Won’t Fly Itself
SUPPLY AND DEMAND are pretty simple concepts. We all understand them, and they play a large role in our everyday lives. The cost of the items we purchase rests, in large part, on how these two key economic factors interact.
As life gets back to normal, we’re watching this play out in real time. Demand is rising and supply can’t keep up, driving prices higher. We’ll be seeing this in airline tickets, and not just because of skyrocketing oil prices. At issue is the forecasted shortage of airline pilots. When there are too few pilots, the number of flights is going to diminish. When that happens, demand will outstrip supply and ticket prices will rise.
Forecasts from respected sources say there will be a shortage of 12,000 to 14,000 pilots by 2024. In further out years, the forecast gets even gloomier. Once it begins in earnest, the airlines will be forced to park aircraft and cancel flights. It’s already happening at some carriers.
Airlines have said that they will begin cancellations with the smaller regional jets and work up from there. This will curtail flights to smaller cities and may even leave some of those markets with no air service.
How did this happen?
Back in the early 1980s, airlines decided to save money by farming out small-city flying to commuter airlines. Those commuter airlines grew, hired pilots and paid them next to nothing. Pilots took those jobs as a stepping stone to the major airlines, where they could make more money.
This worked fine for a while, as the industry grew following deregulation. Eventually, however, the rapid growth stopped and lots of pilots were stuck making little money at the smaller carriers. Prospective pilots saw this and realized that the cost of becoming a pilot wasn’t worth the reward. It simply took too long to recover their investment.
Meanwhile, military-trained pilots weren’t willing to take a pay cut to join a commuter airline and instead moved into other industries besides flying. On top of that, fewer new pilots were being trained. The military is not putting out pilots like it used to because fewer are required with the advent of drones and other military capabilities.
A large retirement wave began to hit the major airlines about 15 years ago because pilots were required to leave at age 60. The Federal Aviation Administration recognized this was creating a problem and raised the retirement age to 65. This helped for a while. But the pay was still too low to get new folks interested in the career. That disparity finally caught up with the airlines. We now have an industry that’ll have too few pilots to fly its planes, especially as travel picks up now that COVID appears to be receding.
The airlines caused the problem by not paying pilots enough. It was a poor business decision. That’s no longer an issue. They have realized their mistake and now the compensation is fair, even at the smaller regional carriers. But there’s still a problem getting folks to make the $100,000 or so investment needed to become a pilot, which is in addition to earning a college degree. It takes time and money for a pilot to become “airline qualified.”
To address the problem, United has started its own flight school. It also no longer requires a college degree. I imagine others will follow suit. Aviation programs at colleges are still a good source of candidates but can’t graduate enough qualified pilots. The problem will exist for a while until the airlines can replace the substantial number of retiring pilots with new hires.
Airlines, like other businesses today, are making an extra effort to hire diverse candidates. For example, United says it will train around 5,000 pilots by 2030 through its new aviation academy, with the goal of at least half being women and people of color. American is also pushing hard for its new pilots to be “the best and most diverse” pilots in the airline business. This could expand the candidate pool. But it could also work the other way, lengthening the time it takes to fill the pilot slots that are becoming available.
The pilot shortage problem will eventually be solved. But until it is, look for diminished service to smaller cities, fewer flight choices to larger markets, higher fares and full flights. Yes, there will be somebody in that middle seat—and it could be you.
Tom Kubik recently retired from American Airlines after 42 years as a pilot. Working on both the management and union side of the business, he saw prosperity, bankruptcy and the disappearance of pension plans. Faced with this upheaval, he also had a side business as a homebuilder. Today, Tom and his wife still travel extensively. Three children and seven grandchildren keep them on the go. Check out Tom's earlier articles.
As life gets back to normal, we’re watching this play out in real time. Demand is rising and supply can’t keep up, driving prices higher. We’ll be seeing this in airline tickets, and not just because of skyrocketing oil prices. At issue is the forecasted shortage of airline pilots. When there are too few pilots, the number of flights is going to diminish. When that happens, demand will outstrip supply and ticket prices will rise.
Forecasts from respected sources say there will be a shortage of 12,000 to 14,000 pilots by 2024. In further out years, the forecast gets even gloomier. Once it begins in earnest, the airlines will be forced to park aircraft and cancel flights. It’s already happening at some carriers.
Airlines have said that they will begin cancellations with the smaller regional jets and work up from there. This will curtail flights to smaller cities and may even leave some of those markets with no air service.
How did this happen?
Back in the early 1980s, airlines decided to save money by farming out small-city flying to commuter airlines. Those commuter airlines grew, hired pilots and paid them next to nothing. Pilots took those jobs as a stepping stone to the major airlines, where they could make more money.
This worked fine for a while, as the industry grew following deregulation. Eventually, however, the rapid growth stopped and lots of pilots were stuck making little money at the smaller carriers. Prospective pilots saw this and realized that the cost of becoming a pilot wasn’t worth the reward. It simply took too long to recover their investment.
Meanwhile, military-trained pilots weren’t willing to take a pay cut to join a commuter airline and instead moved into other industries besides flying. On top of that, fewer new pilots were being trained. The military is not putting out pilots like it used to because fewer are required with the advent of drones and other military capabilities.
A large retirement wave began to hit the major airlines about 15 years ago because pilots were required to leave at age 60. The Federal Aviation Administration recognized this was creating a problem and raised the retirement age to 65. This helped for a while. But the pay was still too low to get new folks interested in the career. That disparity finally caught up with the airlines. We now have an industry that’ll have too few pilots to fly its planes, especially as travel picks up now that COVID appears to be receding.
The airlines caused the problem by not paying pilots enough. It was a poor business decision. That’s no longer an issue. They have realized their mistake and now the compensation is fair, even at the smaller regional carriers. But there’s still a problem getting folks to make the $100,000 or so investment needed to become a pilot, which is in addition to earning a college degree. It takes time and money for a pilot to become “airline qualified.”
To address the problem, United has started its own flight school. It also no longer requires a college degree. I imagine others will follow suit. Aviation programs at colleges are still a good source of candidates but can’t graduate enough qualified pilots. The problem will exist for a while until the airlines can replace the substantial number of retiring pilots with new hires.
Airlines, like other businesses today, are making an extra effort to hire diverse candidates. For example, United says it will train around 5,000 pilots by 2030 through its new aviation academy, with the goal of at least half being women and people of color. American is also pushing hard for its new pilots to be “the best and most diverse” pilots in the airline business. This could expand the candidate pool. But it could also work the other way, lengthening the time it takes to fill the pilot slots that are becoming available.
The pilot shortage problem will eventually be solved. But until it is, look for diminished service to smaller cities, fewer flight choices to larger markets, higher fares and full flights. Yes, there will be somebody in that middle seat—and it could be you.
Tom Kubik recently retired from American Airlines after 42 years as a pilot. Working on both the management and union side of the business, he saw prosperity, bankruptcy and the disappearance of pension plans. Faced with this upheaval, he also had a side business as a homebuilder. Today, Tom and his wife still travel extensively. Three children and seven grandchildren keep them on the go. Check out Tom's earlier articles.The post Won’t Fly Itself appeared first on HumbleDollar.
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