Aviation Crystal Ball

[Niles Crane]

My take on the industry due entirely to the Pilot Shortage!

The Big Boys:

Early December Virgin, QF and PornStar will start cancelling flights. They will book everyone over xmas and take their money, then stuff everyone around over xmas.

This will lead into next year with cancellations a dailly event (yield management).

From about March you will start to see the Business Class seats increase to keep the yeild up on the reduced number of flights. Eventually City Flyer will be business class only!

Wages will go up to try and stop the flood to the sand pit! Captains will probably go to $400K

The Litlle Boys:

Pilot wages have already started to rise. Companies have 2 choices.
1. Go broke due to no crew.
2. Pay the market rate for Pilots.

Now this is where it gets interesting. Up until now Pilot pay rates have been based on Aircraft Size. Small Aircraft = Small Salary, Large Aircraft = Large Salary.

Market Rates will be Captain or F/O regardless of aircraft size.

By next June a Line Captain on any pressurised 2 crew aircraft will be paid $150K plus super. F/O's will be about $70K plus super.

It will be up to the management of all the regionals to adjust their thinking, pricing structure and attitude to stay in business.

The real competition for Pilots is now the Big Boys and Pilots will for the first time since WW2 make choices based on everything other than Pay Scale.

Every regional now has serious crewing problems and current management thinking is to up the pay scale to poach crews from other regionals.

This will not work as the pay has to compete with airlines or most will still take the Jet Job!

All that is required is 100 to stay in the regional environment and not go to the Big Boys.

Casual Captains

By June next year the number of freelance Captains will increase.

Most will be 2 weeks on 2 weeks off, fully found with travel and a daily rate of between $1000 and $1500 for T & C Captains. ie $180K to $270K

CASA

CASA now has a serious problem with low houred crew becoming Captains and the number of Captains flying the same type for different companies.

CASA and the companies now have to get together and standardise SOP's for the same type. Part 119 by CAO!

Interesting times ahead.

Call me an idiot, but I see no other way for the industry to stay an industry.

Niles

[SmokingHole]

OMG Niles! Think you've just started the worlds first popcorn shortage

[Ultralights]

http://s3.amazonaws.com/advrider/lurker.gif

[hoss]

Mate, things are getting better for pilots by the day at the moment. I appreciate your optimism but we are a long way from anything like this, a reeeeaaaal long way.

Keep the dream alive.

:)

[Ref + 10]

It'd be nice though.....

[1224]

POWER TO THE PEOPLE!!!




Oh right, we're just pilots.:mad:

That wont work....


Ok then.... Power to the pilots!!! .... :ouch:

[Trashed Aviator]

Seniority is a dead duck. Many pilots would come home to fly anything if their qualifications and experience were recognised. Bring on the AWA's.

[Ralph the Bong]

Dead right, TA. Seniority is an idea whose time has come... and gone. The concept serves to apply a brake on flight crew terms and conditions. Seniority also acts to retard the development of a positive operational culture within evolving companies. Examples of both facets are already manifest within the Australian industry.

[Howard Hughes]

Ok my take:

The airlines will have no problem crewing their aircraft, as there will always be a steady supply of airline hopefuls! They will however become a training ground for higher paying foreign airlines.

Sim slots all over South East Asia/Pacific will be at a premium (this has already started).

The regionals will be crewed by direct entry captains, the f/o's will be a mixture of cadets and anyone else who has a bare CPL and IFR rating!:ok:

But then I wake up...;)

[KRUSTY 34]

Carefull Niles,

Aircraft will get ya'

[aircraft]

Niles Crane said:
By next June a Line Captain on any pressurised 2 crew aircraft will be paid $150K plus super. F/O's will be about $70K plus super.
I hate having to always be the stick in the mud, but where is the money for this going to come from? Do these airlines have a great big pot of money they keep hidden away in some back room?

The money can only come from the fare paying public, which means increased ticket prices. But, increase the ticket price and what will happen? Some people will still buy the ticket but some will no longer be able to afford to. Increases of as little as $5 can begin to result in less sales. For the kind of pay increases alluded to by Niles Crane, a lot more than $5 extra per ticket will have to come in.

