Pilot Workforce and Training Update August 2017

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Chester Riley
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1 Pilot Workforce and Training Update August 2017

2 Regional Airlines Provide the Sole Link to Global Air Transportation for Most U.S. Communities

3 Forecasts Highlight Severity and Shared Nature of a Worsening Pilot Shortage

4 University of North Dakota Pilot Supply Forecast 2016 Triple Today s RAA Pilot Workforce Equal to today s RAA Pilot Workforce

5 UND Pilot Supply Forecast 2016 Predicts Shortages (Analysis does not include regional airline staffing needs) = 300 parked aircraft Includes new pilots entering the workforce; Reflects only the major airline cumulative shortage = 1,400 parked aircraft

6 Unadulterated FAA Data Shows a Shortage

7 Shrinking Hirable Pilot Pool

8 New Certificates Issued are Declining Overall trend is fewer new certificates (1990 vs. 2016: private -59% / commercial -34%) Recent increase in ATPs (+19% since 1990) associated w/ new requirements, not new pilots

9 Despite High Retention Pay, U.S. Military Faces a Pilot Shortage Crisis

10 U.S. Military Discusses Pilot Shortage This is a supply-demand mismatch The nation as a whole is producing less pilots than we need in order to service commercial, business and military aviation. I m the lead advocate as the airman on the Joint Chiefs of Staff, because we re all affected by this but we have to look nationally at incentives to increase the supply. Gen. David Goldfein, U.S. Air Force Chief of Staff Pilots are strategic national assets and the pilot crisis extends beyond the Air Force and military. It is a national problem which requires senior-level attention in Congress, the Commercial Industry, and the DoD Today the Air Force has a rated manpower shortfall of approximately 1,550 pilots across the Total Force. Lt. Gen. Mark C. Nowland, USAF Deputy Chief of Staff (Operations) Senate Armed Services Committee March 29, 2017

11 The pilot shortage is a shared problem.

12 Impact

13 Between 2013 and % U.S. airports (259) experienced schedule reductions of 10% or more 23% U.S. airports (156) experienced schedule reductions of 20% or more At least 18 U.S. airports lost passenger air service completely Source: RAA analysis of OAG schedules via PlaneStats online portal; Airports had scheduled passenger air service (departures) in 2013 and had reduction in 2016

Between 2013 & 2016 87 airports lost 33% or more of their air service.

14 Between 2013 & airports lost 33% or more of their air service. 52 airports lost 50% or more of their air service. 29 airports lost 75% or more of their air service. 18 airports lost all of their air service.

15 Far-Reaching Economic Consequences 1.1 M $ $36.1 B $121.5 B In 2015, the economic impact of small community air service is estimated at $121B supporting over 1.1m jobs Source: InterVistas

16 Far-Reaching Potential for Job Losses When aircraft are parked without pilots, the impact is widespread and complex. According to DOT s airline employment data (November 2016), RAA airline members employ more than 59,000 people. Besides 20,000 pilots (not all actively flying), regional airlines employ: 15,000 flight attendants 10,000 support staff 1,000 flight control 5,000 customer service 8,000 mechanics

17 Investment in Pilots

Regional Airlines are Investing in Innovative Career Progression Programs Regional

institutions to create career progression stability and opportunities.

Preferred or guaranteed hiring agreements Rotor Transition Program (RTP) Many regional

Regional airline social media pages show airlines taking every self-help measure to

18 Regional Airlines are Investing in Innovative Career Progression Programs Regional airlines have worked to support pilot careers, partnering with collegiate and training institutions to create career progression stability and opportunities. Tuition reimbursement agreements Internship, cadet, and leadership development programs Preferred or guaranteed hiring agreements Rotor Transition Program (RTP) Many regional airlines also offer guaranteed interview or advancement (flow) to major airlines. Regional airline social media pages show airlines taking every self-help measure to attract and retain qualified pilots, with flow programs and significant salary investments even in the early years.

19 Regional Airline Pay is Higher than Reported RAA member airlines pay first year, First Officers an average total compensation of $57, % of RAA member airlines (by fleet) pay first year, First Officers an average compensation of $59,930. Compensation includes minimum base pay, bonus, & tuition reimbursements only; does not include per-diem, commuter support, retirement, health, or other benefits or compensation not listed. The Bureau of Labor and Statistics (BLS) reported 2016 median annual wage for all U.S. occupations at all levels was $37,040. In addition to increasingly attractive first year income, a pilot s ROI is greater than other high-prestige fields. For every $1 invested in education: (SOURCE: Brown Aviation Lease): doctors earn $19 lawyers earn $30 pilots earn $33

Recruiting Success Falling Despite Investments RAA member airline first year, First Officer average total compensation rose more than 150 percent between

20 Recruiting Success Falling Despite Investments RAA member airline first year, First Officer average total compensation rose more than 150 percent between 2015 and today. Overall recruiting success has declined during the same period. Higher pay has not resolved the pilot shortage; broader solutions are needed.

21 FAA s 2013 FOQ Rule Impacted Pilot Supply & Pilot Training

22 First Office Qualification (FOQ) Rule and Pilot Supply In 2013 the FAA implemented a rule that postponed and reduced the pool of hirable pilots by requiring first officers to obtain Airline Transport Certificate (ATP) ATP requires 1,500 hours of flight experience (not synonymous with training) Recruiters cast wider nets and the requirement for higher pre-hire hours attracted second-career pilots and those away from training for extended time RAA supports the rule and desires to create additional carrier investment helping to expand elements of the rule producing the most proficient pilots.

