Summary: Our major media tell the news from the perspective of the 1%, no matter how bogus. For example, in stories about “skills shortages” we see the New America in which employers refuse to pay market-based salaries. They assume that the reserve army of the unemployed — refreshed by immigration — will keep wages down. So they play a game of chicken with workers, assuming that the game is stacked in their favor. Here we look at this contest in the market for commercial airline pilots, one of increasingly common stories about “skills shortages.”
This article in Forbes nicely shows the modern CEO’s view of the world (that’s what Forbes does).
“Pilot Shortage Threatens To Slow U.S. Airline Growth”
by Brian Prentice and Philippe Gouel, 28 Jan 2016
“Unless airlines find ways to work with partners to cultivate a pilot pipeline, they could face difficult, even volatile, competition for experienced pilots because the current regulatory and industry situation can only yield about two-thirds of the pilots the U.S. will need in the next 20 years. … Leading airline executives are considering a new approach to the problem by forming partnerships with operators, training providers, and even regulators to shape the pipeline of pilots in training.”
“Leading airline executives” have more sophisticated tools than microeconomics 101. They do not see a pilot shortage as market signaling that they do not pay pilots enough to produce the needed supply. They have “new approaches.”
Tanya Powley at the Financial Times explains some causes in “Shortage of trained pilots could keep jets on the ground” , 9 March 2016 — “Challenge of keeping the cockpit staffed as passenger demand for flights surges.”
“It’s all I’ve wanted to do since I was about 11 but it’s not without its challenges,” says Mr. Audlin… “You’ve got the stress of pilot training, which is incredibly intense, coupled with financial stress.” … The cost of training is substantial: it can exceed £100,000 for those who undertake a full-time 18-month course. If they go on to train on a specific aircraft, such as the Boeing 747 or Airbus A320, they have to find another £30,000.
Twenty years ago, airlines mostly paid for training, or pilots would join from the military. However, as cuts have been made across an industry that often struggles to be profitable, the financial burden has gradually shifted to the trainee, and most have to cover the cost with bank or family loans.
That sounds like quite a challenge. But like the Forbes article, she doesn’t mention wages. The journalists at The Economist explain modern capitalism’s problem-solving methods: “America is running out of people to fly its planes“, 9 March 2016.
A low-salary, high-barrier-to-entry job is hardly an attractive prospect for people thinking about starting a career in aviation — and with regionals operating nearly half the country’s flights, some flyers’ working lives begin and end at these lowly carriers. … But the Regional Airline Association is trying to boost its recruitment efforts by pitching aviation careers to high school and college students. With luck, the wisdom of the markets should prevail: fewer candidates means salaries will eventually have to rise, and more people will enter the field.
Modern business relies on “luck” and the “wisdom of the markets. That’s logical, because neither of those wants a paycheck. Unlike actual people.
Why the shortage?
While journalists get their information from corporations, a little digging reveals other reasons for the pilot shortage. Irregular hours, often long shifts — and it’s the third most dangerous US occupation in terms of fatalities (higher in the low-paid ranks of pilots). There is also a higher than average rate of injuries and illness, including a rate of melanoma 2.2x the average.
For a clearer perspective see “Fact and Fallacy of the ‘Pilot Shortage’” by Patrick Smith at his website, Ask the Pilot.
The major carriers will always have a surplus of highly qualified candidates to choose from. They are able to cull from the top ranks of the regionals, as well as from the military. The impending wave of retirements won’t come close to depleting a steady supply of experienced crews.
At the regionals it’s a different story.
How it came to this is both a long and short story. The short story is that pay at the regionals is terrible and working conditions are harsh. Keep in mind that becoming a licensed pilot in the first place, to the point where one is eligible to apply for an airline job — any airline job — is a long and very expensive endeavor. It can take years, and tens of thousands of dollars. Salaries at the regionals, meanwhile, begin as low as $20,000 dollars a year, and top out at under six figures. Schedules are demanding and benefits paltry; the relationship between management and the workers is often hostile. On top of all that, the regional side industry is highly unstable. Carriers come and go in waves of mergers, acquisitions and bankruptcies.