So, can you see that, as you increase the ticket price, although you get more money per ticket, you sell less tickets?

Once you have increased the ticket price by more than some critical amount, the total amount of revenue will end up being less than before the price rises.

How much is that "critical amount"? There are many variables, but it can be as little as $2 to a $100 ticket.

The most likely outcome then, of increased ticket prices, is not greater pay for pilots, but less passengers travelling and less flights. And this of course means less pilots required, so there would no longer be a pilot "shortage"!

And the pilot pay would probably end up around the same as before the price rises! Funny that!

Sorry to always have to be the stick in the mud but somebody has to.

[neville_nobody]

WA is one place where salaries will go up as the mining companies HAVE to to have experienced pilots to fly their aircraft. They also have to fly. I don't think the east coast will go as crazy, but mining charter will be where the coin will be. Given the sort of dough they pay mine workers and the amount of money that mining companies have floating around paying a pilots 100G wouldn't be a problem.

Aircraft of course would argue that charter companies should ground aircraft instead of paying decent money.:ugh:

Also by paying real money the charter companies will keep people as there are plenty of sand grophers who want to remain in WA.

[victor two]

Guys,
Employment prospects may be improving for aviation but the "name your price" days are not going to eventuate any time soon. Other factors will intrude, market forces always adjust, it's not just employment or skills numbers that drive wages. GA has had golden days in the past too and wages and conditions in GA have never been massive, not even when GA was booming in thsi country. Lets not forget that the last few years have seen a significant reduction in jet salaries in many sectors too. You think that Jetstar F/O's are getting what Ansett pilots were getting before it went bust and this website is chock full of pilots bleating about poor wages and conditons and job security.
Some of you punters are like amatuer stockbrokers, you see one little jump in the chart and think it means boom times forever .... when the average trend is still slightly down on last years price.

[Ralph the Bong]

Aircraft is a management troll, no doubt about it.:hmm:

[4PW's]

Qantas only made how much profit this year?

You want to know where the money comes from, aircraft?

Reduced profit.

[4PW's]

Don't want to reduce your profit?

I understand really I do as you are, after all, Management, and your bonus is tied to profit. Fine, don't cough up.

No pilots? Gee, that's just too bad. Plane stays against the fence. Punters go to Tiger. You lose profit, and your bonus dries up like an apricot.

Okay, back to the drawing board. You and your mates act like cats as you choke and spit and cough up a fur ball of money. Your profit dries up, but not too much mind you. A billion goes a long way, now.

Nonetheless, your shareholders freak, they toss your ****ty little stock, you get less bonus, but here's the kicker: punters couldn't give a toss about the share price. They need to get to their o/s destination in one piece, and to do that they want you to pay THEIR (not your) pilots properly.

Don't like pilots, do you, aircraft. It hurts, shelling out what would otherwise be YOUR bonus that YOU earned.

What the hell, you could leave those pretty little planes against the fence:E.

[solowflyer]

appears that the majority of pilots being trained these days are from the asian countrys. Could we see an influx of these O/S pilots being imported back into the country at a later stage to keep the supply of lower paid staff coming in?

[SmokingHole]

Could we see an influx of these O/S pilots being imported back into the country

Not while the sleeping dragon continues to awaken. Pretty sure they'll all be needed at home.:rolleyes:

[aircraft]

Aircraft of course would argue that charter companies should ground aircraft instead of paying decent money.Neville, I have never said anything of the sort. What I have been saying, over and over again, is that these companies just cannot afford to pay what you call "decent money".

Given the sort of dough they pay mine workers and the amount of money that mining companies have floating around paying a pilots 100G wouldn't be a problem.Agreed. But the catch is: just how do you get that mining money into the pockets of the pilots?

If Skippers, for example, were to bid on a mining contract with prices that would bring their pilots "decent money", guess what would happen? Skippers would not win the contract - one of the other 9 or 10 turbine operators operating from Perth would undercut them!

