New Report: Effect of Liberalisation on Jobs

[Flying Lawyer]

I found this while trawling CAA publications, and thought it might be of interest to professional pilots.

The CAA has examined the effect on employment of the liberalisation of European aviation markets, and considered the potential impact of an Open Aviation Area covering the EU and the US.
The findings have just been published in: CAP 749 The Effect of Liberalisation on Aviation Employment
I haven't read the entire paper, but this is a summary of the findings:
Liberalisation has facilitated the growth of the aviation market and has boosted employment in that sector in the UK.
The structure of the passenger airline business acts as a natural constraint on the ability to shift jobs overseas.
Pilots in particular are a skilled and scarce resource - there are not large numbers of suitably qualified pilots elsewhere that would readily be able to take over jobs from EU or US pilots.
The phenomenon of “flags of convenience” that has been seen in other industries and led to a loss of jobs from a particular country is unlikely to occur in aviation.
The perceived threats to labour from liberalisation are not borne out by experience.
Liberalisation should not be seen as a threat to labour – it should help to create benefits for employees.
Market access restrictions are not the only protection for labour interests.
The situation within the US domestic market reduces the impact of liberalisation on the US industry.
The CAA concludes that fears expressed about liberalisation of the EU-US aviation market resulting in jobs being lost "would seem to be overstated" and "need not stand in the way of reforms that would sweep away much of the outdated regulatory structure that has existed in aviation since 1944."

If anyone wants to read the full report, CAP749 is here (http://www.caa.co.uk/docs/33/CAP749.PDF).
Note: It's a pdf file - you'll need Adobe Acrobat or similar installed to read it. Free downloads of the programme are readily available on the net.


Tudor Owen

[answer=42]

Flawyer,

Yes, this is more or less what would be expected. Also, with a larger market for the specific skills, there could be a reduction in variability over time of employment and perhaps wages. Greater competition might reduce the gap between the highest wages and the industry median. If there is a shake-out of 'straggler firms' at the start of liberalisation, it might also mean a reduction in the gap between median wages and the lowest. But this is just speculation.

Could you please expand on:
'The situation within the US domestic market reduces the impact of liberalisation on the US industry.'

answer=42

[Flying Lawyer]

'The situation within the US domestic market reduces the impact of liberalisation on the US industry.'

I can expand on what the CAA says:"The strength and competitiveness of the US domestic market (which accounts for around 75% of revenues for US airlines) means that the impact of increased competition on international routes for a US carrier in terms of its overall market is likely to be far less, and that the overall effect on US airlines of new entrant competition will be "tempered."

and

"Fears that the US would be overrun by a sudden influx of cheap pilots from Europe are unlikely to materialise, partly because of natural restrictions but also because pilots that are trained to a sufficient level to enable them to operate US aircraft are a scarce resource, and there is a limited pool available from the lowerwage countries of Central and Eastern Europe.
Moreover, the imbalance in market size means that the US pilot labour force will continue to dwarf that of the Central and Eastern European countries for the foreseeable future.
It is also important to recognise that non-wage costs are likely to have as much bearing on airline management decisions on location decisions as direct wage costs.
"pilots that are trained to a sufficient level to enable them to operate US aircraft"
Slightly ambiguous. :confused:
I wonder whether that means 'good enough by US standards' (with that roll of the eyes heavenwards which often accompanies comments by CAA personnel when mentioning the FAA) or, that the CAA at last acknowledges that American trained pilots can fly safely, and the FAA isn't the aviation authority of a developing third-world country and knows what it's doing. ;)

[Sonic Zepplin]

I believe it to be highly unlikely that most FAA pilots would express interest in leaving their lives in the US to pursue positions in the far reaches of the world, and I stress most. Even those who have been effected by recent down turns.

CAA pilots on the other hand, have always looked abroad, because this has typically been where the action was prior to the EU opening it skies to a more liberal operating structure. The EU's changes in regulations have obviously effected the business model of the EU airline industry, as evidenced by proliferation of easy jet, virgin and other low fare carriers, all of which have provided several opportunities for the EU native.

Historically, the Middle East, and Asia have always tapped the professional abroad to ease the demands of growth, but as I see the labor pool of these countries develope, the pay packages that have attracted this type of professional is now limited, and make the change of venue for many unrealistic in terms of pay, quality of life, etc., etc....

The growth in these countries aviation markets (Middle East/Asia) will likely put pressure on management to fill the cockpit with local talent, which is limited in avalibility. This will and has forced the employer to look abroad to fill the flight deck with foriegn crews interested in building a long term relationship with the overseas employers, and I stress long term.

As a pilot with years of experience moving from position to position to get better pay and better working conditions there comes a time where the move becomes a lateral or even a loosing proposition.

Pilots unlike any other profession (business, medicine or law) always return to the bottom of the senority list even with greater experience they have gained over years applied to the profession. When they move from job to job, they loose seniority and pay, which ultimately reflects in quality of life. Whereas the typical experienced business person, doctor, or lawyer, likely recieves hire pay, partnership, or stock options with their respective professional moves.

Eventually, many pro pilots will opt for staying put with current position and pay as seniority become to large and more difficult to penetrate.

As pay packages erode, those who are thinking of joining the profession will begin to look at other professions with less restrictions and better quality of life, and those that are in and qulified will leave for better opportunities, only if it makes good business sense.

Just one mans perspective

[answer=42]

FlyingL

Thanks for your reply and apologies for my laziness.

Your quotation contains a very important point:
It is also important to recognise that non-wage costs are likely to have as much bearing on airline management decisions on location decisions as direct wage costs.

i.e. airlines that have choices about where to pay (and perhaps base) personnel are more likely to choose low non-wage cost locations such as the UK in preference to e.g. Belgium or Germany.