Airlines struggle because of a global shortage of pilots
A 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 push for more benefits.
Carriers such as Emirates and Australia’s Qantas Airways 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 Ryanair are forming unions across Europe seeking better working conditions, and those at Air France 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, where IATA lowered its airline profit forecast by 12%, citing higher fuel and labour costs. “It’s the symptom of a wider issue. If we look at developed economies, unemployment in the OECD has fallen to lows and we are starting to get wage pressures, of which pilot shortages are a symptom in our industry,” he told airline bosses, many of whom expressed concern about a shortage on the sidelines of the IATA annual meeting last week.
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 an industry that Boeing says will need 637,000 more pilots over the next 20 years.
IATA estimates airline traffic will nearly double during that period, so companies like Canadian training group CAE Inc. and L3 Technologies are building new flight simulators to cash in on training demand.