A so called pilot shortage has caused smaller airlines to cancel flights and park jets, a side effect stemming from federal regulations that have dramatically increased the minimum number of flight hours required for new pilots.
The labor shortages and service cuts have hit first and most sharply at the regional airlines that fly passengers from small airports on behalf of large carriers. One of the biggest regional carriers, Republic Airways plans to stop flying 27 of its 41 fifty seat Embraer Regional Jets because of the so called pilot shortage. That decision will lower income as much as $22 million this year.
In 2010, Congress mandated that airlines’ first officers would need to hold an Airline Transport Pilot certificate–which requires at least 1,500 flight hours as opposed to the 250 hours and commercial pilot certificate previously required. The new rules, which took effect in August, came in response to the 2009 crash of a Continental Express regional flight, which investigators linked to shortcomings in the pilots’ training.
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Hearings on the accident also exposed to many observers—including members of Congress—the surprisingly low pay at regional airlines. The regional side of the U.S. airline industry has long been a fiercely competitive arena in which the big airlines auction large sections of their flight schedules to the lowest bidder. That’s put pressure on wages: The starting pay for a first officer at a regional airline depending on carrier is anywhere from $11,000 to $21,000 per year—about $40,000 to $50,000 lower than the same job at Delta(DAL) and United (UAL), according to the Air Line Pilots Association, the largest U.S. pilot union.
And the stingy pay, in turn, exacerbates the pilot shortage. Not only does it make pilot jobs less attractive, but the small salaries also combine with the more onerous federal training rules have put many new pilots deep in debt. Paying for the necessary hours of training flights before getting a first job can cost more than $100,000.
“There may be a shortage of qualified pilots who are willing to fly for U.S. airlines because of the industry’s recent history of instability, poor pay, and benefits,” ALPA President Lee Moak said last week in a statement that aimed to refute the “myth” of such a shortage. The union says that Emirates Airlines pays new first officers $82,000, “plus a housing allowance and other extraordinary benefits,” and that thousands of U.S. pilots on furlough and working abroad are “eager to return to U.S. airline cockpits—under the right conditions.”
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Flying cuts caused by the shortage have rippled from the tiniest of airlines to major hubs. Wyoming-based Great Lakes Airlines ended service to a half-dozen small towns on Feb. 1 after seeing its pilot ranks slashed from more than 300 to fewer than 100. United, meanwhile, explained the recent plan to shutdown its Cleveland hub in part by pointing to the inability of regional carriers to staff all of its flights there.
In some cases the bigger airlines, with better salaries, are cannibalizing the lower-paid workforce of their regional partners. “Many of the mainline carriers will hire away pilots to meet their capacity needs coming at a time where the pilot pool continues to shrink,” Cowen & Co. analyst Helane Becker wrote today in a client note. “As a result of the limited pilot availability we expect to see reduced flying by the regional carriers and pilot wages increase.”
The new minimum hours are coming as U.S. airlines grapple with other regulations requiring more pilot rest. The industry also has a mandatory retirement age of 65, which has caused large airlines to replace their pilot ranks by hiring from the regionals.
VIDEO: America's Worst Airports: Who's Number 1?
The grim outlook for regional airline profits is also showing up in their stock prices. Shares of Republic fell 8 percent today and are off almost 15 percent this year. Another large regional carrier, SkyWest (SKYW), dropped 2 percent and has declined 19 percent in 2014.
The labor shortages and service cuts have hit first and most sharply at the regional airlines that fly passengers from small airports on behalf of large carriers. One of the biggest regional carriers, Republic Airways plans to stop flying 27 of its 41 fifty seat Embraer Regional Jets because of the so called pilot shortage. That decision will lower income as much as $22 million this year.
In 2010, Congress mandated that airlines’ first officers would need to hold an Airline Transport Pilot certificate–which requires at least 1,500 flight hours as opposed to the 250 hours and commercial pilot certificate previously required. The new rules, which took effect in August, came in response to the 2009 crash of a Continental Express regional flight, which investigators linked to shortcomings in the pilots’ training.
VIDEO: Can You Believe These Jobs Pay This Much?
Hearings on the accident also exposed to many observers—including members of Congress—the surprisingly low pay at regional airlines. The regional side of the U.S. airline industry has long been a fiercely competitive arena in which the big airlines auction large sections of their flight schedules to the lowest bidder. That’s put pressure on wages: The starting pay for a first officer at a regional airline depending on carrier is anywhere from $11,000 to $21,000 per year—about $40,000 to $50,000 lower than the same job at Delta(DAL) and United (UAL), according to the Air Line Pilots Association, the largest U.S. pilot union.
And the stingy pay, in turn, exacerbates the pilot shortage. Not only does it make pilot jobs less attractive, but the small salaries also combine with the more onerous federal training rules have put many new pilots deep in debt. Paying for the necessary hours of training flights before getting a first job can cost more than $100,000.
“There may be a shortage of qualified pilots who are willing to fly for U.S. airlines because of the industry’s recent history of instability, poor pay, and benefits,” ALPA President Lee Moak said last week in a statement that aimed to refute the “myth” of such a shortage. The union says that Emirates Airlines pays new first officers $82,000, “plus a housing allowance and other extraordinary benefits,” and that thousands of U.S. pilots on furlough and working abroad are “eager to return to U.S. airline cockpits—under the right conditions.”
STORY: Airlines Are No Longer Losers, and Investors Have Noticed
Flying cuts caused by the shortage have rippled from the tiniest of airlines to major hubs. Wyoming-based Great Lakes Airlines ended service to a half-dozen small towns on Feb. 1 after seeing its pilot ranks slashed from more than 300 to fewer than 100. United, meanwhile, explained the recent plan to shutdown its Cleveland hub in part by pointing to the inability of regional carriers to staff all of its flights there.
In some cases the bigger airlines, with better salaries, are cannibalizing the lower-paid workforce of their regional partners. “Many of the mainline carriers will hire away pilots to meet their capacity needs coming at a time where the pilot pool continues to shrink,” Cowen & Co. analyst Helane Becker wrote today in a client note. “As a result of the limited pilot availability we expect to see reduced flying by the regional carriers and pilot wages increase.”
The new minimum hours are coming as U.S. airlines grapple with other regulations requiring more pilot rest. The industry also has a mandatory retirement age of 65, which has caused large airlines to replace their pilot ranks by hiring from the regionals.
VIDEO: America's Worst Airports: Who's Number 1?
The grim outlook for regional airline profits is also showing up in their stock prices. Shares of Republic fell 8 percent today and are off almost 15 percent this year. Another large regional carrier, SkyWest (SKYW), dropped 2 percent and has declined 19 percent in 2014.