But this is nothing new. Pay and working conditions at these companies have always been substandard, and filling jobs has seldom been a problem. What’s different is that the regional sector has grown so much. It used to be very small, and pilots saw these jobs as a temporary inconvenience — paying one’s dues. It was a stepping stone toward a more lucrative position with a major. Today, regional jets account for an astonishing one half (53% was the last number I saw) of all domestic departures in the United States. Pilots have figured out that a job at a regional could easily mean an entire career at a regional. Thus, a diminishing number of pilots have been willing to commit the time and money to their education and training when the return on investment is at best unpredictable.
The growth of the regionals is a form of outsourcing by the big airlines. Republic Airways filed bankruptcy; they few flights under the names Delta Connection, United Express, and American Eagle. Like other worker intermediaries in our new economy (e.g., temp agencies, contractors) they are trapped between their big customers — who squeeze every possible dime from them — and their workers to whom they pass on the pressure.
Why the surge of articles about this “problem”?
The airlines want safety regulations rolled back, especially the tough new regulations passed by Congress in 2013. Here’s a typical example of industry propaganda in Travel Weekly. Either compromise safety or have fewer flights! Paying workers more is not an option. The Air Lines Pilots Assn has a through debunking of this campaign.
For More Information
If you liked this post, like us on Facebook and follow us on Twitter. See all posts about the new jobs market, and especially these…
- Do we have a shortage of workers, or just cheap employers? Part one.
- Do we have a shortage of workers, or just cheap employers? Part two.
- The shortage of STEM workers: another bogus crisis crafted to benefit the 1%.
- Connect the dots to see why wages aren’t growing for most Americans.
The Solution
Flight crews had five in the cockpit of commercial airliners. Now there are only two (e.g., flight engineers were eliminated in the 1960s). Eventually they’ll be only one the pilot — doing mostly administrative work and decision-making.
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This shortage will soon wipe out the regional airlines. The major airlines (not counting the low-cost airlines like JetBlue, Frontier, Spirit, etc.) are hiring around 4,000 pilots/year and growing, mostly from the regional airlines that provide most of their domestic flying. There are around 16,000 pilots left at the regionals, and shrinking fast as there are almost no new pilots entering the U.S. job market. Kids don’t want to be pilots anymore, for good reason.
Low-cost airlines are seeing plenty of underserved and overpriced markets as the regionals pull out, but they can’t expand into them as they used to. The low-cost airlines are also losing pilots to the majors and finding it tough to hire new pilots. The low-cost airlines will inevitably shrink, as the major airlines need their pilots, and pilots tend to gravitate toward bigger airlines with bigger planes that pay more.
What this all means is massive profits for the few airlines that get all the pilots. Any industry facing shortage of their product and lack of competition, moves prices higher and quality lower. The airlines will enjoy a very cooperative Congress and FAA, that don’t want the public to see how badly they screwed this up, and will approve anything that appears to fix the problem. The airlines will get approval to fly their pilots harder and longer. They will get approval to replace one pilot with automation that DARPA has been quietly spending huge amounts of tax dollars on with their ALIAS program. Yeah, we don’t subsidize our airlines, right.
So who would want to be a pilot, as the career is headed for worse conditions even in a shortage? It is a tough and expensive road to your first job, and getting tougher for pilots all the way to retirement. Airlines are doing a lot more night flying to get more out of less assets, so pilots are doing a lot more swinging from day to night flying, not good for their health or performance.
