Airlines struggle with global pilot shortage

Growing shortage of airline pilots is putting the industry’s recent growth at risk as planes sit idle, higher salaries cut into profits and unions across the globe demand more benefits.
Emirates and Australia’s Qantas Airways Carriers have poured resources into hiring, but struggled in recent months to use their jets as often as their business plans dictate because of training bottlenecks.
Pilots at Ireland’s Ranair (RYA.I) are forming unions across Europe seeking better working conditions, and those at Air France (AIRF.PA) are striking over pay.

In the U. S., pilots who took pay cuts when carriers went bankrupt a decade ago are receiving big raises under new contracts now that airlines are posting strong profits.

The surge in employee costs, which rival fuel as the biggest strain on an airline’s finances, comes as higher oil prices are already squeezing margins.

Airlines say ticket prices have not kept pace with costs.

 “These cost pressures are not about to stop imminently,” International Air Transport Association (IATA) chief economist Brian Pearce said at the trade group’s annual meeting in Sydney.
At the meeting, IATA lowered its airline profit forecast by 12 per cent, citing higher fuel and labor costs.

“It’s the symptom of a wider issue. If we look at developed economies, unemployment in the OECD has fallen to lows.

“We are starting to get wage pressures, of which pilot shortages are a symptom in our industry,” he told airline bosses.

Many of such bosses expressed concern about a shortage on the sidelines of the IATA annual meeting this week.

Inflation is beginning to take hold in OECD economies after years of lying dormant, and pilot wages also reflect that, Pearce added.

The high cost of pilot training and several years of earlier hiring freezes in markets like the U. S. +and Australia have deterred potential aviators from entering the industry.

Boeing says the industry will need 637,000 more pilots over the next 20 years.

IATA estimates airline traffic will nearly double during that period.

Therefore, companies like Canadian training group CAE Inc (CAE.TO) and L3 Technologies (LLL.N) are building new flight simulators to cash in on training demand.

Plane makers Airbus and Boeing are also expanding into services like training, where margins are potentially higher than building jets.

Some airlines are planning to expand in-house training programs.

Qantas says it will invest A$20 million (15.26 million dollars) in a new flying school to ensure a supply of pilots amid high turnover in its regional arm QantasLink.

Emirates opened a 135 million dollars fight training academy in November for up to 600 cadets.
“We have a social responsibility.

“We can continue to take pilots from smaller players in this country and elsewhere but we need to give back and that is part of what we are doing here as well,” Qantas Domestic CEO Andrew David said.

Other airlines have to look outside their home markets, competing with China, where experienced foreign captains are in high demand.

Airlines offer annual salaries of up to 314,000 dollars – tax free.

“There is not so much a shortage of pilots as a rising cost of attracting and retaining the pilots you need, particularly the experienced ones,” said Andrew Herdman.

Herdman is a director general of the Association of Asia Pacific Airlines.