Airlines Manpower Shortages Revisited

Ever since the airline industry started the recovery from the COVID-19 pandemic, the news were full of flight cancellations, primarily due to the shortage of crew especially in the USA. The crew manpower shortage is an old issue. It started around 2011. This issue was discussed on this blog in June 2011 The New Challenges ... Manpower and Training and in September 2014 The Pilot Shortage Myth, Maybe Not. 

In 2014 the pilot shortage was viewed by ALPA at the time as a "Pay Shortage" and not an actual manpower shortage. The thinking, at the time, was that the industry will suffer in 10 to 15 years of a flight crew and technician shortage in the hundred thousands based on airline expansion plans. 

Fast forward to 2020 and the COVID-19 Pandemic with strict global lockdowns and massive disruptions to life as we knew it. Airlines furloughed, laid off staff and parked or returned aircraft to reduce losses.  As the world learned to cope with the pandemic and airline operations started again airlines faced two issues:   

1. Get aircraft operational (out of parking or storage); and
2. Get staff (crews, technicians and ground) back to man the operation. 

During the Dubai Air Show we all felt the energy of the industry coming back together and looking optimistically to the future; to the much coveted expansion and well being. To achieve this, airlines 

will need to expand and will probably start feeling the pain of flight crew and technician shortages across the globe around 2025 onwards. Training initiatives and programs need to be launched to encourage younger generations to engage with aviation.

Basically, we are back to where we were in 2014. 

It is a reset, hopefully we all have learned the lesson and will work diligently to avert it.

The Pilot Shortage Myth, Maybe Not

Captain Lee Moak, President of ALPA, International in an Opinion titled The Pilot Shortage Myth  in the September 8, 2014 issue of Aviation Week & Space Technology argued that it is not a pilot shortage but a pay shortage. I agree with Captain Moak, that entry level pay for pilots at the lowest paying US airlines especially regionals is at the poverty level and this is driving young people from the profession among other factors. Airline management sometimes use the pilot shortage as an argument to roll back safety regulations (Pilot Fatigue and FO qualification and training rules) or cancel flights and curtail services.

I do not share the view that the shortage is a myth. It may be a myth today but it will be a reality in 15 to 20 years. US carriers are rolling over their older fleets and the capacity increases are derived more from larger aircraft than from fleet expansion, but that is now eventually the fleet will have to increase and so will pilot demand. The rapid expansion of airline fleets in Asia Pacific, MENA and Latin America, add to it the eventual recovery of European airlines and the industry will be looking at a global shortage.

As the fleet ages, so do pilots, in reality pilots aged 45 to 50 years now would be retired by then. Investment in human capital especially pilots, engineers and technicians is no longer a luxury it is a necessity for the survival of the industry. This has been a challenge a few years back (The New Challenges... Manpower and Training Oussama's Take 20 June 2011), still is and will be for a long time.  

A New Religion Or Just A Cult

It is the "new religion of capacity constraint" as AWST calls it in its August 5 -12, 2013 edition, is what US carriers attribute their profitability to. Ten airlines collectively posted a net profit of US$1.6 billions in H1 2013 up from the US$1.2 billions for the same period in 2012 (click here for full story) a 2.1% net profit on a US$ 70 Billions turnover. Not stellar by any means but phenomenal for an industry that could hardly make money or recover since 9/11. For some reason Wall Street loves it, go figure and A4A reckons that this will allow US carriers to effectively compete globally. The airlines are reinvesting their profits into new technology aircraft and on board passenger amenities for the first time since a decade.

A closer look does not paint such a rosy outlook.

For starters, capacity constraint entailed initially the shedding of  aircraft, jobs and routes.It was not until recently that airlines started hiring. The last decade witnessed the consolidation of the legacy carriers Delta/Northwest, United/Continental, Southwest/America West and recently the yet to be approved America/US Airways. Mergers that were touted to benefit the consumer, in spite of all the turmoil of merging and shedding jobs and routes. It also reduced the passenger service to the level of the worst of the two airlines. Since then service levels, whether on time performance or passenger services, have improved and better service is offered on business class/first class domestically slowly spilling into economy class.