Sadly, tendering for a contract with "sensible" prices and margins in your bid is a guaranteed way to lose the bidding. Welcome to the cutthroat world of commercial aviation. But surely you didn't need welcoming - you knew this already didn't you?

Time to roll out a favourite quote of mine from the excellent book "Qantas Flightpaths" by Geoffrey Thomas and Christine Forbes Smith again. This quote is from C.R. Smith, President of American Airlines. Don't think he is only referring to American aviation, or that aviation in that country is somehow different to Australia:

These days no one can make money on the goddam airline business. The economics represent sheer hell.

Yes, I know Qantas have been making record profits, but they are just having a good couple of years. Look over longer terms and include more airlines and you begin to see the basis for this gentleman's quote.

4PW's,
No airline in their right mind would use profits to increase pilot salary. Profits are just way too fickle. Sure, some airlines are profitable this year, but next year, and the year after?

No pilots? Gee, that's just too bad. Plane stays against the fence. Punters go to Tiger.Tiger are in the same boat.

Don't like pilots, do you, aircraft. It hurts, shelling out what would otherwise be YOUR bonus that YOU earned.I am a pilot in GA and have nothing to do with any management. Search PPRUNE for some of my other posts and you will see. I see things differently to you because I am a realist that understands the nature of our beloved industry.

[golfjet744]

If Skippers, for example, were to bid on a mining contract with prices that would bring their pilots "decent money", guess what would happen? Skippers would not win the contract - one of the other 9 or 10 turbine operators operating from Perth would undercut them!

Sadly, tendering for a contract with "sensible" prices and margins in your bid is a guaranteed way to lose the bidding. Welcome to the cutthroat world of commercial aviation. But surely you didn't need welcoming - you knew this already didn't you?


So how is this turbine operator going to find cheaper pilots and hence have a lower cost base. If they undercut but their cost base is the same then they lose money and go kaput.

I know what your suggesting but the fact is the market will eventually have to pay for the skills shortage. If the economics of the market are such that an increased cost base results in a shrinking of that market then there will be less demand for pilots. ie a higher cost base results in less work meaning less demand for pilots. The pilot market will then find its equilibrium, but only after the market has payed for the skills shortage.:ok:

[4PW's]

Sorry about that, aircraft. Venting my spleen against a PPRuNe phantom I misidentified as representing Management was wrong. I shouldn't have targeted you, and I apologise. Hey, I'm no Buddhist, but Karma got me in the form of shaking the my building like a wet dog drying itself. Bengkulu earthquake. Not cool. But back to the thread: you mentioned market rates, and that a high quote for a mine contract would lose against a competitor's lower quote, basis lower pilot salaries. Did you mean to compare that to quotes to build houses in the last 7 years? Perhaps you should have as the electricians, plumbers, chippys and blocklayers didn't play along. Every trade increased rates in quotes and still got the jobs because every other contractor increased rates at the risk of not getting the tradesmen to work for them as, oddly enough, people wanted houses built. Same thing may well repeat itself with pilot salaries. People want to fly from A to B and beyond. Without dissing you, who cares about some dumb-ass'd Seppo Manager in a GT book? So he can't make money. His problem. Nothing to do with pilot salaries. Logically, that this poor, unfortunate man can't make profits for his airline doesn't translate to he didn't pay the pilots well. CEO salaries weren't lowered recently. I read with interest that Qantas, that wonderful airline, has raised its CEO's salary right now. What on earth, which shook recently, makes you think your salary won't go up due to market forces, in the same way the electrician's has these last few years? My gut feeling is salaries won't go up as much as the original writer of this thread suggested, but hey, that's just me:ok:

[Pushback]

Aircraft, try a more positive thought process.... Look for the positives, not the negatives, why things WILL work, not why they won't!

Your "favourite quote":

"These days no one can make money on the goddam airline business. The economics represent sheer hell. "

:{ oh my :(

With that sort of attitude what can you expect? .... misery. There is some good literature around on the power of positive thinking. Be a realist, not a pessimist.

