Expert: D. Norkus - 8/31/2008

Question
QUESTION: Hello:
    Before I begin, please forgive me for the long question.  I am 36 years old and am almost done with my instrument rating.  After my instrument rating,  I should have my commercial/multi by early next year.  When I began my flight training, my goal was to enroll in the  Gulfstream Training Academy after earning my ratings, and fly for them after completing their training program.  This way, I could have gotten an airline job without having to flight instruct.  
    I am writing to you because I am deeply concerned about the recent cuts in airline capacity due to high fuel costs.  I have been looking through news articles online for the past few months and have found mostly discouraging and sometimes contradicting  airlines.  I don’t want to spend all my life savings getting all my ratings, and end up without an airline job. I would like your analysis on the following information I have found:

1)  How is this aviation downtown different from previous ones?  It does not concern me that airlines are not hiring at this time.  After all, I am still working on my ratings.  I am more concerned that this might be a long term or permanent slowdown in global aviation, leading to a global surplus of pilots.   

2) How do you see the future of aviation if fuel prices remain at this levels or even go higher and stay there?  I have read that “deep structural changes” will have to be made in the US airlines industry.  What does this mean?

3) I have read that some analysts are predicting that airlines will have to cut capacity 30-40% in order to stay afloat.  What does this mean for someone in my situation?


4) Do you think there is a chance that in the near future, due to a surplus of pilots, airlines could require 3000-5000 hours to be hired, like they used to back in the 1980s?  When do you expect airlines to start hiring again and what do you think will be the hiring minimums?


5) What do you see as the future of regional airlines.  I have read that regional airlines are especially getting hurt.  I have also read that a lot of planes with under 50 seats will be removed from fleets because they are not profitable with high fuel prices.  Does this mean that larger planes carrying more passengers per plane means fewer planes flying and fewer pilot jobs in the future?  Do you think fuel efficient turboprops might replace a lot of smaller jets which will be phased out?

6)  Another fear I have it when airlines do start hiring, there will be a huge surplus of experienced pilots who I will have to complete with to get a flying job.  What threat do furloughed airline pilots pose to a new beginner like me?  After being furloughed do most airline pilots start at the beginning with another airline or just wait around until their airlines calls them back? Do you think a lot of them will go overseas to fly for foreign carriers?  I recently read that furloughed American pilots are applying with Australian carriers.  



7)  I have read that airlines through Asia, Africa Australia Canada are short of pilots and are hiring foreign pilots.  Even a wealthy country like Japan was facing pilot shortages.  Is it fair to assume that if fuel prices stay this high, the shortage in Asia and Australia Africa Canada  will also end up in surplus of pilots?  

8) I have read that in emerging markets, millions of people will be afford to fly in the next few years and at the same time there are not enough facilities to train pilots in those countries.  Do you think that there is hope for me there if there are not jobs here? I have lived overseas before for 5 years and can adjust very well to different cultures.  I would much rather fly, lets say a King Air somewhere in Africa or Asia instead of having to flight instruct here.  

9)  I know pilot shortage in this country is over.  How about the global pilot shortage that was being talked about only recently by the international air transport association?  ?  A news articles  as recent as May of this year in the Wall St. Journal was talking about coming global pilot shortages and the IATA predicting need to train 19,000 pilots annually.  I have also read predictions from Boeing and Mitsubishi that state that there will be a strong markets for both large aircraft and regional aircraft.   Is it possible for there to be a slowdown in aviation and still be a demand for pilots due to pilot retirement?  

10)Finally, what do you think is the best case scenario and the worse case scenario for someone in my position?  What scenario do you think will play out?  


Thank you ever much for your help!  Your answers will help me make the most important decision of my life.  

Sincerely

Andy Norris


ANSWER: Andy,

1) I think this downturn is having a deeper impact than the post 9/11 fallout because of the current economy. Not only has the cost of fuel crippled the airlines, but fewer passengers were flying this year already as they tightened their belts to save cash. Back in 2001 when the majors cut staff, routes and airplanes, at least the downturn for the regionals was not as bad as they soon expanded to fill routes the majors shifted to them or abandoned. This time around, all airlines are feeling the pinch.

