"Rex expects pilot 'bloodbath' battle"

[PlankBlender]

Response to your article "Rex expects pilot 'bloodbath' battle" of Feb 11, 2008

Here's the draft of a response to this latest one-sided piece of "journalism" in relation to the pilot shortage (am I cynical to suspect the "article" came straight from Rex's press office?). I would much appreciate comments and suggestions for improvement before I send it off. Cheers!


Dear Sir,

It is with considerable dismay that I read the above article today. As a business consultant and aspiring pilot, I am disappointed that a national newspaper of excellent reputation would be so one-sided in their reporting, forgoing to present a balanced point of view as it would befit your organisation.

May I ask you to also report that pilots have been for decades some of the lowest paid employees in their peer group of highly trained technical staff. They hold considerable responsibility for the lives and safety of fellow citizens, just like nurses and doctors, yet many entry level pilots still have to attempt to make a living in General Aviation (for most pilots out of training the first step on the career ladder) on below award wages, often earning as little as $25,000 to $35,000 p.a.

In addition to this, the vast majority of trainee pilots have to fund their education themselves. HECS is not available for pilot training, and most banks will not finance it either. To get their first jobs, young Australians have to invest at least $50,000-$70,000, a vast amount for anyone to save up, especially for a young person just out of school – no wonder fewer are choosing aviation as a career path every year! Only a small number of ab initio trainees are accepted into cadet programs (many so-called cadet programs accept only fully trained commercial pilots), and then only at the price of being bonded to the airline/training provider for many years at reduced salaries – which in effect is of course just another form of self-funding training.

While for the last decades, there has been an oversupply of pilots in Australia (with the obvious result of keeping salaries low), recent baby boomer retirements and global industry growth, primarily in China and India, but also here in Australia due to strong domestic demand and especially the buoyant mining industry, is now redressing that balance. Many organisations have already reacted to the shift in demand and supply, e.g. Surveillance Australia is currently negotiating a 20-30% pay rise, primarily in order to retain staff.

It is noteworthy that Rex have so far made no attempts to increase their below industry average pay and conditions, but have gone to extreme lengths to communicate that the reason for their troubles must lie elsewhere. This latest statement about 60%+ attrition rates merely shows that in a situation of increased demand for pilot skills, the companies reacting slowest in addressing the de facto increased price for labour, are losing the same quicker than employers who are more realistically appraising market forces. There have been suggestions that Rex is using this kind of communication to save face before downgrading profit expectations or announcing other bad news, but at this point there does not seem to be independent evidence for this speculation.

I am taking it on good authority from many colleagues in the industry, that there is a large group of well qualified pilots who would be very willing to work in General Aviation and for regional carriers like Rex, but who cannot make a living or raise a family on the wages offered by the likes of Rex, hence many have left the industry. Consequently, I would dispute the notion that there are simply no suitably trained pilots around.

I think the Australian aviation industry will find that a large part of the so-called pilot shortage is due to the lack of attractiveness of the domestic industry at present, and once labour prices have risen to reflect demand, many Australians who have gone abroad to take advantage of better terms and conditions there, will return, as will said dormant pilots, and in the longer term, more young people will choose to become pilots again. One would also hope that the pledge of the Rudd government to revolutionise the Australian aviation industry will translate into actions in the near future, and aid the recovery of a vital and potentially hugely profitable Australian industry.

Another point in this discussion is the elasticity of demand. It is sometimes argued that one main reason for not increasing pilot remuneration, is that the public would not be willing to foot the resulting bill. Global and national figures, however, show clearly that changes in other variables, the best example being fuel surcharges of recent years, are absorbed without curbing air travel. Quite to the contrary, passenger numbers are up across the board and continue to rise even as the price for a barrel of oil approaches three digit figures! Especially with large parts of regional Australia being quite dependent on air travel, it is almost an obvious statement that the price of air travel is very inelastic, and pay rises for flight crews would not spell the end of profitable aviation business (whereas planes on the ground with the high cost associated with idle asset, might just achieve that!).

Please let me add that I have never worked for (or applied for a job with) Rex, and that I have no association whatsoever with any industry body.

I would be most pleased to see this letter published or the arguments contained herein further researched and the results made available in your paper.

If you have any questions regarding the points made, or require clarification, please do not hesitate to contact me.

Best regards,