Since publishing my pilot compensation blog, Aviation Personnel International (API) has been flooded with phone calls and emails.
Rightfully so, business aviation leaders and their HR partners (or aircraft owners) want the latest data and advice on hiring trends.
And I don’t blame them.
Times are tough and there’s definitely both a pilot as well as an aviation maintenance professional shortage.
But how did we get here? What’s the root cause?
First, let’s examine what created this talent gap so we can we can plan some strategic steps to help correct it.
The Perfect Storm: How the Pilot Shortage Happened
As you’re likely well aware, the aviation industry, and, even more acutely, the business aviation sector, is in the early stages of a long-predicted shortage of trained aviation talent.
The shortage affects both pilots and aircraft maintenance professionals, but the reasons for the shortages in the two professions are different.
This blog focuses on the root cause of the pilot shortage.
Since October, 2011, I’ve referred to this issue as the “Perfect Storm,” because a variety of factors have combined at the “perfect” time to create this shortage.
In large part, it’s caused by more than a decade-long stagnation at the major airlines.
If we trace the talent shortage to its origins, we can see that it began post-9/11, and was exacerbated by the subsequent economic downturn in 2008-2009 and the soaring cost of flight training.
A Quick Timeline
Immediately after 9/11, there was a significant pilot furlough by all of the major airlines. Pilots were forced to look for other opportunities, both in and outside of aviation. In the 15 years since that time, new pilot hiring for the majors has been virtually non-existent.
In 2007, the FAA extended the mandatory retirement age from 60 to 65, which halted a natural turnover of personnel through attrition. This meant that the only entry path for new airline pilots was via the regional carriers, at wage rates that literally qualified them for food stamps.
With the cost of civilian pilot training rivaling that of medical doctors, and the return on investment so low, the attractiveness of the career fell off significantly.
Coupled with a drawdown of our U.S. military, a traditional source for trained pilots, our pool of new talent has shrunk dramatically. (FACT: In 2009, the U.S. Air Force started to train more drone operators than pilots).
In very late 2012, the airlines began to retire pilots again. The initial openings those retirements created were filled by furloughed pilots, some of whom were no longer in aviation but had returned to flying, and some who had spent the preceding 15 years in business aviation.
This began the movement of pilots from business aviation to commercial aviation. Many business pilots held off until the choice was either to return or resign, and, of course, a number chose not to return. When the recall lists were depleted, the majors began to pull talent from the regional carriers.
In 2016, the airlines started to aggressively recruit from the ranks of business aviation, and it has become a snowballing issue. Starting pay at the airlines has risen, and, with the vast numbers of pilots retiring, the time to upgrade to captain has narrowed significantly.
This is only the tip of the iceberg, though.
Airline pilot retirements at several of the major airlines will begin to increase in 2018. Pilot retirements will peak for American in 2023, and Delta in 2022. United and Southwest retirements will peak in 2026.
By the end of 2026, 42 percent of the active pilot workforce at the five largest airlines will retire. On average, American Airlines leads the industry in pilot retirements with 790 pilots retiring each year from now through 2026.
While this may have been a bit of a long story, it is necessary background in order to understand what is happening today.
What Makes the Airlines Attractive?
To further our understanding of what happened, another important question to ask is: what makes the airlines so attractive as to create a significant migration to their ranks?
Being an aviation recruiter, I’ve talked with several corporate aviation pilots who, in the past few years, have made the decision to leave business aviation for the airlines.
One of our former candidates, Mark Erickson, who was a senior captain for both Enterprise Holdings and MCI Corporation, is now a flying for American Airlines as a first officer. He shared with us some interesting statistics, echoing the following reasons why many business aviation pilots are turning to the airlines.
Where compensation is involved, the airlines offer some welcome transparency. Importantly, pilots are given a clear picture of precisely what their compensation packages will consist of through their published contracts.
The airlines guarantee that they will directly fund the personal retirement accounts of their employees; pilot 401K accounts are being directly funded in the range of 3-16 percent of salary. The funds in these accounts immediately belong to the individual, and can’t be taken away should the airline get into financial trouble and go bankrupt, as many airlines experienced in the recent past.
Airlines work schedules are concrete and predictable, allowing for pre-defined down-time (including vacation, holidays, etc.). As fast as people are retiring from the airlines, pilots are getting this “seniority” perk fairly quickly.
This is a twofold issue.
