Accompanying Deck to RAA White Paper for May 2014 distribu?on U.S. Regional Airlines are Facing Shortage of Qualified Pilots Ac:on Needed to Prevent Service Cuts and Reduc:ons Na:onwide March 19, 2014 1
Execu:ve Summary U.S. Regional Airlines Facing Pilot Shortage FAA s FOQ rule, requiring 1,500 flight hours for first officers, has reduced the number of qualified pilots available FAR part 117 increased the number of pilots required by air carriers between 5-8 percent, or 3,600 5,850 pilots Major airlines will re?re more than 18,000 pilots in the next ten years and will draw from regional airlines when hiring Regional airlines employ fewer than 18,000 pilots in total workforce Boeing predicts nearly half a million new pilots will be needed over the next 20 years Numerous airports have already lost service, with 239 addi?onal airports at risk Claims that regional airlines could ayract enough pilots by raising salaries are inaccurate Congress and FAA should revisit FOQ rule to ease pilot shortage 2
Air Service Cuts and Reduc:ons As of February 2014, 11 airports have already lost service and United Airlines closed its Cleveland Hub due to a pilot shortage. Source: RAA 3
265 Markets in the Con?guous United States with Greater than 90% Regional Departures Source: Innovata Schedules, June 2014 via Diio online portal 4
21 States Across the U.S. have Greater than 65 percent Regional Departure Share, 35 States have Greater than 50 percent Departure Share Source: Innovata Schedules, June 2014 via Diio online portal 5
Top 20 Markets by Departure Decline June 2014 vs. June 2013 0% - 5% Departure Change - 10% - 15% - 20% - 13% - 14% - 14% - 14% - 15% - 15% - 16% - 17% - 17% - 18% - 20% - 25% - 24% - 25% - 25% - 30% - 28% - 28% - 29% - 35% - 34% - 40% - 37% - 37% Santa Barbara Wilmington, NC Pensacola Newport News Ithaca Jackson, MS Flint Alexandria Valparaiso Columbus, GA Toledo Grand Forks Dickinson Lawton Erie Key West Memphis Santa Fe, NM Cleveland Sun Valley Regional Share % 100% 77% 100% 68% 74% 100% 100% 100% 85% 81% 100% 79% 100% 56% 72% 100% 96% 68% 89% 97% Source: Innovata Schedules, June 2013/2014 via Diio online portal Note: Includes markets with greater than 50% regional departure share, and has at least 3 departures and 150 seats per day 6
Air Service Cuts and Reduc:ons 239 addi?onal U.S. airports are considered at risk for air service loss or sharp reduc?ons. Source: Flightpath Economics 7
What s Influencing Pilot Supply and Demand? Qualification Guidelines (FOQ) Technical Skill Requirements Rules Attrition Career Perception SUPPLY Financial Aid DEMAND Instructor Pilot Shortages Training Capacity Retirements Schedule Growth Source: RAA 8
Pilots Face Mandatory Age 65 Re:rement, Crea:ng Need for Replacements 20,000" 15,000" 10,000" 5,000" 0" Cumula&ve)Number)of)US)Mainline)Pilots)Reaching) Re&rement)Age)in)each)year*) 0" 0" 0" 0" 2009" 2010" 20112" 6,644" 5,029" 3,580" 2,264" 1,032" 2012" 2013" 2014" 2015" 2016" 2017" 2018" Source: Akin & Associates, The Perfect Storm: Causes and Consequences of a Looming Pilot Shortage, January 24, 2014 10,388" 8,377" 12,594" 2019" 2020" 2021" 2022" 15,155" 17,751" 9
A Diminishing Produc:on of Qualified Pilots to Replace Soon to Re:re Pilots 10 Source: Venture Management using FAA data
Pilot Cer:ficates Issued Pilot Cer?ficates Issued (FAA and GAMA) Source: UND Study 11
Global Demand for New Pilots - 2013-2032 Source: Boeing Pilot & Technician Outlook 12