(Last I heard Qantas and Virgin are making excellent profits and have been for years, maybe Mr Dixon and Mr Godfrey don't share CRSmiths point of view)

Wish you luck in getting out of GA if that is your desire...

[Niles Crane]

I do not want to make this a personnel attach on an individual.

Aircraft, everything you have said is both right and wrong.

Yes some companies will go out of business over the next 2 years as all come to terms with the new environment. But only those companies who cannot manage "Change Management"!

The interesting point here is just because a company goes out of business does not mean that others will fill the void.

The pilots will move on to other companies, not just one company. This only happens in a take over.

The other companies that want to fill in the void have their own crewing problems and will not be able to take up the slack.

We do not need ANY COMPAINES pulling down the sign!

And yes I am in management and have been for over 11 years.

The last mining tender I was involved with (6 weeks ago), the mine asked how we where going to crew it as they are very aware of the crewing problems in the industry. What they are after is a strategy that sees their tender continue for the duration, not a cheep price and the tenderer cannot fulfill his promise.

Just because the first major increase happened in the West does not mean it will not effect the whole industry. This is a global industry!

Governments, both state and federal have to come to terms with this and change their policies for the industry, that is the regional industry. All political parties have a policy of keeping the bush viable, and aviation is a vital part of that policy. Governments will have to dig deep as well, not just subsidies, but tax reform etc.

Everyone has to change their thinking on Aviation, Governments, CASA, Companies, Unions and Pilots if the industry is to stay an industry. The fall out is much higher wages for pilots, especially Captains.

Companies will pay much higher wages but there needs to be a trade off as well.

This will be in the form of allowances, seniorority etc.

If they pay $150K pa for a Captain, Metro, Dash, B1900 whatever, they will also not want to have the added expense of working out early starts, late finishes, roster changes etc.

We have to expect that if we are paid that amount, they have the right to work us to the CAO, and they will want the best pilot for the job, not the next pilot on the seniority list!

We will get roster changes and it will not be the companies fault that this occurs, so if we get this type on money, we will have to work for it. You always have to choice to leave.

Gee the company did not give me 24 hours notice to a roster change so they owe me $200. Get over it, this is what will send companies broke, not $150K pa as the incidentals cannot be budgeted accurately.

This will be the reality of aviation for the foreseeable future.

Niles

[Ref + 10]

We have to expect that if we are paid that amount, they have the right to work us to the CAO, and they will want the best pilot for the job, not the next pilot on the seniority list!

We will get roster changes and it will not be the companies fault that this occurs, so if we get this type on money, we will have to work for it. You always have to choice to leave.

Gee the company did not give me 24 hours notice to a roster change so they owe me $200. Get over it, this is what will send companies broke, not $150K pa as the incidentals cannot be budgeted accurately.

I'm not arguing as such, but the increases on the West haven't made the slightest difference to the working conditions at the various companies. Prior to the increases people were working hard. Since the increase, they are still working hard. The increases didn't coincide with a massive influx of work.

[boofta]

Niles
Most of what you say is right, but you cling to the same old song.
There might be pay rises but companies will expect productivity
and flexibility from pilots.
That assumption is wrong,economics 101.
Its supply and demand, not, they are wanting more pay, so we
will pay more for this and that in return.
The extra will now be simply in pilots pockets, maybe reduced
productivity as well, or you will be out of business.
The cycle evolving is something never seen in my almost 40
years in the industry at all levels, and Looong overdue.

[knackeredII]

Aircraft et al,

You say that the airlines can't afford to pay decent wages any more. Well, it was not so long ago that they did pay decent wages and they WEREN'T going broke. What's happened since has been a continual mind game to employees to accept less, so that, ostenstibly they can reduce fares to the public, but more importantly divert more funds to management and shareholders.

If the business model will not support paying market rates for employees, then change the model or get out of the business but don't ask one or groups of employees to shoulder the burden. I've ben watching management play this game for a long time now and it's about their bluff was called!