- One of the most important aspects of it is the promise of long-term compensation should one lose his or her pilot medical insurance. Different from corporate disability programs that require employees to find another job in the company, the contracts generally pay 50-60 percent of the pilots’ income until retirement.
- Airline pilots will most likely never need to relocate their families because they can typically commute to any base. This means they never have to worry about a spouse having to leave his or her career, or any other hardships that a move might create.
Pilots learned after the TARP buyout in 2008 that the viability of a corporate flight department is a variable that is out of their control. Airlines are in the business of flying airplanes, while corporations generally use airplanes to create more usable time and provide greater security for their employees.
Stability is also factored into a pilot rationalizing his move to an airlines by saying: “When I’m flying that 777 at 60 years old, I’m getting paid $350K to work four days a week.”
How Does BizAv Compete with the Airlines?
The business aviation industry, to its credit, is making some changes to try and compete for talent with the airlines. For one thing, the compensation landscape in business aviation is changing at a rapid pace.
Weekly, I learn of Part 91 operators who are making across-the-board changes to compensation and schedules for both pilots and maintenance professionals. These operators know how critical it is to retain trained talent that fits within their culture.
Because of the fast-moving pace, however, salary survey data is likely becoming obsolete before it’s even published. Business aviation salary surveys benchmark strictly similar, “like organizations” (e.g., fleet size). In today’s world, we need to also be benchmarking airline salaries, not just other “like flight departments.”
What I can definitively tell you is this: most of the “heavy iron” corporate operators have raised compensation for international captains to total cash compensation levels north of $200,000.
With a limited supply of pilots and an overall recovery in the US airline industry, major airline pilot pay and benefits should, in theory, continue to move higher as the majors airlines compete for talent.
Many of the operators who’ve already made across-the-board changes include brand names that we know quite well. In addition, in order to retain pilots, organizations are adding headcount to provide more “life balance” with the schedule.
At least one Part 91 operator offers a program that rivals that of the airlines: should one lose his/her medical certificate, he/she would receive continuous pay for the balance of their anticipated career.
Where Do We Go from Here?
I know I’ve painted a rather bleak picture of the current marketplace, but as unpleasant as it might seem, I think it’s realistic.
Unfortunately, there’s no “silver bullet” solution to the employment situation for business aviation.
Instead, my advice is to:
- Continually remind your pilots of the benefits of working for your organization. Highlight the state-of-the-art equipment you fly, the places you go, team camaraderie and more. Make sure to cite anything whatsoever that they might not be offered somewhere else. You’ll also want to mention the opportunity they’ll have to be developed and rewarded for their performance, rather than having any rewards based on their seniority number.
- Talk to your HR partner, reporting executive and/or owner. Explain the complexities of business aviation and what’s happening in the industry. The airlines only have to hire a licensed pilot. Corporate operators need to hire a pilot that fits the company culture. And, they have to invest heavily in high-dollar, airplane-specific training for each new pilot. When a pilot leaves, so does the investment in training, so there is value in retaining such an individual. Share our blogs with them, or ask them to call me directly.There’s certain information I can share confidentially with our clients that I cannot post in a public forum, such as this blog.
- Do not rely exclusively on compensation data that published in 2016 (or even this year). If you do, plan to add 10-20 percent more and then some, if you have specific type-rating requirements or live in a high-priced locale.
- Get creative with your scheduling and personal development options. You want to try and create a “sticky” work environment for your staff. Here’s a post on how to mine for talent within your current organization.
- Check out these recently published API blogs related to attracting and retaining people during this aviation talent shortage:
Bizav Experts Sound Off on Retaining Aviation Personnel
Why Your BizAv Organization Might be Failing to Retain “A” Players
The Aviation Talent Shortage is Here and Now
Business Aviation Hiring Trends, Part I
Business Aviation Hiring Trends, Part II
Lastly, remember that there will always be business aviation pilots because of the unique opportunities our industry represents. But, because of the situation we’ve just discussed, attracting new pilots and retaining those who are, today, under 40 years old will be a challenge for years to come.
This may sound overly dramatic, but I truly fear we may lose a whole generation—or at least experience a big gap in the next generation coming up and into business aviation. If we cannot recruit new pilots and retain our existing ones in business aviation, we’ll fail to achieve a balanced group of professionals across multiple generations.
This issue of talent shortages and how we might address them is a topic of great concern to me. I would love to hear from you about your own experiences, or any opinions you might have regarding this critical matter. If so, I invite you to leave a comment below.