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James Dennin, Kapitall: A pilot shortage is causing difficulties for some airline stocks, especially regional providers.
Airlines have done incredibly
well in the early weeks of 2014, led in part by
American Airlines (AAL), now the world's largest carrier after its merger with US Airways. However, while the big conglomerates have prospered, regional airlines are facing a major problem in the form of pilot shortages.
Continental Airlines (UAL) regional partner crashed in 2009, Congress initiated an investigation and mandated industry changes. The resulting regulations increased the amount of flight hours first officers need to earn an Airline Transport Pilot certificate by a factor
That made becoming a pilot more expensive. In some cases getting the flight-time you need can cost as much as $100,000. That's not too big a deal for the pilots working for giants like American whose starting salaries are around $60,000 a year, b
ut for pilots at regional airlines like Republic Airways (RJET) the new regulations present a substantial financial burden. Starting salaries at the smaller shops start around $21,000 – hardly enough to pay off such a large amount of debt. As a result, far fewer aspiring pilots are completing training. It's just not worth it.
At the moment there are thousands of furloughed and expat pilots who've chased better salaries overseas. If you work for Emirates Airlines, as opposed to a regional company, the salaries are as much as 4 times larger – not counting benefits.
Will regional airlines find the money to pay their pilots better, solve the problem of expensive training, or face continued pressure from larger competitors? We built a list of the 7 regional airlines that are also publicly traded.
Click on the interactive chart below to view data over time.
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