[SmokingHole]

the market will eventually have to pay for the skills shortage

Exactly, the market ie the customer will have to cop the increase in cost.
Just as a shortage of oil drives up the price of fuel.

[Ralph the Bong]

Yeah the old arguement that the contract will go to the lowest bidder is just crap. If price was the sole determinant on demand, then why do so many people drive a BMW? For an aviation example, Skywest was not the lowest bidder for the WA turbo-prop routes but was deemed to be the superior supplier based on additional criteria.

Regarding the aviation industry, it is too simplictic to say that demand for air travel is price elastic so wages must stay low to stimulate demand. This is crap and management know this. It is the low yeild end of the market which is price sensitive. In any event, the elasticity of demand for air travel (in this low end market segment) changes and becomes less elastic as price falls. A saturation point is reached where price can fall to a point where demand is unaffected; the Joe Q Public can only take so many holidays per year!

The high yield end of the market is far less price sensitive. This is the business or 'essential' travel market segement. In WA, FIFO contacts will be offered to companies that can deliver the service AND at a low price. If Skippers pay their pilots more, they will retain staff and thus save training and other costs. At the moment, they will lose contracts because they cant deliver the goods. If other companies were successful against Skippers in a tender process based only on price, they would have to factor in other costs: employing more staff, acquiring airframes, engineering costs, workers comp...etc, etc..This would have to be factored into their tender bid. (Note that if this did occur, datal seniority would mean that there would be no chance for the pilots that are resultantly displaced to either enter the successful company at their current rank or to negotiate a higher salary with a company that now needs their skills- this exemplifies why seniority is a dead duck).

However, bad management means that some companies under-bid so as to appear competitive. They then have to find, in a panic, means to lower their costs so as to remain profitable. This is what drives management to try to cut pilot's conditions. However, many client companies can see through this behaviour and the problems that accompany it. There is a current case in another thread which exemplifies how a company made misleading promises as to what they could deliver and what could actually BE delivered. The whole process is now in the courts, I understand. Do BHP Biliton and WMC what that sort of crap with their FIFO contracts? I think not.

The mining boom in WA can easily support higher wages to crew, and so can the prevaling economic conditions support a general pay increase for all pilots. This can be done with a minimal increase to the price of a ticket: $10,000 a year more for an FO and $20K for a Captain summates to $30,000 for (say A320/B737) crew. With super', etc, this would equate to a cost to the company that must be passed on of ,say, $35K (being generous). The said crew would fly ~ 450 pax/day, say 200 days/year..gives a whole $2:57 per ticket. A$10K pay hike to each regional Pilot that flies for a company that employs 50 Pilots and carries 180,000 pax/year leads to a increase per ticket of $2.77.
I think the market can tollerate that! :hmm:

[Capt Wally]

.............a crystal ball in the shape of aviation would indeed be round..................for we are all but going full circle here with the predictions of future aviation. Am sure once upon a time the wages of pilots where not that good way back when aviation in this country was in it's infancy & we simply didn't know better or had nothing to compare with like we do today in the modern world. Sure we are worth more money (shall never dispute that fact!!!!) in pre dispute days it was a very comfy existance a few. But in today's climate a few here have hit the nail on the head with extra money for the pilots has to come from somewhere such as ticket sales. There are many aviation companies these days & they are now big business, registered on the stock market & worth zillions but the emphasis is on 'big buisness'. They are no more no less in the buisness of transporting people & making money for the share holders, much like a large ground based form of transport. The costs like all big businesses in the buisness of transportation are based on cost per head/parcel per mile travelled. The G. Dixons of this world even tho we may believe otherwise are no fools, that's how come they are at the top & we (pilots) are at the bottom of the food chain. The demands of pilots are just one minor part of the needed core mechanical requirements in aviation & those demands will vary as the world shrinks with modern travel now avilable to the masses . We are already seeing a world shortage to some degree of the skills needed to keep the machinery operating & that includeds the very important engineerers. (God love you guys for getting me home safely) Look today's world is spinning faster, probably in the physical sense as well, God knows my days seem to fly past! (pun intended) & we are now a very fast society that simply wants it all & wants it now (I'm no different than the rest of you guys out there)!.......& that 'want' COSTS!...hence we as pilots like just about every other living creature on this planet needs greater comforts, in the form of money for the homo sapiens (you, me), see told you lot out there, (those that are still reading this feet putting to sleep words that is) that's it's going 'full circle':-) It probably started off as a fair paid job to a well paid job as the world expanded back to a fair paid job & less these days. Strive for better T&C's that's something that was started way back before the 40 hr week, just bare in mind that for a plane to carry a certain amount of weight it needs a certain amount of wing area, we (pilots, engineers etc.) are that 'wing area', increase the weight & we are needed more !.........finally we have a foot in the door because the 'plane' is getting heavier !!!...........Oh God it's nice to be old, one can get away with what I just spilled out of my head above !:-)