Pilot Headcount Distribu:on by Segment and FAR Part 117 Impact on Pilot Staffing Needs Thousands$ 45$ 40$ 35$ 30$ 25$ 20$ 15$ 41.1$ Pilot$Headcount$(000)$ 2012$$By$Segment$ 17.0$ FAR$117$Impact$$$$$$$$$$$$Add l$$pilots$$ Network$$$$$$$$$$$$$$$$$$$$$$$$$2,000$$ $$3,300$ Regional$$$$$$$$$$$$$$$$$$$$$$$$$$$$850$$ $$1,350$$ LCC$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$300$$H$$$$$500$$ Other$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$100$$$$H$$$200$ $ Total$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$3,300$$$H$$5,350$$$$$$$$ 10$ 5$ 5.9$ 2.3$ 0$ Network$ Regional$ LCC$ Other$ Source: U.S. DOT Form 41 data Note: FAR 117 espmated to increase pilot staffing needs by 5% to 8%. Network includes SWA. 13
Most Age 65 Related Pilot Re:rements are at the 4 Largest Carriers!7,187!! 61%& Total&Age&65&by&2022&and&%&of&Total& Current&Ac8ve&Pilots&&&!4,967!! 47%&!3,977!! 40%&!1,620!! 18%& Top 4 Carriers Alone will Re?re a Minimum of 18,000 Pilots from age 65 Alone by 2022. FAR Rest Rules Adds Need for 2,000 3,500 Addi?onal Pilot s at these 4 Carriers. Mainline Staffing Demand creates Down- line Turbulence at Regionals and Others Only 18,000 Total Regional Pilots today, A large por?on of which will not leave American! (AA/US)! Delta! United! Southwest! Lower Paying LCCs will be Tapped as well Source: Pilot Seniority Lists and U.S. DOT 14
Airline Pilot Wages and Compensa:on Airline pilot salaries are compe??ve, with excellent life?me earning poten?al Regional airlines make considerable investments in new pilots, including wages, benefits, and signing bonuses Regional airlines spend $25,000-35,000 per pilot on post- hire, safety- based airline systems training, which serves a pilot through his or her en?re career At nearly all regional airlines, collec?ve bargaining agreements with labor unions determine how pay is allocated among senior and junior pilots - Several regional airlines report instances where pilot unions have capped first officer pay to raise captain pay - One regional airline reports that its pilot union has rejected two years of ayempts to raise first year salaries 15
Airline Pilot Wages and Compensa:on According to the U.S. Bureau of Labor Sta?s?cs, the median* annual wage for U.S. airline pilots was $114,200 in May 2012. The lowest 10 percent earned less than $66,970, and the top 10 percent earned more than $187,200. The median income for all other U.S. occupa?ons is $34,750 Senior captains at major airlines can earn upwards of $200,000 *The median wage is the wage at which half the workers in an occupa?on earned more than that amount and half earned less. 16
U.S. Airline Pilots Median Annual Wages, May 2012 Total, All Occupa?ons $34,750 $114,200 U.S. Airline Pilots $0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 17
Source: Brown AviaPon Lease 18
RAA s Commitment to the Next Genera:on of Aviators Regional airline salaries have been rising and many airlines are offering signing bonuses for first year officers, yet the pilot supply shortage persists RAA Scholarships awarded at the RAA Annual Conven?on All colleges and universi?es with avia?on- related studies are eligible to have students apply University Commons held annually at RAA s Annual Conven?on and Trade Show Some airlines offering mentoring and gateway programs 19
Working toward a Solu:on Regional airlines have redoubled efforts and are using innova?ve means to help ayract, hire, and train new pilots Lawmakers should call upon the FAA to use its Congressionally- given flexibility to expand credit for experience gained in high quality, structured- training programs Lawmakers should urge FAA to expedite approval process for avia?on training programs qualifying for credit hours and expand eligibility to ins?tu?ons providing equivalent structured training Congress should consider suppor?ng future aviators through Federally- backed loan guarantees and grants, and other programs 20