The pilot shortage is finally a reality
PART TWO THREE YEARS LATER, IT’S REALLY, TRULY HERE
I don’t know about you, but I sure love being proved right. Lord knows it happens rarely enough at home, so I have to look for small victories elsewhere. As it so happens, writing a monthly column for a widely read aviation magazine makes for a potentially rich vein of retrospective sagacity. Thus I was recently perusing a few of my early Taking Wing columns when I came across this gem from March 2014: “What Shortage? It’s Kinda, Sorta, Maybe Here.” Despite the blithely noncommittal title, I drew a few strong conclusions about the nascent pilot shortage in that piece that have, quite happily, since been borne out by industry developments.
OK, perhaps my humble little article wasn’t quite a Nostradamus-level piece of bold prognostication. Given the easily available, incontrovertible data that juxtaposed skyrocketing pilot retirements against historically low levels of flight training, recent predictions of a pilot shortage might now be treated on par with statements regarding papal doctrinal inclinations or ursine toilet habits. But as late as 2014 there was still an enormous amount of skepticism among pilots who had seen many such predictions ignominiously fizzle out against a backdrop of persistent industry turbulence. Really, one can argue the main reason this pilot-shortage prediction panned out while others did not is that the newly consolidated U.S. airlines have remained disciplined, stable and profitable for a longer period than any since deregulation. Let the good times roll, I say.
So here’s where we’re at right now, a “State of the Shortage,” if you will. The so-called “legacy” U.S. airlines (American, Delta, United) are still on the front edge of a spike in mandatory retirements that will continue to ramp up over the next few years before peaking in 2023. Nearly half their current pilot force will reach age 65 within the next 10 years. “Low-cost carriers” like Southwest and Jetblue, and cargo companies like UPS and Fedex, face a steadier pace of retirements but will nevertheless lose a historically large percentage of their pilot groups. Meanwhile, global demand for air travel has continued to grow at a pace not far removed from industry forecasts (for once), and mainline carriers have reversed the prior trend of outsourcing their domestic feed by bringing a larger portion of it in-house. The result is that major, low-cost and cargo carriers have already started hiring pilots in numbers not seen since the 1997-to-2001 period — more than 10,000 in the past three years — even before mass retirements have really kicked in.
Thus far, the major airlines have had little difficulty recruiting such numbers of experienced, well-qualified pilots. True, the military services are putting out far fewer pilots than they once did, but the majors also draw from a deep reserve of talent among the regional airlines and lower-paid national carriers, as well as corporate and fractional operators. It is at the entry-level jobs in general and the regional airlines in particular that the pilot shortage is currently most acute. Most regional pilots have aspirations of flying for a major airline and will make the jump as soon as an opportunity presents itself. Meanwhile, flight training has seen a recent rebound, but not quite enough to feed the regionals’ needs, and in any case, the 1,500-hour rule means there is a multiyear lag in the pipeline. Therefore, the regional airlines have largely been reduced to coaxing qualified pilots to apply with
the one inducement that consistently produces applicants: cold, hard cash.
Thus we are treated to the rather amusing specter of regional airlines that only recently competed with one another to slash costs — many being quite vile to their employees in the process — now competing with one another to throw the most money at prospective pilots! Take Endeavor Air, for example. Weakened by a botched merger, it was bought out of bankruptcy by its major-airline partner, Delta Air Lines. After forcing Endeavor’s already low-paid employees to take additional pay cuts, Delta’s then-ceo openly bragged about achieving a cost reset in the regional airline industry. Five years later, Endeavor is hemorrhaging pilots, who are fleeing for greener pastures, and has found it necessary to offer a $10,000 hiring bonus and $20,000 annual retention bonuses to attract and keep replacements. Envoy and PSA, both of which cut pilot pay only three years ago, are offering even heftier signing bonuses ($22,100 and $21,560, respectively). Others with higher attrition or planned growth have yet deeper pockets: Mesa and Trans States Airlines are each offering new hires a cool $30,000, while Air Wisconsin is the current hiring-bonus champion with up to $49,000 in first-year inducements. This is all on top of first-year base pay that has risen to an average of $35,000. Five years ago, many firstyear airline pilots qualified for food stamps. Now it’s possible to do rather well for oneself from the get-go.