23 FOQ and Pilot Supply The FOQ rule presented a new barrier to the pilot career path. The rule change made it harder and more expensive to go through a part 141 or part 61 pathway to become a pilot -- effectively limiting the pilot career path to wealthy students UND / University of Nebraska Omaha Pilot Careers Aspiration Study Update found more than 1/3 of aspiring aviators in flight training environments had been discouraged or decided against becoming a commercial airline pilot because of the rule. Large numbers considered relocating overseas for earlier career start.

24 FOQ and Pilot Training The FOQ rule also impacted pilot training performance. Pilot Source Study 2015 Independent population study examining training records of part 121 regional airline first officers hired since the FOQ rule s enactment, to assess FOQ impact on regional airline pilot training outcomes Researchers: University of North Dakota, Embry Riddle Aeronautical University, South Dakota State University, Purdue, Middle Tennessee State University, Arizona State University, and Ypsilon Associates, an independent research consulting firm RAA did not commission or fund the Pilot Source Study Reference:

25 FOQ and Pilot Training Pilot Source Study 2015 Findings: No positive correlation between higher hours in flight and proficiency in initial airline training Pilots hired after the rule required more extra training and higher rate of non completions than pilots hired before the rule Pilots with lower hours in flight performed better than pilots with higher hours in flight Longer time between graduation date and airline hire corresponded to decreased training performance R-ATP pilots (pilots with structured training backgrounds providing credit toward flight hours) had the best training outcomes

26 Congress Authorized Alternate (R-ATP) Pathways PL authorized FAA to approve alternate pathways to the ATP, where specific academic training courses may be credited toward total flight hours in cases where the Administrator determines this credit for structured training enhances safety. Candidates following these pathways hold Restricted Privileges ATP (R-ATP) certificates. R-ATP certificate holders may serve as part 121 First Officers. FAA has authorized institutions of higher education to certify graduates of specific aviation degree programs for R-ATP certificates and has established a military R-ATP pathway. Empirical data shows pilots holding R-ATP certificates have the best training outcomes but there are too few pathways today to meet demand.

27 Airline Invested R-ATP Pathways Airlines have proposed an additional, safety-enhancing R-ATP pathway called the Air Carrier Enhanced R-ATP pathway (ACE). This additional R-ATP pathway is proposed as an additional airline investment in pilots and could only be approved by FAA if it increased safety. Designed to bridge gap between pilot training and pilot qualification by offering significant, additional structured training in the post-hire airline environment while pilots are on airline payroll, but before they are released to independent line flying Includes but is not limited to: screening, testing, selection, academics, training, checks, audits, and mentorship Is qualitative, scenario-based, and highly structured, fostering a higher level of pilot proficiency and enhancing safety Executed through a special FAR Part 121 initial pilot training program, but not a simple variation on initial training the special program is designed to achieve all the rigor, structure, supports, testing, and other safety enhancing characteristics required of R-ATP pathways. FAA would approve this program only if the Agency deems it enhances safety. Only the FAA can determine appropriate credit hours associated with R-ATP pathways.

28 Fact Check Does RAA s Proposal Repeal the FAA s FOQ rule? No. FOQ allows for approved structured training pathways. RAA has proposed an additional, airline-sponsored R-ATP pathway within the current regulations. Do R-ATP certificates offer reduced safety compared to ATP certificates? No. In fact, strong data shows new hire pilots holding R-ATP certificates perform better than pilots who hold ATP certificates. The law requires FAA to approve R- ATP pathways only when they enhance safety. Does RAA s Proposal Seek a Reduction in the FOQs Required Flight Hours? No. As with all R-ATP pathways, pilots would still be required to accumulate flight time required for the R-ATP. The FAA would determine the appropriate credit hours associated with additional structured training.

29 Additional Measures to support the Pilot Workforce Flight training is costly and is not covered by student loans. Aspiring pilots must pay outof-pocket or take on private loans, placing the career out of reach for many. Policymakers must consider innovative measures to help pilots offset training costs. Many children never fly commercially during childhood. Outreach must start earlier and strive to include young people not otherwise exposed to flying. Just six percent of commercial airline pilots are female. Outreach to women and girls is essential. Programs like the Civil Air Patrol are critical for attracting more aspiring pilots and deserve support and funding. Communities and organizations can defray costs of pilot training and present children with aviation exposure and flying opportunities through foundations and other avenues. School counselors should introduce pilot careers to students and parents when children are beginning to plan their education and career paths; but most do not discuss pilot careers. Educating school counselors on rewarding pilot careers is critical.

30 Requested Actions for Policymakers Open up financial avenues to support pilot training, including expansion of student loan coverage for flight training and establishing student loan forgiveness programs for pilots, preserving and expanding GI bill funding, and establishing tax incentives for employer based programs. Encourage FAA to recognize that academic training courses offered by various providers including colleges, universities, certificated air carriers, and other qualified providers, can meet the requirements of the statute in cases where crediting completion of these courses toward a R-ATP certificate enhances safety. Encourage FAA to evaluate aviation safety programs on science, empirical evidence, and data. The Agency should continue to evaluate new R-ATP pathways and should investigate credit for scenario-based and highly structured training methods, such as high-fidelity flight simulators.

31 Questions? Please contact:

Pilot Workforce and Training Solutions December 4, 2017

Pilot Workforce and Training Solutions December 4, 2017 INDUSTRY DATA 2 Economic Impact of Civil Aviation In 2014, civil aviation generated $1.6 trillion in economic activity and supported 10.6 million