Bloomberg — U.S. airlines are facing a pilot shortage that’s complicating efforts to ramp up flights, forcing them to step up training programs, recruit foreign pilots and even replace planes with buses.
According to Federal Labor Statistics, the industry will need to employ an average 14,500 additional pilots annually until 2030. But carriers say there’s no way they can bring on that many due to long lag times for credentialing. Worse, experts believe that this staffing crisis will not end soon.
“The pilot shortage for the industry is real and most airlines are simply not going to be able to realize their capacity plans because there simply aren’t enough pilots, at least not for the next five-plus years,” Scott Kirby, chief executive officer of United Airlines Holdings Inc. said earlier this week on a conference call. He stated that United will have to maintain 150 regional aircraft despite increasing domestic demand.
The Air Line Pilots Association took a picket in front of Hartsfield-Jackson International Airport (Atlanta, Georgia) on March 10, 2022.
The issue isn’t new — airlines already faced difficulty finding and retaining pilots before the pandemic — but a purging of employees at the start of the downturn in 2020 has left the industry ill-prepared for a rebound. Thousands of pilots accepted buyouts or retired early when federal aid to avoid furloughs failed to cover all the airlines’ labor costs, especially for veteran pilots earning six-figure salaries.
Two years later, airline crews are not qualified enough to completely restore the route maps.
“This is going to be one of the biggest constraints for the industry going forward,” Alaska Air Group Inc. Chief Executive Ben Minicucci said on an April 21 call.
Plans for rapid resume of flight operations following the pandemic have been canceled by airlines. United anticipates that flying in this quarter will be 13% lower than 2019, Delta Air Lines Inc. a 16% decrease, American Airlines Group Inc. a 8% decline and Alaska Air, a 9% drop. JetBlue Airways Corp. will reduce 10% of the summer flights it has planned.
Regional Carrier Crunch
This problem is especially acute for regional airlines where the pilot ranks have been reduced by larger carriers hiring. Beggar-thy neighbor strategy left small aircraft unoccupied and reduced flights for shorter routes.
“We don’t have the regional aircraft flying the summer right now [that] we would like,” American’s chief executive officer, Robert Isom, told CNBC Thursday. “This is a fantastic opportunity for people that want to come in and fly planes. They can make a lot of money.”
Regional airlines are crucial for ferrying passengers to larger airports. These “work horses” of the industry are subject to capacity purchase agreements that bind them to one or several primary airlines like American or Delta. This allows for pricing and scheduling control.
“This is the pivotal point,” Faye Malarkey Black, chief executive of the Regional Airline Association, said in an interview. “We have not seen this level of service loss since right after 9-11, when that crisis changed the fly-drive equation. I expect this bad situation to get worse before it gets better, no matter what we do.”
Some airlines now link up with charter bus companies to take the place of puddle jumper flights. United and American have contracted with Landline Co., a Fort Collins, Colorado-based startup, to ferry passengers and their bags by motorcoach on some shorter routes, allowing them to sell destinations where they don’t fly.
Others also are looking to hire staff. SkyWest Inc., an Australian discount carrier, and Breeze Airways are also looking for foreign pilots.
Pilots are being paid more to stay in the industry. The rapid rise in labor costs may threaten the profitability of discount airlines, limiting their growth and diminishing their core advantages.
That’s a risk to Spirit Airlines Inc. and Frontier Group Holdings Inc. Those two carriers “require an abundance of pilots willing to work for less than what large airlines pay,” said Jamie Baker, a JPMorgan analyst. “The sustainability of that model should logically be questioned in the current environment.”
–With assistance from Justin Bachman.
© 2022 Bloomberg L.P.
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