Besides increased compensation, the regionals’ dearth of qualified applicants has led to other changes as well. Applying and interviewing has become ever more streamlined. In one extreme example, Trans States Airlines even allows applicants to interview via Skype videoconferencing. Several airlines will hire pilots well before they actually have the required flight time, contingent on meeting the requirements within a certain time frame. Regionals are starting to tout qualityof-life perks — for example, sister airlines Gojet and Compass treat their commuting pilots to free hotel rooms up to four times a month. And virtually every regional carrier now has some sort of flow-through, bridge program or preferential-hiring agreement with their major airline partners.
Even without such formalized programs, career progression is becoming increasingly fluid. Upgrade time has fallen precipitously at most regional airlines, though not all; it’s become much easier to build desirable turbine PIC time within a few years. Meanwhile, competitive minimums have finally started to fall at the major airlines. All still require a four-year degree, and most still want turbine
PICS, but the “extras” that were necessary to get one’s resume noticed at the beginning of the hiring cycle are starting to fall away. Every major airline is now facing the likelihood that it will exhaust its traditional sources of experienced pilots well before its retirements begin to taper off. There is talk of airline-sponsored training, very early general aptitudebased hiring, even European-style ab-initio programs.
On a personal note, over the past three years I have flown with a sharply increased number of captains who have a son or daughter going through flight training, currently building time or already at the regional airlines. This is a marked turnaround from a decade ago, when many were actively discouraging their progeny from embarking on an airline career. It’s certainly not a scientific metric, but is perhaps indicative of the overall optimism within the piloting profession right now. Similarly, several of my experienced general aviation friends who forswore airline flying have reconsidered, abandoned their nonaviation careers, and are now flying for regionals. Even professional pilots who are completely uninterested in airline flying — no matter how much money is thrown their way — are finding their skills more in demand as the effects of an airlinedriven shortage reverberate through the industry. A rising tide lifts all boats.
I do want to avoid being too Pollyannaish here, because I remember similar breathlessness in the late 1990s. Recognizing the pickle they are in, the airlines will do everything they can do to ease their labor shortage. The U.S. Senate’s recently proposed FAA reauthorization bill significantly weakens first officer flight-time requirements, a longtime industry goal. I fully expect the retirement age to be raised again, or even abolished altogether, within the next few years. Even in the midst of good times, it is entirely possible for individuals to suffer through career turbulence. The seniority system — ubiquitous across union and nonunion airlines alike — binds pilots’ livelihoods to the health of their employers, and the shortage itself is increasingly casting the sustainability of the regional-airline business model into doubt. That instability will create winners and losers within the regional industry. In just one recent example, Horizon Air pre-emptively canceled hundreds of flights over the summer due to a lack of pilots. Faced with increasingly unreliable regional partners, it is likely that the major airlines will continue to bring a larger portion of their domestic feed inhouse. While this is overall a very welcome trend, there will undoubtedly be short-term pain for many regional pilots.
Keep in mind that even the major airlines, though currently raking in record profits, are not immune to a return to their historical instability. Another major recession would do the trick quite quickly. So would a global falloff in travel due to terrorism or trends toward isolationism. We may eventually see a single-pilot airliner come to fruition, though that is entirely dependent on the dubious viability of a secure datalink network.
The hard experience of a hundred years has shown these possibilities to be real, but if you yearn to make your living plying the airways, if the itinerant lifestyle of a professional pilot agrees with you, then at least the short-term economic disincentives have been removed. True, the training investment required is as high as it ever was, but the return on investment is quicker than it has been in 60 years. All in all, I’m not sure that we’ll ever see a more advantageous time to start a flying career. If you’re going to go for it, it might as well be now.
Horizon Air (above), once a leader in regional pilot pay, has fallen behind and is now canceling flights due to a lack of pilots. Airlines are attracting qualified pilots with large hiring and retention bonuses that have been reported to be as high as $10,000, and even upward of $20,000.
With the regional airlines struggling to man their cockpits, expect to see more domestic flying transferred back to mainline carriers.