Is it even possible to replace the pilots approaching retirement in the next five years? No. Most of the civilian pilot schools in the U.S. closed or were sold to foreign airlines in the ’90s. The Lufthansa training school in Arizona that trained the suicidal German Wings pilot is an example. Of U.S. schools still open to everyone, they are all teaching over 90% foreign students, and running out of instructors as the airlines hire them away. Shockingly, they now have 100% annual turnover on instructors, they stay one year, and that only because of the 1000-hour rule. There aren’t many pilot schools overseas, although the Chinese are building them fast, I don’t know where they will find instructors.
But if kids did suddenly want to become career pilots, and we somehow could train them, would that help? The failure rate for civilian airline pilot training has been around 90% since forever. So we would need a quarter of a million new students. And it would take ten years to finish their training and initial experience. That would not help. We could lower standards and blast them through in six years, still not much help. We could just not really train them much at all and call them done in three years, that would help the failure rate and get them into cockpits in time to alleviate the worst of our problems. That would be the MPL program JetBlue wants approved.
We already have regional airline captains who are too inexperienced to rent a car. Statistically, their lack of driving experience makes them too risky for Avis or Hertz to trust them with a car. But they can captain an airliner. They aren’t having accidents, automation and greatly improved monitoring, planning, and control have helped make routine flying less skill-intensive, when everything works, which is most of the time.
Sherman,
“The low-cost airlines are also losing pilots to the majors and finding it tough to hire new pilots. The low-cost airlines will inevitably shrink…”
Missing from your entire comment is the usually — and always successful — response of other businesses to a skills shortage: raise wages. The magic of prices, supply, and demand.
Oddly, that was the point of the post to which you are replying. I find it difficult to understand why you would ignore it — unless you posted a comment without reading it.
Thanks Larry for the response. I certainly beat around the capitalism bush, without directly calling it that. It takes ten years to produce a pilot. The airline industry historically has hired frantically until it begins laying off in large numbers, in decade(ish)-long cycles. Right now the three major airlines are still bringing back pilots laid off 15 years ago, at the same time they hire as fast as they can. Capitalism is not working here.
If young people rushed into training once every decade, attracted by recently increased pay, they would always end up getting to the airlines as the airlines are laying off for a decade. That didn’t used to happen, because the military supplied the majority of new airline pilots, and there were always more civilian pilots than jobs. The civilian supply was constantly over-driven by passion to fly, lure of always high pay, and prestige.
There was never a balance between supply, demand, and pay. If there had been, we would have seen a massive drop in pilots entering the career during downturns and layoffs, but it never happened before now.
If you look at military attempts to manage their pilot supply, it is laughable. The graphs are simply ludicrous in their utter failure to ever have supply match demand. The military has just stopped paying pilots bonuses to get out early, while at the same time paying pilots bonuses to stay in. That has been repeated every decade for over 50 years. When the airlines hired, the military saw huge losses of pilots, which artificially smoothed the supply/demand curve at the airlines.
If you take away the military supply, and take away passion to fly, high pay, and prestige, there is no supply for airline pilots. That is where we find ourselves. The ten-year supply pipeline is almost empty of American students. Raising pay alone could bring a small surge of new students and a small surge of new pilots a decade from now, but far too little and too late.
If all the pen manufacturers in the world disappeared today, we would be producing pens again in a couple months. Even before prices went up, people would recognize the opportunity and re-tool existing manufacturing facilities to produce pens. If all the sugar cane fields in the world were wiped out, it would take a bit longer to get mature crops to market, but still capitalism would prevail.
Pilots currently require longer to replenish than business cycles have time for. We need a solution other than capitalism, and that will probably mean eliminating pilots with lengthy training. They can be replaced by pilots with much less training, or by automation, or something we haven’t yet considered, or we can let the economy stutter and shrink while waiting a decade for new pilots, who so far aren’t rushing into the career in any numbers.
Sherman,
Let me attempt to put your clear statement about the airline industry (thanks for that!) in a larger context.
“Capitalism is not working here.”
