China buys up flying schools as pilot demand rises
Mainland airlines scour world for staff with talent shortage threatening growth
Jamie Smyth in Melbourne and Ben Bland in Hong Kong MAY 11, 2018
Chinese airlines are buying foreign flying schools and poaching pilots, amplifying a talent shortage that has affected airlines in other regions. “The growth in Chinese aviation is unprecedented in our lifetimes and probably in history,” said Paul Jebely, a Hong-Kong-based lawyer specialising in aviation. “There have been more aircraft ordered than there are pilots to fly them. ” The squeeze on flying talent has triggered flight cancellations, dented profits and threatened the industry’s ambitious growth targets around the world. Emirates is the latest major airline to feel the impact of a war for aviation talent with the Middle Eastern carrier cancelling flights and grounding aircraft this month due to a shortage of about 125 pilots. “We’re a tad short of pilots,” Tim Clark, Emirates chief executive, said last month in a moment of understatement, adding that Chinese carriers were offering extremely competitive packages to pilots to move to Shanghai or Beijing.
Chinese airlines are buying foreign flying schools and poaching pilots, amplifying a talent shortage that has affected airlines in other regions. “The growth in Chinese aviation is unprecedented in our lifetimes and probably in history,” said Paul Jebely, a Hong-Kong-based lawyer specialising in aviation. “There have been more aircraft ordered than there are pilots to fly them. ” The squeeze on flying talent has triggered flight cancellations, dented profits and threatened the industry’s ambitious growth targets around the world. Emirates is the latest major airline to feel the impact of a war for aviation talent with the Middle Eastern carrier cancelling flights and grounding aircraft this month due to a shortage of about 125 pilots. “We’re a tad short of pilots,” Tim Clark, Emirates chief executive, said last month in a moment of understatement, adding that Chinese carriers were offering extremely competitive packages to pilots to move to Shanghai or Beijing. China's pilots get their wings in Australia In September Ryanair axed 20,000 flights due to a rostering mess-up made worse by pilot shortages. This forced the low-cost carrier to reverse a longstanding policy and recognise trade unions and agree new pay deals — a move that it said would cost it €100m ($120m) a year from 2019. Experts say the pilot shortage has been prompted by surging demand for air travel fuelled by the rise of low cost carriers in recent decades. Some say this has gone hand-in-hand with a lowering in the status and pay of pilots, in comparison to other industries, and the rising cost of flight training in western nations, which is putting off new recruits. China is on course to overtake the US as the world’s largest air travel market by 2022, according to the International Air Transport Association. US aircraft maker Boeing predicts China will need 110,000 new pilots in the years through to 2035, and its airlines are expected to purchase 7,000 commercial aircraft over the next two decades.
China’s aviation market grew by 13 per cent last year, with 549m passengers taking to the skies, double the number who flew in 2010. Growth is being driven by the rising middle class, an expansion of routes by Chinese airlines and the easing of visa restrictions by foreign governments keen to attract Chinese tourists.
The number of pilots and co-pilots working in China almost doubled between 2011 and 2017. Over recent months China’s main airlines — China Eastern, Air China, China Southern and Hainan Airlines — have stepped up recruitment and are expanding their offshore training. “Chinese airlines have raised pay dramatically,” said Dave Ross, the president of Wasinc International, which helps Chinese airlines find foreign pilots. Mr Ross said pilots coming from Central or Latin America, and some places in Europe could quadruple their compensation in China. The starting salary offered to foreign pilots in China has jumped over the past 10 years from $10,000 per month to $26,000 per month, tax free, and was still rising, he said. “Some Chinese airlines are offering tax-free salary packages, which can be up to twice what western airlines offer,” said Murray Butt, president of the Australian and International Pilots Association.
India’s surging air travel — where passenger numbers have been growing by an average of about 16 per cent a year since the beginning of the millennium — adds more pressure to the global pilot shortage.
Having seen rapid growth in passenger numbers over the past few years, Indian airlines have been recruiting from the military, from abroad and from their competitors by offering increasingly lucrative contracts. They have also made it more difficult for pilots to leave, forcing commanding officers to give a year’s notice if they wish to leave. “Airlines have been poaching each other’s pilots, and this move was meant to stop some of that,” said one pilot, referring to the one-year notice period. “But as far as the pilots are concerned, it is outrageous.” Chinese airlines pay the tuition of cadet pilots and are intensifying efforts to develop more local talent. But there are only 22 pilot schools in China and restrictions on the use of domestic airspace mean they are increasingly looking overseas to partner with foreign flights schools. Almost half of China’s 5,053 trainee pilots last year were trained abroad, creating a flourishing business for flight schools and their owners in the US, Canada and Australia. “Chinese companies have been on a buying spree of foreign flight schools from Australia to the US and the Philippines to Canada,” said Mr Jebely. “There are many very happy flight school owners who have cashed out, with some significant premiums paid.” The gleaming new offices and recently purchased Cessna aircraft at CAE Oxford’s flight school at Moorabbin airport in Melbourne highlights how Chinese cash is transforming the flight school industry in Australia.
“About half our students are Chinese students at the moment — it means we can invest in aircraft and facilities that you see here,” said Mike Drinkall, general manager of CAE Oxford, which operates more than 50 pilot schools globally. China Eastern bought half of CAE’s Australian subsidiary in 2014. It is training 150 pilots at the centre this year and plans to double that number following a $50m investment in facilities, now under construction. The influx of Chinese trainees into Australian flight schools has coincided with a 25 per cent drop in the number of local trainees receiving commercial pilots’ licences — prompting concern among the country’s airlines. “
There is a shortage of pilots everywhere. We are lucky because we are at the top of the food chain,” said Alan Joyce, Qantas chief executive. “
But what we are worried about is that we are taking pilots from the military and general aviation, and we can’t keep doing that or the ecosystem won’t survive.” Qantas says it will open the biggest flight school in Australia next year and train up to 500 pilots a year. The school will train Australians but also foreign candidates — including Chinese — as the airline seeks to capitalise on the fastest growing aviation market in the world. “Given our brand name this could be a good business in its own right,” said Mr Joyce.