Flight Training - January 2015 - 48

ADVANCED PILOT»

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.
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

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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 (www.boeing.com/assets/
pdf/commercial/aviationservices/
flight-services/training/pilot_tech_
outlook_2014.pdf ).
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.
Wayne Phillips manages the Airline
Training Orientation Program (www.
atopjets.com).

http://www.boeing.com/assets/pdf/commercial/aviationservices/flight-services/training/pilot_tech_outlook_2014.pdf http://www.boeing.com/assets/pdf/commercial/aviationservices/flight-services/training/pilot_tech_outlook_2014.pdf http://www.boeing.com/assets/pdf/commercial/aviationservices/flight-services/training/pilot_tech_outlook_2014.pdf http://www.boeing.com/assets/pdf/commercial/aviationservices/flight-services/training/pilot_tech_outlook_2014.pdf http://www.atopjets.com http://www.atopjets.com http://FLIGHTTRAINING.AOPA.ORG

Flight Training - January 2015

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