“When America sneezes, the world catches a cold”

The idea of a looming pilot shortage is a myth. That is the message which came out of the Boyd Group International Aviation Forecast Summit in Las Vegas this week. Sitting on a panel Chuck Howell, CEO of Great Lakes Airways and Jeff Jones, VP of Strategic Planning for Republic Airways made that point very clear. The shortage is not looming; it is here right now and it is going to get worse in a hurry.

Both executives, each representing a slightly different portion of the regional airline industry, were spectacularly blunt about the challenges they face to recruit, train and retain qualified and competent candidates as pilots. And, while the challenges are slightly different, there is also some concern that the ultimate result is that it is not only the regional carriers which will be affected; it could very quickly scale up into the mainline carriers as well.

For Great Lakes the solution was more of a stop-gap approach. The company removed 10 seats from its Beechcraft 1900 aircraft to drop the passenger count below 10 and change the FAA regulations under which the carrier operates. This allows it to hire pilots with less experience and train them up to the 1500 hour minimum necessary for operating larger aircraft. Howell notes that this has worked, at least in the short term but also that “Outside of EAS it is not a business model that is long-term sustainable.”

And the company struggles to retain those pilots they’ve invested in training. Howell explained that the “rigor and the time and the money involved in taking that pilot from day 1 and putting them on the flight line that they start actually carrying passengers is a major investment” which pays off: the end result is well trained pilots. But, “because they’re well trained everyone else in the industry wants them.” Great Lakes is a feeder in to the larger regional operators just as those airlines feed the mainline carriers. And as the number of available pilots dries up at the bottom tiers the upper levels will feel pressure.

Jones has a similar view of the industry, though Republic is one rung about Great Lakes in the pilot hierarchy. Much like Howell he recognizes that the costs of becoming a qualified pilot are far outstripping the pay scale those pilots see coming in to the industry. And he believes that the obligation to act on that front is shared with the mainline carriers:

Our whole basis of dealing with the [mainline] partners that we have is based on low profit margins which are based on long-held rates. The next step for us is dealing with our major partners in how can we get down to help share in the right costs, raising the starting pay enough that [young pilots] can see their student loans being paid in the long run?
Yes, it would seem that the answer is easy: Just pay more. But it may be too late for that to be an effective solution to head off the shortage. Renegotiating contracts is far from a trivial task and, even if it happened quickly. Current growth at regional operators often comes in the form of pilots leaving other regional operators. The true growth is not sufficient to replace the pilots moving up to the mainline carriers. The pipeline to get a sufficient number of pilots to the minimum hour requirements is compressing and these executives question whether enough pilots can be trained to 1500 hours quickly enough. As Howell opined:

Quantity of time does not mean quality of time. A kid banner-towing getting 1500 hours is not going to have the same skill set as a kid flying in all-weather conditions and complex equipment.
… How do you get that time? There is nothing scalable right now in the industry for the volume [needed].
Ultimately the challenge is very real. Republic Airways has already reported to its mainline carriers that it may fail to operate schedules as promised. Great Lakes is able to survive for now, but that may not be a plan which is viable long-term. And, in the middle of it all are the consumers – and airlines – insisting on lowering costs. It is a very real challenge and the tipping point may have already passed, even if we have not really seen it yet.