When Will the Regional Airlines Hire Again?

Over the past decade, several events have created the perfect storm for the airline industry's financial health, and as a result, pilot hiring and aviation employment in general, has trickled to a near stop.  9/11, the surge in fuel prices, the age 65 rule, and an economic recession have all lined up, nearly at the same time, leaving pilots stuck in their present positions, and for some, furloughed or laid off completely.

That is the bad news.  The good news is that nothing is permanent, especially in the ever-changing airline industry.  All of the issues above are troughs, not bottomless pits, in the cyclical nature of regional airline pilot employment.  While there are no completely accurate ways to predict the future of the airlines, we can look at each of those issues and get a general idea when the pilot employment lines will start to move again.

9/11

9/11 was, without a doubt, the single-worst event that the airline industry has had to overcome.  Aside from the terrible, personal tragedy, the demand for airline service dropped drastically overnight as the flying public gave in to fear and avoided air travel for a significant period of time.  That led to drastic economic losses for the airlines, which in turn, led to huge wage concessions by the pilots.

The aftershocks of 9/11 are still being felt by pilots today because wages have yet to return (and may never return) to their pre-9/11 levels.  With regard to pilot employment, this issue has had a significant effect on pilot starts.  Fewer people are willing to incur the expense and time it takes to become a professional pilot because the monetary return on that investment has decreased significantly compared to what it was in the late 1990's. When the airlines begin hiring again, and they will begin hiring again, the number of pilots that the airlines will have to choose from will be significantly lower than it would have been, had 9/11 never happened.

Surge in Fuel Prices

Fuel and labor are the two biggest expenses for an airline.  The fuel surge in 2007 and 2008 caused massive losses for the airlines.  As a result, pilots again took wage concessions, and that further added to the issue of fewer pilot starts.  In addition to the decrease in pilot wages, it costs much more to learn to fly than it did back in the 1990's, largely due to fuel prices.  In the early 1990's, renting a Cessna 152 cost about $40 per hour wet.  It is roughly double that today.  Bottom line - more expense training costs means fewer pilot starts, which likewise means a bigger pilot shortage in the future.

Economic Recession

Like a mere raft on a vast ocean, the airline business will always surf the waves of the economy.  As the economy swells, so does demand for air travel.  When those swells subside, the result is a decrease in capacity throughout the airline industry, which adds to the number of furloughed pilots and pilots waiting in the employment lines for an airline job.  The Fed is forecasting the economy to exit the recession sometime in 2009.  This will signify the beginning of a new economic wave, and pilots can expect airline growth as demand for air travel increases because families begin traveling for vacations again and business travelers once again travel for meetings.

The Age 65 Rule

Each issue above has been a body-blow to pilot employment this decade, but the knockout punch was the change to the age 65 rule for mandatory pilot retirements.  The controversial change from the age 60 rule to the age 65 rule demolished aviation hiring for 4 to 5 years.  The retirement numbers that were forecast for the major airlines when the mandatory pilot retirement age was 60, will remain a fraction of those numbers until about 2013.  Pilot hiring at the regional airlines is largely defendant on pilot hiring at the major airlines, because experienced regional airline pilots get hired by major airlines, leaving vacancies behind. 

Pilot hiring will recover from the age 65 rule.  Furthermore, the airlines will not wait to hire pilots at the moment they are needed.  They need time to train pilots so they are not severely understaffed as the retiring pilots exit the airline industry.  Airlines may spool up hiring up to a year in advance of their actual need for pilots.

An effect of the age 65 rule that people may not be considering is that the number of annual retiring pilots around the year 2013 and beyond, will exceed the number annual retiring pilots that occurred before change to the age 65 rule.  Why?  Because more pilots will retire (and to be blunt, die) between the ages of 60 and 65 than they did between 55 and 60.

What does all of this mean?

It means that a future pilot shortage is not a myth.  Assuming something completely unpredictable doesn't affect the airline industry again, a drastic surge in pilot hiring is likely be seen in 2011, give or take a year.