The return of the pilot shortage, and who’s for disrupting aviation?

Who remembers the pilot shortage? Before Covid-19 grounded aviation in April 2020 and sent thousands of flightdeck personnel into furlough or new careers, one of the industry’s biggest worries was how to find enough pilots to fill all the cockpit seats a growing global fleet and retirements would leave empty over the next decade. Well, in the USA at least, that shortage appears to be back. How happy you are about it probably depends on whether you are an employer, employee, or a passenger.

According to Trey Urbahn, founder of US budget airline Breeze, airlines’ inability to recruit or retain enough pilots “threatens the cost structure of the industry” because carriers “will have to compete by having to pay people more”. Simple supply and demand economics, or is it more complicated than that? Urbahn believes rocketing salaries could endanger the sector’s whole low-fare low-cost business model, something that has led to a huge expansion of air routes over the past 20 years. If costs rise – including salaries – many of these services become unsustainable, the argument goes.

At least airlines may have a bit more in their pockets for those pay rises. Eighteen months ago, there were concerns that many large carriers did not have the liquidity to tide them through a period when they were making virtually no revenues. However, United Airlines has just reported a $473 million profit for the third quarter. The sum is modest compared with the losses it endured during the worst of the pandemic – a loss of $1.8 billion during the same quarter in 2020 – but the trend is encouraging. Rival Delta posted its first quarterly profit since the crisis began on 13 October.

In Europe, air traffic control provider Eurocontrol is also more confident than previously about the next few years, following a strong summer for the region’s airlines, and a series of upbeat economic forecasts. It believes the sector could be back to 2019 traffic levels by 2023. Just five months ago, Eurocontrol had been suggesting that it would be 2024 at the earliest, and probably 2025, before flight activity returned to pre-crisis levels. “We are optimistic about traffic recovering to 2019 levels earlier than anticipated,” says its director general Eamonn Brennan.

Asia, however, is still the outlier. While some countries are relaxing draconian travel rules, China’s two-week quarantine requirement for visitors and returning residents has virtually eliminated international passenger flights. Its territory of Hong Kong is taking a similar approach. Available seats on services into China from Southeast Asia in September were running at less than 2% of the same month in 2019. The situation is affecting not just Chinese airlines but those in Asian countries that are dependent on the Chinese market.

However, even a rebound in traffic does not mean airlines are on the mend. Such are the liabilities many have accumulated, that the crisis “does not end when the planes are full again”, says Anko van der Werff, chief executive of Scandinavian airline SAS. During the pandemic, several operators went into a kind of deep-freeze or hibernation, with governments paying salaries and acting as lender of last-resort. Now, however, they face the parallel challenge of keeping day-to-day costs under control while they grow again, as creditors knock loudly at the door.

Cash may be in short supply, but several carriers – with an eye to their image as climate-responsible businesses – are investing in one exciting new technology: electric vertical take-off and landing aircraft. Japan Airlines this week said it will lease or purchase up to 50 of Vertical Aerospace’s in-development VA-X4 air taxi from lessor Avolon. For its part, Avolon is convinced about the market, having ordered 500 of the five-passenger eVTOL, which is scheduled to enter service in 2024.

While some high-profile commitments for new aircraft concepts are little more than loose agreements with no contractual obligations or substantial deposits changing hands, in this instance those making the announcements do appear to be staking real money. American Airlines and Dublin-based Avolon have both declared their intention to become equity investors in Vertical, which itself will go public on the New York Stock Exchange this year after its takeover by an already listed acquisition vehicle, Broadstone.

Another asset management firm, Amedeo, has taken a different route, with a preliminary order for 200 electric-powered 19-seat aircraft being developed by France’s Aura Aero. For London-based Amedeo, “sustainable aviation is more than aspirational and we are committed to partnerships in sustainable aviation that will define the next three decades in aerospace”.

The next five years in aviation could be among the most dynamic in decades. Not only might the industry enjoy one of its strongest recoveries – albeit from record lows – but the period could witness the arrival of genuinely disruptive forms of air transport, from eVTOLs to hydrogen-powered passenger aircraft.

Although the decade started off in the worst possible way, in terms of technological breakthroughs and industry expansion we could be about to enter the roaring twenties.