A shortage of pilots could keep the airlines from making a comeback?
An important question facing the airline industry is not whether it will face a pilot shortage, but when it will begin.
With the number of flights reduced to a fraction of what they were before the pandemic, it’s hard to imagine that there could be a pilot shortage on the horizon. As of February, global airlines were only flying at about 47% of pre-Covid capacity, based on our own analysis of data from OAG and the International Air Transport Association.
But by 2025, after global demand in domestic and international travel expands beyond 2019 levels, we expect a worldwide shortfall of at least 34,000 commercial pilots — almost 10% of the total workforce. That gap, which will begin to be felt as early as next year, is based on a modest recovery scenario. If we were to see a more rapid recovery, that shortage could reach 50,000.
The danger: A pilot shortage could ultimately limit industry growth later in the decade by as much as 10% to 12%, according to our analysis. And thanks to the pivotal role air transport plays in the global economy — aviation accounts for about 4% of global gross domestic product — slower industry recovery could temper economic growth worldwide.
While it will be close to two years before passenger volume globally returns to pre-pandemic levels and longer than that for revenue to fully recover, demand for pilots isn’t determined by passenger volume. It’s linked to flight hours and the number of planes flying, and airlines are already bringing aircraft back into service faster than expected to stimulate demand.
The looming pilot shortage is the product of a number of converging trends, most of which predate the pandemic. For airlines, a pilot shortage has many ramifications. Too few pilots could translate into fewer routes and lower frequency. Nonstop flights to smaller cities may be dropped from airline networks, and the number of nonstop flights per week may be reduced across the board. It could also mean higher fares to make up for the drop in revenue because of fewer flights and the slow return of business travel, which normally produces a big percentage of airline revenue.
Pilot shortages will likely remain an issue. The need to attract pilots will be most acute in Asia, where demand and capacity will grow rapidly. That shortage will lead to aggressive competition among airlines, higher salaries for existing pilots, the poaching of pilots from competitors, and subsidized pilot training to help fill the talent pipeline.
A supply shortage might also mean higher pilot salaries. Even before Covid-19, the latest round of contract negotiations between airlines and the pilot union saw upward pressure on salaries. The higher cost would be a heavy burden for airlines at a time when financials are not looking strong. For those carriers looking to be proactive, there are three approaches that could help. The first two are rethinking crew operations to make them more efficient so fewer pilots will be needed and extending more financial support for training programs for new pilots — subsidies some airlines under financial pressure have contemplated cutting.
The third is increasing engagement with pilots. In recent surveys, airlines have consistently told that they see pilot engagement as one of their biggest challenges, and staying in touch during a pandemic is surely more challenging. Competition among airlines may in fact develop as they recall pilots, given that furloughed pilots start at the bottom of seniority whether they return to their former carrier or they switch to a new one. Airlines can’t create new pilots overnight, but they can make sure they lose as few as possible. Those that try to engage may have a leg up.
While there are many challenges to overcome before the pilot shortage hits, airlines — and possibly the economy — are likely to pay a price if the industry waits until the problem is on top of them. Everyone benefits from a strong and vibrant aviation industry: law enforcement, the military, manufacturers, airlines, shipping companies, and, most important, the flying public. The DGCA and the airlines will not compromise safety by lowering standards to fill cockpits. Instead, if the pilot supply keeps shrinking, airlines will reduce capacity and cut back flight schedules.
Some communities could lose service altogether. Any steps made today to fill the gap will take three to five years to produce results, which makes it imperative that the government and the private sector act now.
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