University Gateway program. Students at six preferred universities (including North Dakota) start as college interns at Cape Air or JetBlue, then fly for at least one year as flight instructors before joining Cape Air for 2-3 years. Afterward, pilots are given preferred interview slots with JetBlue.

Cape Air President Linda Markham says 20 program graduates have moved on to JetBlue. More than 100 more are in the pipeline. “It helps to have the carrot at the end of the stick,” Lovelace says.

[rudder]

It isn't very complicated.

Nobody... nobody is going to spend $100K on education and training for a vocation that pays $20-$30K in starting wages AND requires a wage and tenure reset each time you change employer.

The current model will not carry the industry in to the next decade. Time for somebody to invent a better mousetrap.

[DEFCON]

Hypothetically speaking:

At one time I felt confident the guy beside me knew how to fly and it was therefore safe to leave the cockpit briefly. That is not the case any longer.

The ongoing lobby efforts of management, often hand-in-hand with the unions too, are mostly attempts to justify lower professional standards to support industry growth. Gimmicks to attract and retain newbies are coming into fashion as well.

But then; what about the career regional pilot? How is he to be compensated for the constant tribulation that comes with playing nursemaid to a never ending stream of ever-less qualified rookies that pass through the right seat on their way to places where they believe the grass is actually green?

[deicer]

Defcon,

It's not just pilots.

The revolving door is below the wing, and it has definitely become a much more dangerous place to be.

[Wolfhunter]

It isn't very complicated.

Nobody... nobody is going to spend $100K on education and training for a vocation that pays $20-$30K in starting wages AND requires a wage and tenure reset each time you change employer.

X2… It’s that simple (and maybe that complicated); no mystery at all. You might be surprised at how many seasoned pilots are doing “other stuff” while employers moan about the shortage.

[J.O.]

Some airlines in other parts of the world are starting to park aircraft due to a lack of pilots. The numbers that are being offered for some expat contracts in the last few months are staggering.

[rudder]

It is a sellers market for pilots. That will only tip further in the pilots favour as the baby boom wave of deferred age 65 retirements kick in.

If pilots could start acting in unison and stop trying to screw each other over to get ahead then there would be a significant uptick in pay and benefits at ALL levels of the industry. Any carrier that attempts to solicit an entry level commercial airline pilot for less than $50,000 per year should be told "there are no takers". It is time to reverse the trend that the corporate bottom line can be enhanced by underpaying pilots.

Regardless, large carriers that are not in the process of developing and implementing a pilot successorship plan will see their ability to grow limited.

[J.O.]

Japan just raised their mandatory retirement age to 67 because of the implication of pilot shortages. It may be a pinky-sized Band-Aid on a severed jugular, but I suspect they are first of what will be many countries to do the same thing.

[rudder]

If starting pay for a doctor or lawyer were just $30K/yr then it is likely that law schools and medical schools would be empty. You cannot pay for $100K in education expense with no net earnings after graduation.

Becoming a commercial pilot takes a significant capital investment and a not insignificant investment in time and education. Time for the entry level airlines to recognize that. If they don't do so quickly, then they will figure it out when the application drawers are empty and it will be too late.

[John S.]

. . . . The absence of respect was as sickening as it was stupid.. . . .

Don I know that your are referring to anti-labour governments and courts in this sentence but for a person with my point-of-view it is even more true when applied to the ACPA founders to us 'feeders'.

I would suggest that anyone who had a long and productive career at Air Canada probably had the best possible Canadian aviation experience.

If you are not happy about the state of the industry then you, and your co-workers for the past 40 years, need to step up and take the blame for the way the pilots have been manipulated into letting the industry evolve the way it has.

It was not the guys flying up north or the float planes in BC or Ontario that established that arrogant attitudes of B747 pilots. (I say that because the most arrogant person I have ever met was a CP 747 captain, back in the late 80's.) But what I am referring to is the major airline pilot vs. the pilot trying to be a major airline pilot.

Over the past 40 years my experience is that way too often the major airline pilot has had an attitude of superiority. Of entitlement. Of exclusiveness. Of greatness. Of importance. In fact anything except acknowledgement of the fact that they were flying big jets because of a huge dollop of good luck.

[turn on sarcasm]

And all this talk of pilot shortage focuses on how hard it is for a young person to get into the industry, large up front costs and low starting wages.

What is missing from the conversation is what any mainline wide-body captain is earning. Or what a retired Air Canada pilot gets for a pension.

Maybe the carrot at the end of the career is not big enough for the 20-year-olds to want to put in thirty years or fourty years to get that carrot. Instead of $260K per year the senior pilots should earn $1m per year.

And forget about a measly $10,000 per month pension. Who can live on that? Juice that carrot to at least triple that amount. Why should airline executives have all the money?

You do that and then there would be no pilot shortage.

At least not for senior pilots and retirees.

[turn off sarcasm]

[DEFCON]

JO

I believe Japan just raised the max age for a commercial PIC to 71 for domestic operations. I've also 'heard' ICAO is considering an overall policy change in the same respect.

It's funny how some things really matter, like the age of physical incompetence, until commercial interests decide they don't.

[J.O.]

It's funny how some things really matter, like the age of physical incompetence, until commercial interests decide they don't.

Hmm. I've never seen it phrased quite that way before. If age were the only benchmark of competence (or a lack thereof), the life of a check pilot would be soooo much easier. We've all seen folks on the downward side of the birthday counter who were still as sharp as a tack and young folks who didn't belong in an airplane. My concern is that there's been nary a whisper from the folks in charge of administering aviation medicals as to how the implications of an increasing pilot age range will affect medical assessments.

[Boney]

Funny, I know of a number of young qualified pilots just out of flying school with 250 hrs and can't find a job. Everyone needs 1000 hrs as minimum.

Catch 22