2) I wish I knew how the cost of oil was going to go. Then again so does every airline CEO too. “Deep structural changes”? To me, that implies most airlines need to make real and marked changes in the way they do business and run the place from the top down. Many CEOs these days get no respect as they take their multi-million dollar bonuses while the front line employees still have not regain wages lost after 9/11. I have worked for two airlines and they way each does business is like night & day. From the way they treat their employees to their customers, attempt to save fuel/money and even schedule their ground staff- two totally different animals. Darwinism is alive and well in the airline industry. We may very well see more die off before this latest wave of depression in the industry is over.

3) Cutting capacity cuts their immediate operating costs. Fewer planes to operate, less crews, less fuel equals less cost. It should be noted that no U.S. airline has ever shrunk to profitability (says Bob Crandall, former AA CEO). Although cuts may keep an airline afloat longer, they may not keep them out of bankruptcy. What does that mean to you? The fewer majors there are, the less feed they need. Hiring slows, stops or furloughs happen at the majors and the regionals. Currently all three are happening at most airlines.

4)I don't know when the airlines might hire again but you can bet the minimums will go up. Back when I was hired in 2001 airlines were barely were interested in your resume if you had less than 1,000 hours. Today there are thousands of experienced pilots out of work so the competition is stiff. The days of the "300 hour wonders", as they are known in the business, getting airline jobs are over. (At least until the next hiring spree anyway!) Even with many pilots looking for work, there may come a day when the starting pay is just too low and not enough pilots apply, so the recruiters will look to low timers just to fill the classes again.

5)Right now many regionals are suffering with their gas guzzling RJs. As they trim them from the fleet, yes, there will be fewer jobs. Although turbo props are more efficient, most airlines do not have the cash on hand to go out and get a fleet of turbo props. It is simply easier to operate the jets less, but fill them up. Going from 10 planes that are 70% full on a route to 7 or 8 will cause the remaining flights to have a higher load factor- providing ticket prices don't go sky high. That said, just because a plane is full doesn't mean an airline is making money. If they can't cover their costs, they could fill all the planes and still lose money.

6) Yes, it is a very real possibility that you could be facing a job market filled with furloughed pilots. While some have taken advantage of jobs openings overseas the majority will not. They have wives, kids  & extended family here complicate up and leaving for a job overseas. Their 'threat' to you is that airlines like to pick the most qualified   applicants. Their flight experience is something you just can't compete with. That said, some airlines may not be interested in hiring a furloughed pilot as they know as soon as a recall happens they will lose a pilot. You, on the other hand, will be there for several years. (Although 6 years after being furloughed there are STILL a handful of American pilots flying for American Eagle awaiting recall! But I digress...)

7) Sure, it is possible the fuel crisis will also have the same effect abroad. One can only assume the same can happen abroad but I can't really comment. I know only what I have read in the news (like AvWeb) or on aviation message boards. I am interested in the American hiring trends (or furlough as the case may be) but do not follow too much happening abroad in the career as I have no interest in pursuing such jobs.

8) If you can find a job abroad for which you qualify (work permit included) and they will hire you- more power to you. Since you have the ability to pack up and go, you may find a golden opportunity. Try the message forums at http://www.pprune.org as that is a largely non-American group and you may come across something there.

9)Honestly, I have not been following the "global pilot shortage" topic all that much. Again, just what comes up in the news or popular pilot message boards like those at FlightInfo.com

10) Best case? You will get a regional job Worst case? You don't get such a job, have outstanding loans and will have to get your CFI and teach to build hours. I did not desire to get a CFI either and I had to get that 1,000 hours to be considered competitive. I had about 400 hours before I got my first pilot job- flying skydivers. Between that and some ferry flying I managed to get the flight time I needed to get a regional job in between working my regular day job. There are ways to get time without a CFI. They just may be harder to find.

I am just a pilot, not an economics major, so I don't have all the answers for you. So much of what you want to know just cannot be predicted with any certainty- even by the top analysts on Wall Street. The only constant in this business is change. You must know going into it that there will be highs and lows, repeatedly. Your only hope is when the next one comes around is that you are not on the bottom anywhere. I can't help but feel that the flight schools running their glossy ads in Plane & Pilot magazine have done aspiring aviators a great disservice advertising "Be an Airline Pilot in 6 Months!" The bottom was bound to fall out one day and now so many have come to think that short cut was the norm.