.........remember at the end of the day, we love to fly right?.........otherwise why would we put up with such basic conditions just to earn a living!

Capt wally............needs a drink now !:)

[SmokingHole]

In my previous life as a tradesman earning $20/hr, all the staff got together and hit the boss up for a $4/hr payrise in line with other employers. The immediate result? "You can all get stuffed, don't come Monday."

Two months later after we all found new employers, we were all reinstated by the old boss at $28hr!!!

That was 8 years ago and now, with the current shortage of tradesman, I have mates still in the industry earning up to $50/hr for some and others on contractual work earning $800 a day - that's over $200K! Not bad for a bloke who probably can't even spell probably.

The shortage of skilled workers has created a backlog of work and has driven up the prices. In this town, people don't care how much you charge, as long as you turn up and do the job!

Similarly in Aviation, as the number of bums on seats continues to grow at a rate greater than suitably qualified pilots are being produced, you don't need to be a rocket surgeon to see what will happen. Be patient I say. All good things to those who wait.

[Capt Wally]

................"smoking hole", an unfortunate nic name for someone in the aviation industry!:).yep I too was a tradesman in a previous life< god it seemed sooooo long ago now & we too did or tried to do something similar to what you mentioned here to gain more money. But, & there's always a but! We have wittnessed in the past exactly what you mentioned here with respect to all telling the boss to stick it & await an expected payrise 'cause he/they needed us............world war 3 as I call it (the pilots dispute) tried pretty much that............Hawke & Ables hoped into bed with each other & put that to rest in this country once & for all, the rest is history...sadly that tactic simply doesn't work in aviation as we saw. I'm not saying don't do this but in order to do just that one would need to be very well prepared. I do hope tho that yr crystal ball is accurate & all we have to do is wait & see....still sillier things have happened in aviation, I live in hope that it will get better (as it ought to) & without hope we have nothing !

Capt wally:-)

[SmokingHole]

telling the boss to stick it & await an expected payrise

Think you misread Wal, we got the arse after asking for a payrise. We didn't leave. There was just no job next monday.....:{ My experience with GA as a newbee ten years ago was similar. "What? You wanna get paid to fly?" A change for the better, however, is in the air. No pun intended;)

[Capt Wally]

....yeah I know "smokey" I was drifting off course a little there:)...............wouldn't it be grand if for just one week ALL pilots could simply say NO, we are not going to work for peanuts anymore...............I know it's pie in the sky stuff but sheeeeeeez the impact (sadly to those that indirectly pay our poor wages, the gen public would suffer) it would have on the bottom line of the big operators. In reality we need to just chip away at the problem & make an impact over time, & fortunetly the time is running out for the top end fools that have made it big time at OUR expense !.....................not 4 2 much longer !


Capt Wally:-)

[max autobrakes]

Wasn't that tried once ?:\

[Ref + 10]

Yeah, but there isn't an abundance of pilots that can be shipped in from overseas anymore.....

[27/09]

Aircraft

What I have been saying, over and over again, is that these companies just cannot afford to pay what you call "decent money".


Perhaps you might like to tell everyone what you consider "decent money" is for a pilot?