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The Pilot Shortage Crisis Is Nigh! … Or Not

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People in the aviation industry have been talking about a looming U.S. pilot shortage for decades, but you may be hard pressed to find anyone in the U.S. who's actually experienced one during the past 20 years.

Actually, 20 years ago, I remember receiving materials from an outfit that explained just how strong the demand would soon be. Now, the warnings are back (if they ever went away). So, should you believe them this time? If you think the hype is overblown, you're not alone.

"Shortage" is relative, and if history is any indicator, any future shortage may depend more on real world market conditions than projections developed years earlier (a.k.a., today). For example, if there were any projections for a shortage this past decade, market forces turned that shortage into massive furloughs that took place around 2003 and slashed benefits for many pilots lucky enough to keep their jobs through that decade. Back then, Northwest Airlines was on pace for 1,068 total furloughs. United and Delta had actually each hired furloughed pilots … to serve as furlough administrators. Not long after that, in 2008, the world's economy fell off a cliff.

Now, as the economy recovers and the the major carriers forge ahead, the picture remains complicated. Shortly after the majors began to shrink, the regionals grew. The practical result is that one trend may now start to reverse. The majors are regaining their footing following a series of mergers (recall Delta and Northwest circa 2008; United and Continental in 2010; and American and US Airways just this year) that created the largest carriers in the world. They've been re-absorbing pilots furloughed in the last decade and could expand their service to take back some that the regionals had grown to acquire. That suggests more pilots could be needed for the majors, but fewer for the regionals. Don't think the complications end there.

Warnings, Predictions, Concerns

In 2010, a panel of "experts on pilot hiring and screening" told the NTSB that over the next decade airlines will need to hire "about 42,090 pilots," AP reported. The figure was predicted as the result of both retirements and industry growth. Participants also told the NTSB that fewer military pilots would be leaving their positions for jobs with the airlines and, because they see it as an economic cul-de-sac, careers in aviation are attracting fewer college students. Airlines, the experts said in 2010, are fighting with corporations for pilots.

In 2012, Boeing forecast that almost 70,000 pilots will be needed in North America between now and 2031. The global demand would be more than six times higher than that, it said. In the states, demand would be affected by a confluence of events. The FAA raised the mandatory retirement age for pilots from 60 to 65 on Dec., 13, 2007, which suggests that affected pilots would be forced into retirement starting last year. That couples with forecast growth at the majors and more stringent pilot training requirements at the regionals.

The training rules are expected to go into effect in late summer 2013 (more on that, later), but one year ago they already had the FAA's director of flight services, John Allen, concerned about the affects of fast-growing demand. "I'm concerned because it has safety implications," Allen told The Associated Press in July 2012, "someone getting into the system that maybe isn't really the right person to be a pilot."

The Pilot Pool

As for attracting new pilots, a quick trip around the web might find you a professional flight school like one we found in Florida. A page currently on the school's website shows a graph of "commercial and airline pilot salaries." Of six companies listed, including American Airlines and UPS, four have starting salaries of $36,000 or less. It should be noted, however, that among them is ATA -- which declared bankruptcy and ceased operations in 2008. (This suggests that the numbers presented to prospective students may be less current than their placement would suggest). The other five companies sharing real estate on the graph do still exist. And while the starting salaries posted there may suggest why young people could see airline pilot jobs as a financial dead-end, the graph also shows figures for 10th year captains. All of those, according to the flight school, earn more than $120,000 per year and two clear the $200,000 mark.

At this point it may be worth noting that, as a pilot training center, the company that provided these figures is in the business training pilots. That also means it's in the business of finding pilots to train. It does support a webpage that states "airlines are hiring pilots and demand for airline pilots continues to grow" and is candid that India, China, and Middle Eastern airlines will see strong growth.

At best, this is predictive economics. At worst, its crystal ball fortunetelling delivered by people who could see financial gains from the information they deliver. Here at AVweb, we've seen a number of reactions -- both formal and informal -- to the current economic and regulatory state of affairs in the airline industry and projected future hiring.

Regulating Competence

Most recently, Kent Lovelace, chair of the aviation department at the University of North Dakota (UND), this month told AVweb that the law not yet in force (and noted above with regard to the Boeing forecast) is already having an effect. Referring to the law that would require first officers of regional aircraft to hold at least an ATP certificate, Lovelace said regionals already have started to reject applicants who aren't likely to hit the 1,500 hour minimum by summer. He also said that the law (that's scheduled to take effect this August) was causing some students to choose a different career path. The result, he said, was that the applicant pool for some regionals already had shrunk "to where some carriers, the usable applications they have on file are virtually nil." Among AVweb's audience, Lovelace's opinion quickly found its critics.

In response to Lovelace's comments one reader wrote, "as one of the qualified pilots with no intention of flying for free, I can assure you the regionals will see a shortage of 'qualified' applicants only because I can make more than their senior captains as a commercial pilot." The pilot then argued that any increase in the experience requirements for pilot applicants at the regionals should logically correspond with higher entry-level pay at the regionals. He'd checked on that, he said, and it wasn't happening.

And then there was Brant Harrison. Harrison is a pilot flying for a regional carrier. Like many currently employed pilots working the low end of the pay scale, he's been waiting for the forecast pilot shortage with great anticipation. Pilots like him have invested thousands, or tens of thousands of dollars in civilian pilot training. Some have gone through intensive pilot training academies, coupling their aviation education with a college degree and bringing debts in the range of 100s of thousands of dollars. Many of those pilots have now been sitting for years in low paying jobs with little apparent mobility. Some have also been sitting with loan repayment that began once they left school.

