The aviation industry continues to gather from a variety of sources published assessments, prognostications, speculations, and occasional baseless puffery from false prophets who reside on the Internet in the guise of bloggers. The objective is to get a handle on where the industry is headed for the flying public, for the workers, and for those who aspire to join the club. Two recent treatises from reliable sources deserve consideration by anyone who wants to fly for a living.
One would think that the venerable airplane manufacturer, Boeing, would have a vested interest in human capital: the people who fly and fix airplanes. If the companies that buy Boeing aircraft cannot attract personnel to fly and maintain the machines, then sales of such devices will most assuredly flail. Thus, Boeing periodically looks at where it thinks the industry is headed and attempts to calibrate that momentum to the need for pilots and maintenance technicians. Based upon the results of a study Boeing released in July 2014, aviation is the place to be for anyone searching for a dynamic career with loads of opportunity and promise. However, there could be turbulence along the way that career chasers need to expect.
Over the next two decades, Boeing predicts that worldwide demand will require 533,000 new professional pilots and 584,000 maintenance technicians. In North America, 88,000 new pilots and 109,000 mechanics will need to be recruited into the business.
Sherry Carbary, who is Boeing’s vice president of Flight Services, said in the Seattle Times that, here in the United States, supply is currently “keeping up with demand” but that “there could be an issue in some of these developing countries if we don’t come together and deal with it.”
The Boeing report adds fuel to the fiery debate about that pilot shortage. Responding to the Boeing report, John Nance, TV commentator, former airline pilot, and author of aviation novels, stated in the Seattle Times that it is “myopic” to deny a pilot shortage looms. “The market is having problems for the first time in my 45 years with the aviation business. Especially regional carriers and nighttime cargo carriers are desperate right now. These new rules [requiring an ATP for all first officers] put them in a real corner.” Download your own copy of Boeing’s report online.
Now, about those regional airlines: The news is not so good. The Associated Press’s David Koenig dug deep into the regional airline conundrum and discovered less than encouraging data.
The first issue is money. The bottom line is shrinking for many regional carriers. SkyWest, one of the leading small airlines, made just more than $50 million over the past two years. That compares to the $110 million it cashed in on during each year from 2005 through 2008. Republic earned about $80 million a year from 2006 but earned just $26.7 million in 2013. It lost money in 2010 and 2011. The decline in earnings can be partially attributed to the fact that the major airlines rewrote the agreements with the regionals and capped their profit margins at about 12 percent, as compared to 20-percent margins in the late 1990s.
A pilot for American’s Envoy Air has experienced the personal impact of the financial realities. He expected to be at the airline for five years and then move out and up. He’s been there for 17 years. “American is shrinking Envoy’s fleet in a cost-cutting squeeze. The future of our carrier looks bleak. I’ve never seen morale lower.”
Helene Becker, an industry analyst for Cowen and Co., speculated in the AP story that the regional airline industry may soon experience the consolidation frenzy that resulted in mergers during the past few years such as those between Continental and United, Northwest and Delta, and American and US Airways. Becker said the basic problem is that fares are set by contracts with the large airline affiliates. That means they have little control over revenue and the ability to pass along higher costs. Add to this the need to raise pilots’ pay in order to attract more crewmembers—if they can find them.
The anemia afflicting the regional airline industry is perhaps best reflected in numbers from the U.S. Department of Transportation and the Regional Airline Association. Among 17 of the largest regionals, employment fell 13 percent, from the equivalent of 56,626 full-time jobs in 2009 to 47,478 in 2014.
What does it all mean? The airline industry has had highs and lows since day one. Nothing’s changed. But at least now you know.
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