Windscreen of Opportunity?

The oft-warned ‘airpocalypse’ appears to be starting. Air service cutbacks in the US blamed on a shortage of pilots. A captain’s crunch in Asia. But will aspiring young aviators endure the cost and time to pursue a flying career? Rick Adams looks at the changing dynamics of airline flight deck jobs.

The pilot shortage debate has raged for several years: there is, or isn’t, going to be a dearth of qualified pilots to fill the growing number of cockpit seats of the world’s commercial airlines. Doomsday forecasters cite Airbus and Boeing estimates of half a million new aircraft deliveries across the next two decades, the en masse retirement of aging pilots, the declining numbers of ex-military. Naysayers point to lists of furloughed airline veterans, previous shortage forebodings that never materialized, and caution about flight school cadets with inadequate experience.

The situation is a bit more complex than broad generalizations. Like the maze of national pilot licensing regulations and irregular airline growth patterns around the world, the employment and training picture is a patchwork. One shortage/no shortage statement doesn’t fit all.

The good news for aspiring pilots is that first officer jobs are available in the US, if you can afford the education and flight-log building. The good news for experienced pilots is that captains are in high demand at enticing salaries, especially in Asia and the Middle East. The bad news is that regional airlines in the US are throttling back service, and it’s a supply problem that cannot be solved just by throwing money at it.

Half-full or Half-empty?

The shortage of right-seaters at US regional airlines stems from a combination of factors: new flight- and duty-time rules which limit the hours a pilot can be working; steady growth among the major air carriers, which has both reduced the pool of furloughed pilots and drained the regionals of many of their qualified crew members; an abnormal number of pilot retirements; and foremost the legislation passed by the US Congress, leading to the Federal Aviation Administration (FAA) mandate that all airline pilots have a minimum of 1500 flight hours.

The FAA’s new “pilot fatigue” rule, which went into effect January 4, limits pilot flight time to 8-9 hours and stipulates a minimum 10-hour rest period prior to the flight duty period. JetBlue claimed the new rule was a cause of its cancellation of many flights during the recent winter storms. It may enhance safety, but the rule also has the effect of requiring more pilots on an airline’s roster to juggle scheduling.

In late February, a US General Accounting Office (GAO) report concluded that indicators of a pilot shortage were mixed but “no major airlines were experiencing problems.”

Certainly the majors have been dipping into the furloughed pilot pool. Between 2001 (9-11) and 2008 (recession), United Airlines eliminated more than 3,500 pilot jobs. Beginning after their 2010 merger with Continental, some pilots returned, and last fall United recalled the last of their laid-off pilots. American Airlines exhausted its available furlough roster last spring. Delta Air Lines recently called back all of its pilots, and plans to add about 50 new recruits monthly.

The Air Line Pilots’ Association, International (ALPA) says more than 1,000 of their members in North America and over 1,600 other experienced airline pilots are still looking for cockpit jobs.

A factor expected to come into play next year is an inordinate number of pilot retirements, triggered by the mandatory retirement age of 65. The FAA raised the age from 60 at the end of 2007, so the wave of gold-watch parties started last year and is expected to accelerate in 2015. United, for example, expects to lose more than 2,000 retiring pilots over the next five years. The merged American-US Airways, which has about 14,000 pilots, is expected to lose fully half of them to retirement in the next 10 years, according to Capt. James Ray of the US Airline Pilots Association.

The GAO report painted a more disturbing picture for regional airlines, which supply about half the passenger traffic in the US: 11 of 12 regional airlines “failed to meet their hiring targets for entry-level pilots last year.”

“The new pilot classes at airlines are not being filled,” said Scott Foose, senior VP, operations and safety, for the Regional Airline Association (RAA). “That’s one of the first indicators that the supply is not keeping up with demand.”

Great Lakes Airlines recently pulled out of several small-town markets, blaming “the severe industry-wide pilot shortage.” Many of the places Great Lakes has served, such as Devils Lake, North Dakota, are part of the US government Essential Air Service program, which subsidizes (at more than $240 million a year) certificated service to more than 100 smallish communities.

Republic Airways Holdings, which has flown as American Connection, Delta Connection, United Express, and US Airways Express, removed 27 aircraft from operation because it could not find enough qualified pilots.

Florida-based Silver Airways plans to exit from Cleveland, Ohio due to the nationwide pilot shortage. They will retire five aircraft and end scheduled service to five cities in New York, Pennsylvania, and West Virginia.

The GAO report acknowledged, “A continued shortage of pilots for these airlines could mean additional curtailment of services, and thus far, it is smaller communities that are experiencing reduced service, and over a longer term may result in a contraction of the industry.” Some 70% of the US relies on regional airlines for their only scheduled flights. Roger Cohen, president of the RAA, said, "Flights are going to get grounded and canceled; airplanes are going to be parked.

The curtailment of small market services will not only raise the hackles of members of the US Congress in whose districts the cutbacks are occurring, it could impact the feeder traffic which the major airlines depend on. United also cited “reduced new pilot availability” in slicing more than half of its service in Cleveland. Delta has cut hundreds of flights at its one-time sub-hub in Cincinnati, and put up for sale the former Northwest headquarters outside Minneapolis, Minnesota.

In the wake of the GAO report, the RAA called for Congress and the FAA to work together “to fix the pilot supply challenges.” The “arbitrary ‘quantity versus quality’” 1500-hour rule, they said, “has unintentionally cost thousands of airline and related jobs. These cuts will continue to grow over the coming years unless the government immediately addresses this issue.”

