Sunday, June 15, 2014

New FAA ATP rules will reshape airline hiring

On August 1, 2014, a new FAA regulation goes into effect that will reshape the way that airlines hire pilots. The Colgan Air crash in 2009 led to changes in the requirements for airline first officers. Previously, FOs were only required to hold a commercial pilot license. Under the new rules, effective in August 2013, first officers were required to hold an Airline Transport Pilot License. The last phase of the regulatory change, coming in less than two months, will change the requirements for the ATP.

The changes were detailed by Aviation International News last year. Under FAR 61.156, ATP candidates must graduate from an FAA-approved course that includes a minimum of 30 hours of classroom instruction covering a variety of aviation and airline topics and 10 hours in a FSTD (flight simulation training device) before taking the written exam. At least six of the simulator hours must be in a Level C (full motion) simulator that replicates a multiengine turbine airplane with a maximum takeoff weight of more than 40,000 pounds. This is equivalent to the size of a regional jet. The flight simulator requirement is going to cause problems for both airlines and pilots.

The combination of higher licensing requirements and low pay for entry-level airline pilots has already created a pilot shortage at 11 of 12 regional airlines according to the Wall St. Journal. According to the laws of supply and demand, when a commodity, in this case qualified pilots, becomes more scarce, the price, in this case wage, of the commodity goes up. So far, this has not happened in the airline industry, partly due to the prevalence of union contracts.

One airline that has been feeling the pinch is Great Lakes. The regional operator of 31 turboprop airliners that typically fly into small airports, Great Lakes Airlines pays its new first officers $16 per hour according to Airline Pilot Central. This isn’t as much as it sounds because pilots are typically paid by the flight hour. Great Lakes guarantees its pilots only 75 hours per month for a gross monthly paycheck of $1,200. This is the equivalent of $14,400 annually. To make matters worse, Great Lakes pilots are not paid at all during new-hire training, a process that can last up to three months. They also incur a training contract that requires them to pay $7,500 if they leave the company within 15 months.

The economic reality is that there are too few pilots who are willing to work for the wage that Great Lakes is offering. In March, USA Today reported that the airline was suspending flights to some destinations due to the shortage of pilots. In spite of this, the airline and the pilot union cannot come to an agreement on raising contractual wages.

Great Lakes is not alone. A Wall St. Journal analysis found that the average regional airline first officer earns $22,400. Five years later, if the pilot is still a first officer, the average base pay would only be $35,100.

This brings us to the question of the flight simulator training to earn the ATP. AIN estimates that the new training rule will cost ATP applicants “thousands of dollars.” In truth, the cost will be probably be on the order of $20,000. Simulators are not plentiful and they are not cheap. The obvious question is why any pilot would pay $20,000 for a job that only pays $15,000.

The most obvious answer is that airlines should hire pilots who meet ATP requirements and provide them with the training required to pass the ATP written test and checkride as a part of the new-hire curriculum. After all, airlines are providing new hires with simulator training already. The problem is more acute for airlines like Great Lakes that operate airliners that weigh less than 40,000 pounds.

Minimizing the impact of the changes to the ATP is only half the battle. To attract new hires, regional airlines will be forced to raise wages to compete with other industries. To gain the experience and flight time needed to earn an ATP will still take years and thousands of dollars in training costs. Many of the traditional “time-builder” flying jobs, such as flying checks, no longer exist. It will be difficult and costly for neophyte pilots to gain the 1,500 hours required for the ATP. The entry-level jobs at the airlines will have to become more attractive to encourage prospective pilots to make the commitment in time and money.

There are several possible outcomes to the airline pilot crisis. One is that Congress will issue a legislative fix when the problem becomes so extensive that airline lobbyists and passengers alike demand a solution. An easy way to fix the problem would be to expand the restricted ATP license. Currently, the restricted ATP is available only to graduates of specific “institutions of higher education” or military training. Congress and the FAA could expand the list of acceptable institutions to include FAR 141 training schools. The unrestricted ATP could be earned after being hired by an airline and passing the initial simulator training.

Another helpful fix would be to eliminate the requirement to train on a 40,000 pound aircraft simulator for pilots who will fly smaller airliners. There is no reason that pilots of airplanes like the Beech 1900s that are operated by Great Lakes would need to train on a high performance jet that is more than twice the weight of the plane that they will actually fly in airline service.

If congressional help is not forthcoming, there is little doubt that the changes will drive up airline ticket prices. Regional airliners are already more expensive to operate than larger planes on a per seat basis. As ticket prices increase, more passengers will elect to either drive to their destination or to a major airline hub where fares are lower. This will lead to less airline service into many smaller destinations.

As regional airlines are squeezed by increasing labor costs on one side and shrinking revenues on the other, they may become targets for takeovers. One possibility is that regional airliners will be absorbed into the major airlines that are now their code share partners. It might make more sense for the name brand airline to control the hiring process and establish pay scales for regional jets and turboprops than to keep outsourcing to third parties. This would also allow the airline to exercise more quality control over its brand and customer service. The change would require agreement of pilot unions and the adjustment of scope clauses in their contracts. Absorption of regional jets into mainline carriers could introduce a new golden age of regional jets.

A final possibility is that some airlines will consider ab initio (“from the beginning”) training. The concept of hiring prospective pilots and training them from zero hours to the cockpit of an airliner is one that has been used by the U.S. military and some foreign airlines for years. Lufthansa operates a flight school in Goodyear, Arizona to train prospective pilots for airline service. Boeing is currently partnering with Emirates Aviation College in Dubai on an ab initio course that will take cadets from zero hours to an ATPL in 16 months. Ab initio training would allow airlines to utilize long-term planning for personnel needs rather than scrambling to hire pilots as positions become open.

The future of airline hiring and the ATP license is uncertain, but the airlines definitely need qualified pilots. The need is immediate and will persist for the foreseeable future. The new ATP requirements make the pool of available and qualified pilots smaller, which will have the effect of making the pilot shortage worse. If corrective steps are not taken, canceled flights will soon become much more common.


Read the full article on Aviation Examiner

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