Most of the large carriers have put in orders for the new generation high technology aircraft except for Delta. Delta does not want to go through the teething pains of aircraft like the B787 or A350 but would rather invest in B717s from Southwest and MD80s from SAS because they reckon fuel prices are not an issue, after all they own a refinery. But then how would Delta compete against fuel efficient passenger pleasing high technology aircraft; only time will tell.

The airlines have decided that fifty (50) seats aircraft are not what they need and have invested in one hundred (100) seats, new technology fuel efficient aircraft, a great move. The seats offered did not increase after all capacity is expected to rise by 1.4% by Q4 2013 compared to the same period in 2012. So practically the number of operating aircraft is going to be less which means more passengers will fly on routes, hopefully profitable ones but then there will be less routes flown by less aircraft.

The airline costs have marginally risen as a result of new labor contracts and higher maintenance costs only to be saved by stable fuel prices and guess what, the infamous ancillary fees. Whenever, the airlines are in trouble, they just raise their fees, no explanations needed. 2012 was a record year and the airlines collected US$ 6 billions in baggage and reservation change fees, I expect 2013 will be more of the same. This allows the airlines to boast that ticket prices are being held back.

Even though the airlines have improved aircraft efficiency and staff productivity, their profits still come from fees and not from core airline activities.

No one ever got prosperous by holding growth. Holding capacity will not generate added revenues for the airlines and whatever efficiency and productivity new aircraft will provide will be offset by payments to cover the new assets lease or loan payments. Domestically, the airlines are consolidating and practically reducing competition; they have some sort of control of the playing field, maybe not for long as seen from the Department of Justice reaction to the AA/US Airways merger plan. Internationally, it is a different ball game, the competition is with aggressive, full service and award winning airlines that are innovative and firm believers in growth from the Far East and MENA. To effectively compete globally, the US airlines have to really leave their comfort zone and start being innovative instead of whining about EXIM Bank financing or deep pockets of rich nations.

Is it really a new religion or just a cult?

MRO AMERICAS 2013

Aviation Week and Space Technology (AWST) runs the MRO Conference and Exhibition annually at various regions (Americas, Asia, Middle East, Europe etc...). Having worked in the UAE for more than a decade and a half, I have attended several MRO Middle East including the last one in Dubai in January 2013.

The MRO Conference and Exhibition provides a venue for international and regional speakers from the industry to discuss the state of aviation in general and the MRO sector in particular. The exhibition usually includes regional and international MROs that have a presence in the region allowing them to bring their latest developments to their customers and potential customers.

On a personal note the MRO Middle East exhibition provided me with the opportunity to catch up with friends and colleagues to discuss events both professional and personal. An exchange of views that though informal was important to remain current of what is happening in the region. The last MRO Middle East 2013 was an opportunity to say good bye to friends and colleagues before leaving to relocate to the USA.

MRO Americas 2013 (MROAM) held in Atlanta (16 to 18 April 2013) was an opportunity for me to observe how things are in the USA and in a way to introduce myself to a new market where I will be working.

MROAM is much bigger in terms of exhibitors and attendees than its Middle East equivalent. The conference had several sessions running simultaneously over the three days. Aviation is a truly global business,  so one sees the familiar large international MROs exhibiting alongside the USA regional players. The exhibition was well planned and it was easy to locate stands and booths.
The Aviation Week EVENTS app is a great help in locating exhibitors and keeping track of the conference sessions.

I was not expecting to meet many familiar faces at MROAM. Surprisingly, I was wrong. The value of MROAM for me was the opportunity to visit, observe and meet professionals from MROs in the USA and get the feel of how things are done. Things are not that different here, aviation is a truly global industry.