Correction or Crash?

Gill Fowkes, manager of customer and partner school relations at Bristol Ground School, offers an insight into the current pilot recruitment market.

There are several indicators that the pilot recruitment market in Europe may have reached a peak, but is this just a temporary setback or the start of a downturn?

During the last few years, airlines have been recruiting at an unprecedented rate and industry conferences and forums have echoed with talk of an impending, if not current, airline pilot shortage.

While it is fair to say that the words ‘pilot shortage’ have appeared in print sometime in most years over the last decade, perhaps fuelled by an ever optimistic training industry, during the last few year many employers have expressed real concern about the number and/or quality of applicants and their ability to sustain growth without an assured supply of new pilots.

The training industry capacity and number of new licences issued has not kept pace with the growth in the number of commercial flights

The reasons for concern about shortages are obvious: the growth in air travel is a matter of record and more flying means more pilots required. However, the training industry capacity and number of new licences issued has not kept pace with the growth in the number of commercial flights.

The question about quality of applicants has caused some debate. Of course, everyone applying to airlines has already achieved at least the technical standard: EASA CPL/IR with ATPL theory exams and an MCC certificate (the so called ‘frozen ATPL’). So why are so many applicants (maybe 50%, according to one industry expert) not acceptable to the airlines?

There are probably two reasons. One is that trainee pilots are often self-selected. The main career entry criteria is often that of having enough financial resource to contemplate training rather than necessarily the right aptitude for the airline pilot career.

The second reason is that there is an incentive for the training industry to take on customers and continue to provide them with a service even when they are struggling in their training, as there is no direct consequence for the training organisation if they graduate pilots who are not successful in finding employment.

Perhaps our industry is not alone in this. How many university graduates fail to find employment in related industries? You may well find a law graduate who is working as a barista rather than a barrister. Similarly, there are many commercial pilot graduates not working as commercial pilots.

This has led to the introduction of assessment before training (such as the Wings Alliance scheme) and some airlines are for the first time setting up training schemes to assure their supply.

2019 started with perhaps the largest consumer in Europe of flight school graduates, Ryanair, predicting up to 1000 vacancies. 8 months later, Ryanair have announced they have 500 pilots more than they need and are cutting jobs and stopping recruitment. What has gone wrong, and how long term is this?

Well, if you assess the Ryanair announcement carefully, CEO Michael O’Leary states several factors in his decision: lower air fares in the UK and Germany resulting from over-capacity in those markets; higher oil prices; increased staff costs resulting from a more generous pay settlement following their dispute with their flight crew last year; delays in the introduction of the Boeing 737 Max which alone will mean 600 fewer pilots and cabin crew are needed this year in addition to existing over-staffing; and an over staffing of around 500 pilots resulting from dramatically reduced resignations this year. On top of this, Ryanair are concerned that a no-deal Brexit will further reduce demands in the UK and Irish markets.

When the largest animal in the herd sneezes, we have to consider the rest of the herd catching a cold

Some of these factors will affect the industry as a whole while others are Ryanair-specific. However, when the largest animal in the herd sneezes, we have to consider the rest of the herd catching a cold.

Other airlines (eg easyJet) have talked about over capacity in some European sectors, and if Brexit further dampens demand this will get worse. If demand does not return, capacity will reduce and with it the number of pilots required.
Higher oil prices eventually must be passed onto passengers and higher fares influence demand; however, fares will only rise when the over-capacity disappears.

There is an obvious link between pilot terms and conditions and the job market; when there is a pilot shortage, competition between employers increases leading to better Ts & Cs all round.

However, the reverse it also true. In Ryanair’s case, their settlement may have directly increased their staff costs but also indirectly put even greater strain on the budget when pilots became more reluctant to move on to green pastures; that might help reduce the recruitment, selection, and training budgets but those savings will not offset the increased staff budget.

The B737 Max issue does affect some other airlines but is probably a welcome relief to Ryanair as they are also reporting over-capacity.

So, which of these are temporary and which are longer-term issues? Well, it’s fair to say that the Brexit uncertainty is the biggest unknown. It might have quite a long-term dampening on the UK and adjacent markets. Or it might be a flash in the pan. On the other hand, over the long-term, the growth in passenger numbers and therefore pilot jobs is widely expected to be steadily if not dramatically upward over the next decade in Europe.

At a recent conference, one presenter showed a graph of passenger numbers which spanned the dramatic industry downturn following the events in New York on September 11th 2001. There was a barely discernible dip in the relentlessly upward trajectory of the graph. While it is terrible at the time when a pilot loses a job offer or a job, the fact is that the best people quickly find other work.

Only time will tell whether the Ryanair announcement marks a short-term correction or the peak of the job market. However, history indicates that it is more likely to be something we look back at as a minor blip.

Author: Rob Hall

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