Idaho Cargo Airline, a FedEx Contractor, Can't Find Enough Pilots to Grow
It's not just the regional passenger airlines that face pilot shortages. Regional cargo carriers, who typically fly secondary routes for UPS (UPS) - Get Report , FedEx (FDX) - Get Report and DHL, face shortages too.
The shortages at regional passenger carriers have led to the elimination of some routes, the bankruptcy at Republic and signing bonuses including $15,000 at regional airlines owned by American (AAL) - Get Report .
For regional cargo carriers, the problem has been less extensive and less publicized. In fact, spokesmen for both FedEx and UPS said the two giant overnight package carriers have seen no impact. "We do supplement our fleet of 237 jets with contracted lift from smaller carriers," said UPS spokesman Mike Mangeot. "That network is working fine."
Nevertheless, in Hayden, Idaho, near Coeur d'Alene, Empire Airlines, which flies primarily for FedEx, is having trouble retaining pilots or finding new ones to hire.
"We are probably losing 20% of our pilots a year," CEO Tom Komberec said. "But the thing that has me extremely alarmed is the pilot pipeline. The input is 25% of what it used to be 10 or 20 years ago.
"Companies like Empire, we are able to staff our flights for customers right now, but we do not have the margin of extra pilots that we used to have," Komberec said. "So we are running close to the bone, which prevents us from taking on new opportunities for existing carriers or looking for new business.
"If you're struggling to retain what you have, you have to be careful about trying to expand," Komberec said. "And if there's not a fix, it will affect our ability to crew the airplanes we have, and something will have to give. They will have to find some other way to move freight."
For FedEx, UPS and DHL, another way to move freight likely means trucks in place of aircraft on secondary routes, which would likely increase the amount of time required to make deliveries.
Empire operates a fleet of 56 aircraft including 14 ATR-42s, seven ATR-72s and 35 single-engine Cessna 208Bs. It had 2015 revenue of about $50 million, about 85% from freight operations. While FedEx is the primary customer, Empire also operates Hawaiian Airlines (HA) - Get Report regional subsidiary Ohana by Hawaiian with three ATR 42s.
Empire may be an outlier -- the pay is not low and for some, the opportunity to live in the Northwest adds value. For others, however, "when you're a young man or woman, you have a different view of where the important things in aviation are," Komberec said. "The draw to fly 777s across the pond is so great for many of them."
Empire ATR first officers start at around $38,000 annually and 30-year captains make around $100,000 annually. Cessna pilots start at about $40,000 annually and can earn about $75,000 after 15 years. Komberec said he has about 115 pilots, but "I would like to have 130."
The pilot shortage has two principal causes. One is the low pay offered by regional carriers, which typically bid for contracts from bigger airlines and must keep costs low in order to compete. The Air Line Pilots Association said some offer starting salaries below $30,000. "The supply of pilots willing to work for $25,000 is almost zero," said ALPA President Tim Canoll.
The second reason for the shortage is a Federal Aviation Administration regulation that took effect in 2013. The regulation, adopted following the 2009 Colgan Air crash near Buffalo, raises the required experience level for first officers to 1,500 hours from 250 hours. Exceptions exist for former military pilots with 750 hours and graduates of four-year schools with 1,000 hours.
The Regional Air Cargo Carriers Association (RACCA), which includes about 50 regional air cargo carriers and about 170 related companies, said the regulation has caused disruptions in small package deliveries from UPS and FDX hubs in Atlanta, Memphis, Cincinnati and Fort Lauderdale. Routes have been abandoned and employees have been furloughed, RACCA said. Komberec is RACCA chairman.
Canoll said the minimum flight hour requirement, "at its heart, is a safety initiative, the result of four fatal accidents in which crew training and lack of experience were contributing factors. We cannot allow economics to impede.
"Regional carriers can still do business," Canoll said. "There are plenty of qualified, certificated pilots available to fly. They just need to be enticed to do it."
While Komberec said many U.S. flight school graduates are foreigners who return to their home countries to work after learning to fly, Canoll said, "they do that because they have an opportunity for better pay and working conditions and benefits overseas then they do here, especially starting off.
"People are clamoring for a change in the regulation, but the regulation they want to bypass is safety," Canoll said. An alternative would be to provide more student loans for pilot training, rather than "to cut corners so we can put pilots in the cockpit with less experience," he said.
At Empire, Komberec used to hire pilots with as low as 500 hours and train them as first officers in the right seat of an ATR.
"People coming from the University of North Dakota and Embry Riddle {two of the top pilot training schools} had a direct pipeline," he said. "They had well-structured flight and academic training."
In many cases, it was better and safer to hire pilots from the schools than to hire "guys who scraped up hours flying themselves around," he said. "People can come to us with 1,500 hours but they didn't have the opportunity to learn in a complex and structured environment."
As for Empire's Cessna's, which operate with just one pilot, the experience level required by the FAA is less because Empire operates these aircraft under FAA Part 135, which does not apply to scheduled service. But because the pilots fly alone, Komberec requires them to have more experience than first officers flying ATRs with experienced pilots sitting in the left seat next to them.
"Today, kids have a difficult time figuring out how to get from 300 hours to 1,500 hours," he said. "We used to be able to provide the path for them to do that."
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.