This is what capitalism looks like. It’s run by people, and so messy. Supply and demand cycles are usually wild, with prices rocketing and crashing. These cycles are easily replicated in a classroom exercise, and easily seen when looking at the centuries of data on commodity cycles. Boom-bust, repeated.
Some industries have wild but brief swings, such as grains — where supply and demand usually adjust over a year or two. Many industries have cycles that take decades to run, such as mining (including oil & nat gas), since it takes a decade to bring a new mine (or field) into full production (including the transportation system to move the output).
What’s interesting here is that the airlines are not adjusting prices (wages) in response to labor shortages. This is an increasingly common phenomenon. Tech companies respond by illegally exploiting the H-1B visas to bring in cheap labor and illegal wage cartels to suppress wages. Corporations drum up the bogus STEM shortage to suppress wages of skilled workers and shift the cost of training onto the government and students.
It’s a structural change in the US economy, one that few yet see.
Sam Weigel is a pilot (First Officer) for a major US airline, columnist for Flying Magazine and blogger. He rose through the ranks the same way that many (most?) pilots flying for the majors did — instructor, “freight dog”, regional turboprop, regional jet and finally right seat with a major.
At the link below is a series of blog posts carefully selected (I searched on the word “shortage”) to have information useful to readers of this post. Caution: They are not in date order.
http://fl250.blogspot.com/search/?q=shortage
Meanwhile, on the automation front:
http://www.cnn.com/2016/03/17/hotels/hotels-robot-future-travel/
The next 20 years are going to be a great time to either be retired or to have enough capital to own robots. Being a worker when automation is moving so quickly and society has not yet adapted, well, that could be a tough time.
Driver-less cars are a lot closer than most people think. Pilot-less aircraft probably are not that far behind. That will certainly solve the pilot shortage.
I am confident we will have solved the problem of how to re-balance our society to cope with automation in 100 years but life will be increasingly challenging for the average worker until the solution is found.
Pluto,
(1) Chris Ulmson, director of Google’s car project, says that full success — self-driving on any road — is 30 years away. Also, when such a car is cheap enough for mass use remains unknown. Americans can barely afford today’s cars.
(2) I agree that the next century might be difficult as we adapt to automation. However, it’s important to remember that we know how to manage it now. We merely lack the will to do so.
I’ve worked in industrial automation for over 35 years, and I’m stunned and amazed by what vendors are bringing me. Not only because it seems impossible these new gadgets can do what is claimed, but they are cheap, and simple to integrate into our machines, appliances, vehicles. The adoption of common platforms for components to talk to each other within machines and over the internet, has accelerated the pace of innovation, and the pace of adopting and using innovation, because new technologies are swiftly accepted and making money for whoever develops them. These kind of changes to how change happens aren’t visible to most consumers, and they negate our reliance on even recent historical precedence. If you consider yourself “techie”, you may still not realize how fast changes are coming.
I can take you to large factories surrounded by empty housing, churches, schools, and stores. There are trucks backed up to both ends of the factory dropping off raw materials and picking up finished products, but few cars in the huge, weed-filled parking lots. Not only are there few people working in the factories, there are large, empty office buildings attached to these factories. The machines take care of and call for inventory, they accept new orders as orders are placed anywhere in the world, and work those parts into the production schedule, all without a human thought.
The neighborhoods around these factories did not adapt well or at all, they crumbled. Families watched everything they had go away, their jobs, their homes, their businesses, schools and churches, everything they had invested their lives to build went away. This isn’t like an economic cycle that might see their jobs come back, they are gone. So far, we are not adapting at all to automation, we are being replaced and displaced. Unless you are in automation, then you are very busy.
A cheap, driverless, all-electric car is probably a lot closer than we think. Sensors and actuators and controllers that manage it all, are getting rapidly better and cheaper. Keeping a car precisely on a road is getting cheap fast. Keeping a car precisely on a snow-covered and slippery road without a centerline or curbs visible, is getting cheap fast.