Flying Career Still a Good ROI

Like the pilot fatigue and 1500-hour rules, the widespread perception of low wages for regional pilots is debris from the 2009 Colgan Airways crash near Buffalo, New York. The co-pilot of the Colgan aircraft was reportedly paid only $16,000 a year, and the derisive “fast-food wages” label has tagged regional pilots since.

“The focus on low regional first officer pay is misleading the world to believe that the job is not what it used to be,” said aviation consultant Kit Darby.

It’s true that new-hire salaries at some regional airlines start as low as $20 per hour, and the industry average starting salary for first officers is about $24K a year. However, that’s just the probationary first year. Wages for US regionals do get better over time. After five years’ experience, the average FO base is nearly $40,000. At 10 years’ experience and by then in the left seat, a US regional captain can expect to make $75,000.

After perhaps 3-5 years, an experienced regional first officer might be hired by a major air carrier, where the average annual FO pay is around $100,000. A majors captain averages $175,000 and top captain pay can exceed $200,000. And even though average pilot salaries declined nearly 10% over the past 10 years, a three-decade majors career can still be worth $10 million or more in pay, benefits, and retirement, according to Darby.

An aeronautical engineer, by comparison, is expected to earn perhaps $5 million over a lifetime.

“Pay is excellent, time off is the best (15 days a month average), and retirement is better than ever,” Darby noted. American and United offer 16% defined contribution benefit plans, and others such as JetBlue and Southwest offer 401K matches up to 9.3%.

The low starting salary is often contrasted with the educational cost in obtaining the various pilot licenses, and now additional required flight time, to even qualify for the right seat of a Bombardier Dash 8 or Embraer 145. Kent Lovelace, department of aviation chairman at the University of North Dakota, said the average debt load for a professional flying graduate from the four-year academic program is about $60,000. Darby has seen debt burdens as high as $200,000, especially when factoring the extra cost of logging flight time to reach the 1500-hour level.

In addition, after July 31, an Airline Transport Pilot (ATP) certificate will require another training program consisting of 30 hours of ground school and 10 hours of simulator – before taking the written and practical tests. The FAA estimates costs around $6,000 but others say such a program will be more like $15-20,000. For the most part, university flight schools do not have the Level C motion-based multi-engine simulators required for the training.

To ease the burden a bit, American Eagle began offering $5,000 hiring bonuses a year ago, and has now upped the ante to $10,000 for graduates of a dozen schools, provided the pilots make a two-year commitment to the airline. As part of a February agreement with its union, Republic Airways is also paying signing bonuses.

Concerns about paying back student loan debt out of low entry-level salaries is not the only factor dampening Generation Y’s passion for flying. UND’s Lovelace says their surveys show today’s students “are more interested in friends and family,” which may not align with the on-the-road lifestyle of an airline pilot.

Have Captain’s Bars, Will Travel

Most airlines have a strong preference for home-grown pilots, but to address growth in China, India, elsewhere in Asia, the Middle East, and Russia, they’ve acquiesced to hiring experienced foreign pilots, many from America and Europe.

Chinese airlines account for more than half of all recruitment postings for captains on career websites. Recent listings by Hong Kong-based Wasinc International showed openings for A330 and B777 captains for Air China, B737, A320, and A330 captains for China Eastern Airlines, A320 and B737 captains for Shenzhen Airlines, and A320 and EMB-190 captains for Tianjin Airlines. Boeing forecasts 192,300 new pilots will be required in the Asia-Pacific region by 2032, 40% of them in China.

Chinese airlines have been hiring foreign pilots for more than 10 years, paying as much as $270,000 a year in salary and benefits, an increase of 30% in just the past 18 months. About 1,800 foreign-pilot licenses have been issued by the Civil Aviation Administration of China (CAAC), or roughly six percent of the commercial pilot workforce. The duty-time workload is said be much heavier than elsewhere, especially on domestic flights, and the oppressive smog certainly diminishes the ambience. Some American ex-pat pilots have returned to the States, even at a lower pay rate, exacerbating the shortfall of captains in China.

Cebu Pacific in the Philippines is hiring additional foreigners to fly its fleet of Airbus A330-300s after the airline was unable to find sufficient local candidates. Foreign pilots, however, receive the same compensation and benefits as local crews; for example, A320 captains are reportedly paid $96,000 per year gross.

A draft law which would allow Russian airlines to hire foreign pilots has been submitted to the State Duma from Transport Minister Maksim Sokolov. The main reason: a shortage of qualified flying personnel, primarily captains. Passenger traffic in Russia is growing 13-15%, creating a need for 1,500 new pilots a year, and in-country pilot schools can only manage about one-tenth of the demand. Critics are concerned, though, that pay scales may only attract lower quality candidates, while cadets at the Ulyanovsk aviation school complain some airlines refuse to hire them in anticipation of recruiting experienced foreign pilots.

Etihad Airlines, the United Arab Emirates flag carrier, hires foreign pilots to fill gaps as necessary but requires them to pay back the cost of their training. Local pilots are not required to reimburse training costs.

Low-fare airline AirAsia intends to phase out its non-Malaysian pilots by 2019 in what it says is an effort to cut costs. Of AirAsia’s 700 A320 pilots, 100 are from 32 other countries.

One irony of the pilot shortage dilemma in the US: several flight schools on American soil, both universities and independent academies, are training hundreds of pilots for airlines in Asia, limiting the slots available for potential pilots at US regional carriers.