Balancing Budgets

Harrison's observations are that the civilian path to a job in an airline cockpit often begins with a job in flight instruction. From there it may advance to one flying night cargo, and from there, to a job flying for the regionals. Mirroring the comments of our aforementioned AVweb subscriber, Harrison notes that the career path means that once at the regionals, pilots might well start with a lower salary than they held at their last job. In his experience, that translates to starting pay somewhere near the $19,000 to $24,000 range. That's for a pilot who, if nothing changes, will by this summer need to have a minimum of 1,500 hours flight time before being hired and could need a college degree before flying for the majors.

Harrison describes the regional carrier job is an entry level position that follows a series of entry level positions in the same industry. "I saw my peers … instructors who had spent tens of thousands on flight training and I could see how difficult it was for them. By then," he said, "some had families."

Harrison concedes that the first year at a regional is considered probationary. Salaries jump the second year … "usually to the $25,000 to $35,000 range," he says, with a slow climb of one or two thousand dollars each year after that spent flying as a first officer. "It takes upward of six years before you move to a regional airline. A lot of guys arrive in their late 20s and early 30s. When they get in, they're in debt, and they're starting at $1,800/month." And in Harrison's experience, they'll be flying the right seat at the regional for another five years, on average.

The goal of it all is to make it to the major airlines. If and when he's selected by one, Harrison expects his starting pay to fall within a $45,000 to $60,000 range and then quickly move to something closer to $70,000 to $110,000. If all goes well, Harrison expects that his career with the airlines could see his salary peak at anywhere from $100,000 to $200,000. "But," he says, "that's the last five to 10 years of your career."

Boots On The Ground

While flying for a regional carrier and waiting for the great pilot shortage to occur, Harrison has taken his own look at the numbers. He's authored his own 170-page report and discussed it with AVweb earlier this month. Following up with him this week, Harrison said that from his perspective the pilot job market looks different from what forecasts and what he termed "rumors" suggest. In his view, the numbers don't necessarily bear out an impending pilot shortage crisis.

Contrary to what experts told the NTSB in 2010 and what UND's Lovelace said just this year, Harrison thinks that the situation at the regionals isn't what most people would call a looming pilot shortage. In his view, following massive furloughs and restructuring at the airlines, the landscape is more of a basic economic curve that "is finally getting back to where the supply is matching the demand." Toward that end, Harrison believes the market is doing what it does and "those guys who are applying may not have as much trouble finding jobs." But looking ahead, he doesn't put too much faith in any talk of an impending pilot shortage crisis.

Harrison's research is based strongly on aircraft orders. It told him that total pilot demand among all carriers, regional and airline, would amount to 632 pilots this year, based on fleet growth and attrition. His math says that the numbers jump up to 2500 by 2019 and may reach into the 3-4,000s beyond 2021. "You can't get a perfect outlook,' he says. But, in the end, Harrison says his figures match well with Boeing's projected fleet growth of about 1.4-percent domestically, each year for the next 10 years. Where he may disagree is in the new staffing required to support that growth. In Harrison's view, the personnel required by the airlines will not produce a pilot shortfall that can't be met by natural market reactions.

In The Real World

As it is, Harrison says "the last few years, things have stagnated. The over-60 rule should have brought attrition last year and into this year." But other factors have had an impact on the jobs market and upward mobility for pilots. "The regional industry saw explosive growth in the last decade. That led to quick upgrades for pilots moving from the right to the left seat, but when that came to a stop, and oil prices climbed, and all sectors were depressed…. What had been a 2-3 year stint in the right seat grew to six or seven before pilots moved left."

At the same time, the majors were shrinking. "They furloughed pilots and and those that weren't furloughed at the majors saw their road to the left seat of an airliner stretch as high as 20 years," says Harrison. "The good news now is that the majors are done with cutting and now are looking at long slow steady growth at about 1.4-percent. That could push the promotion timeframe for copilots seeking a captain position back down into the low teens." But there are still complications.

"If the regionals slowly shrink over the next five to six years, that will make up for some of the loss of pilots to the majors," says Harrison. In his own model, Harrison sees the majors growing enough "to hire off the street," and he expects market forces "may put pressure on the right seat at regionals" that could translate to opportunity for pilots moving into the regionals. Even then, Harrison thinks those pilots can expect to spend three to six years at the job before moving up to the majors.

In short, from his position inside the industry, Harrison's outlook is not nearly as bullish as that of some of the major players who are currently raising concern over a looming pilot shortage. He has, however, grown "cautiously optimistic about the industry as a whole." Harrison says he hopes his view (and report) simply provides "a more realistic view of what people can really expect." "It's going to be a competitive environment. Thousands of pilots will be seeking major airline jobs … it's going to be competitive and that won't change until early next decade."

Finding Answers

Within the regional industry that could force compensation packages up to meet a rising demand, but even there, the outcome may not be so simple. "The contract system in the regionals tends to slow the adaptation to new the new cost realities of supply and demand." Harrison believes the market will react, but maybe in other ways.

"The pilot pool is becoming something that the airlines will need to pay attention to," says Harrison, but that doesn't necessarily mean more pay. "I imagine it's very possible that we could see loan enhancement programs that allow selected pilots to move through the system more easily. If the airlines don't want to flex on compensation, then loan repayment, or better rates, or a guaranteed pipeline are also forms of compensation that airlines may use to facilitate supply."

Bottom line? ... Stay tuned.

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