What I wonder is: how long until cars locate and communicate with each other the way airplanes do, to decide who does what? Think about informal and transient networks of cars approaching intersections, deciding amongst themselves who will do what when they arrive at each intersection based on common algorithms, augmented by sensors along the road they communicate with. That would be hugely efficient and safe, compared to our current system. We will accept most anything if we are told it will be more efficient and safe.
Sherman,
I don’t know why you focus on the driverless car, with its massive hype. The steady relentless march of algorithms is real today, as they prove equal to (often superior to) human reasoning in thousands of fields. From taking orders in fast food joints to choosing antibiotics, the job losses will be almost unimaginable.
Combined with relatively simple mechanical systems, and they will be able to replace a large fraction of jobs. See this:
https://youtu.be/sal8j067BVs
(1) I agree that driving anywhere on any road is probably more than 20 year into the future although the speed of progress on this project has been breath-taking. But driving the same routes over and over again might be feasible in less than 10 years. The biggest immediate impact of driverless vehicles will not be the family sedan, it will be on the taxi drivers, bus drivers, and truck drivers.
Your average bus driver is probably earning $30,000 per year (counting benefits), a machine that can do the same basic job that costs $100,000 (more or less a random number), would hit break-even in less than 4 years. This is an easy choice for the money managers. Four years after they were introduced (assuming no major problems were discovered) the robot would probably cost less than $25,000 and seal the deal.
(2) You and I know how to deal with increasing automation, but we are rational people. Society, at large, is not as rational and may well try quite a number of solutions before finding one that works for it and then the solution might not be the one we would choose.
Self driving cars could make the concept of owning one obsolete. Why own one when your phone can simply summon one whenever you need it?
“Americans can barely afford today’s cars”.
Yet Americans are snapping them up in huge numbers. Light trucks (includes SUVs) at an annual rate of over ten million vehicles and cars at almost seven point five million.
http://online.wsj.com/mdc/public/page/2_3022-autosales.html
If Americans decide they can’t afford a pricy SUV they can move down-market to a Civic or Focus. Or a three year old coming off lease.
Roving,
It’s the magic of subprime lending plus easy credit! We’ve seen this play before. Readers of the FM website have followed this from the beginning.
Sherman
“I can take you to large factories surrounded by empty housing, churches, schools, and stores. There are trucks backed up to both ends of the factory dropping off raw materials and picking up finished products, but few cars in the huge, weed-filled parking lots. Not only are there few people working in the factories, there are large, empty office buildings attached to these factories. The machines take care of and call for inventory, they accept new orders as orders are placed anywhere in the world, and work those parts into the production schedule, all without a human thought”
Links please.
Thx
Breton
Breton,
It reads like a description of Detroit and its auto factories, and to a lesser extent of many cities in the NE US “rust belt.”
Links? This is the real world, real factories, real neighborhoods. They don’t have websites describing their worker-less factories for me to post up. No, I’m not going to create a lesson for you in what has been happening in manufacturing for the past 30 years, that you seem to have missed.
Sherman,
These things are matters of epistemology, which vary by community. Here grand statements like that are not esteemed unless supported by data. Personally I agree with your broad statement, but experience has shown that relying on such things in preference to hard data quickly leads people’s thinking into the wastebasket.
Hence Breton’s request for data. That’s how you convince people who do not already agree with you.
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They say driver-less cars or automated aircraft is the solution. I personally prefer to drive and its enjoyable. In terms of flying I’m labelled schizophrenic so I can’t even bother trying. However when flying as a passenger I prefer the ‘personality’ of a real pilot. Computers are always adept to fail. And replacing important roles like flying or driving with robots before replacing mundane tasks like stocking store / grocery shelves and building homes automatically first is an utter retarded (Airbus pun intended) choice.
Auto,
Those are commonplace views today. Fifty years from now they’ll be considered quite mad, as machines will be far safer humans. The obvious analogies are people’s preferences for horses instead of cars, and trains instead of aircraft.