The AustralianAugust 29, 2008 12:47am AEST Rex pilot shortage under control:
Steve Creedy, Aviation writer | August 29, 2008
REGIONAL Express is optimistic it is well on the way to solving a crippling pilot shortage that forced it suspend several routes last financial year.
The airline feels it can handle fuel prices at today's levels but needs its pilot attrition rate to stay at 25 per cent or below if it is to earn a net profit this financial year like 2007-08's $24.3million result.
After losing half its pilots last financial year, the airline is hoping it will have enough to allow it re-open some suspended routes in the second half.
But managing director Jim Davis said the airline wanted to be absolutely confident it had enough pilots to weather future recruitment drives by major airlines.
Mr Davis said the last thing Rex wanted to do was restore a service and cut it again two months later. "So we want to build up. And we feel by early next year, by about February, it might be less of an issue."
Rex executive chairman Lim Kim Hai said pilot attrition remained the big problem.
Rex is not hedged and offsets fuel increases or falls by raising or dropping surcharges.
"We are not so concerned about the fuel prices at this level," Mr Lim said.
"If it goes to $US140 (a barrel), $US160 then we have to review it, but we could deal with it at $US140, even up to $US160.
"We have a lot of resilience as far as the fuel prices are concerned."
To address the pilot shortage, the regional carrier has established its own aviation college in Victoria and established a cadet scholarship scheme that requires graduates to stay with the airline.
It has also ramped up recruitment, including a drive to lure South African pilots.
Mr Lim said the airline would be better able to deal with its attrition rate when 40 students graduated from its new academy in October.
Union officials and pilots have been urging Rex to address is pilot shortage by improving wages and conditions.
They have also expressed concern about the effect of the pilot exodus on the level of experience in Rex cockpits. But Mr Lim said Rex could not compete with its bigger competitors. "You have to be realistic," he said. "If we had to pay 10 per cent more to avoid the problem, or we had to pay 20 per cent more to avoid the problem, it could still be something we stretch for," he said.
"But the pilots who leave are not looking at 10 or 20 per cent in their new jobs with Qantas and their new jobs with Virgin. They are really talking about 80 to 100 per cent increase and on top of that a career as a jet pilot.
"More than the immediate money, (it's) the future career. So why do you even bother to fight that, because you can't win the battle?"
Mr Lim said the airline was offsetting the pilot losses with its cadet school, whose graduates are locked in for six years.
"In a couple of years we'll find we'll have a huge crew of pilots that are no longer going to leave us," he says.
"And because there are new pilots coming on every year, we have the ability to control the supply.
"So in a way, we've turned a very bad situation to something where we've become more confident."
Mr Lim said Rex would be hit if the drop in the Australian dollar outpaced falling fuel prices but, he doubted this would happen. There had been about a 10 per cent fall in the currency compared to a drop of about 15 per cent in fuel prices.
"I don't think the outlook is going to be tremendously worse than it is today," he said. "Of course, this time last year we wouldn't even think of a $100 fuel price."
The airline's $24.3 million net profit was about 3 per cent above last year and better than revised guidance. Officials were encouraged by a strong fourth quarter in which after-tax profits rose 31.7 per cent to $8.3 million.
Group revenue grew by 15.7 per cent to $260.5 million, partly due to the consolidation of results from Pel-Air for the full financial year.
Passenger numbers for the year rose by 5.6 per cent to almost 1.5 million while load factors decreased marginally to 68.1 per cent.
Passenger numbers remained relatively strong despite moves by the airline to increase its average fare to $152.80 in the fourth quarter of 2007-2008, compared with an average for the year of $141.30.
lian, 29 Aug 08..
So now management have given up on trying to compete with wages, putting ALL their faith in cadets and south african pilots, and hope that the fuel price and au/us dollar remains within limits?
sounds like a really really really good strategy. well done you muppets.
this is not even being REACTIVE... this is just tossing the cards in the air and hoping they land with a royal flush. Admitting that there IS a problem, but not doing anything about it!
And Steve Creedy.... for shame! do you REALLY think that rex has their pilot shortage under control ?