If you truly want to fly, you just have to move toward your dream. It may or may not include going to an aviation academy...and that may or may not include being a CFI. You could end up having to keep your day job while teaching part time. You may not get there how you planned but we all know things don't always turn out as planned. My career has been seriously derailed twice (furloughed and lost a captain upgrade) and I have only been in this job for 7 years! It just comes with the territory. You hope for the best but plan for the worst. I have a friend that was a mid-life career changer to airline pilot. From thrilled to have the job, to sick of it took all of 4 years. This job it is not all some imagine it to be, so I hope that you have really considered all the angles. The better informed you are (and you seem to have been researching quite a bit) the better you know what to expect and can handle the lows as well as the highs.

If you have not made a visit to the http://forums.jetcareers.com/ message boards, I highly suggest it. There is so much there that would be helpful to you. Also, there are many topics on Gulfstream. You should definitely read those. Before you make the "most important decision of my life", please go over that board and even post more questions there. You can never be too informed.

I hope I have been of some assistance.

Dottie











---------- FOLLOW-UP ----------

QUESTION: Thank you for your detailed answer.  I just have a few follow up questions:

1) You had mentioned that back in 2001, regionals were requiring about a 1000 hours.  I think i could handle that.  Do you think there is a chance that in the future,  regionals could require around 3000 hours or more?

2) Fuel prices have come down in the last several weeks.  Do you think that if they come down around $70-$80 per barrel by next year, airlines could recall all their pilots and begin hiring by the end of next year?

3)I recently went to Kit Darby's website air-inc, and it predicts that about 7,500 pilot jobs will be created in 2008 (4 months remaining this year).  Do you consider Kit Darby as a reliable source?  

4) Is there somewhere where aspiring airline pilots can get  counseling and advice on a continuing basis for a fee?  

Once again, thank you for your help and thank you for the work you do.  I will be contacting the gulfstream traininag academy in the next few weeks or so to find out more about their program and i will keep you updated.  Thanks.

Andy Norris


Answer
1) You had mentioned that back in 2001, regionals were requiring about a 1000 hours.  I think i could handle that.  Do you think there is a chance that in the future, regionals could require around 3000 hours or more?

There is ALWAYS a chance! Personally, I just don't see the minimums going that high though. I believe they will definitely go back up to the 1,000/100 mark when hiring resumes. "Academy" grads with 300 hours will be much less as the market will probably still be flooded with very qualified pilots 2 or 3 years from now.

2) Fuel prices have come down in the last several weeks.  Do you think that if they come down around $70-$80 per barrel by next year, airlines could recall all their pilots and begin hiring by the end of next year?

Yes, if costs go down there could very well be recalls. However, on the other side of that coin, prices could just as easily go back up again. Training is not cheap so any recalls would have to be well worth the cost. Also, those airlines that have parked aircraft as a result of rising fuel prices now have a smaller fleet, so there is no reason to recall pilots to staff a smaller airline.

3)I recently went to Kit Darby's website air-inc, and it predicts that about 7,500 pilot jobs will be created in 2008 (4 months remaining this year).  Do you consider Kit Darby as a reliable source?  

Yes and no.
While Kit often has many useful stats on what is going on in the industry, many pilots consider him a "snake oil salesman" that is perpetually warning of a looming pilot shortage. If you look over his jobs list and the companies attending his road shows, many hiring are not the airline jobs that we would all think of. That said, Air-Inc does have many, many useful services. (I am a former subscriber pleased with the limited services I used.) All I can say about Kit is that some of his info should be "taken with a grain of salt", if you know what I mean but he may very well offer you something worth your money.


4)Is there somewhere where aspiring airline pilots can get counseling and advice on a continuing basis for a fee?  

But of course!
Mr Darby and his associates will be glad to provide such services for a fee. Additionally, you might contact Cheryl Cage at Cage Consulting http;//www.cageconsulting.com or Lori Clark (former recruiter for Mesa Airlines) at Clark Aviation Consulting http://www.flytheline.com

You will also find many resources at  http://www.airlinepilotcentral.com

That site will be a major resource for you. APC also has many downloads for pilot candidates you can use.

Dottie