FT051717

#INTHEAIREVERYWHERE

Vol. 16 No. 46	Wednesday May 17, 2017

After 100+ days, President Trump is still focused on his campaign promises to provide the U.S. with security, GNP growth, and improved infrastructure.
Politics have slowed down a few of his programs, but he seems to be on a positive flight path.

Growth & Challenges

As I have suggested in my past articles, these policies will help to grow the U.S. airline industry, but this growth will create secondary problems, among which are the need for improved and increased airport infrastructure and more pilots.
In this article, I will focus on the pilot shortage, which is being called a national problem for both the U.S. Military and the U.S. commercial airline industry.

The Pilot Crunch

Both military and aviation industry experts have long predicted, even based on the existing trends and policies, that U.S. aviation would face a serious shortage of trained and qualified pilots.
Although this problem has long been identified, the remedial steps have so far proven inadequate as a growing number of commercial pilots approach mandatory retirement and airlines increase capacity without an adequate pipeline of qualified new pilots.

U.S. Commercials Move

As a result, the U.S. commercial airlines have incentivized military pilots to leave early to join the commercial airlines and this has become a national issue.
Military pilots leaving early has implications to mission readiness and the maintenance of core military capabilities.

Pilot Turnover Accelerates

      Due to the aging of the current commercial pool of trained and qualified pilots, it is estimated that approximately 45,000 out of 153,000 U.S. airline pilots will reach mandatory retirement age in the next five years.
      It has been reported that over the last 10 years, pilot numbers inside the U.S. have decreased by approximately 6,000 annually without adequate replacements.
      In addition to this attrition, the U.S. airline industry faces significant labor pressure because of the predicted rapid growth as an effect of President Trump’s policies, with current shortages of pilots ballooning to 15,000 by 2026, as outlined in a major study by the University of North Dakota.

High Costs, No Seed Incentives

      One of the major contributing problems is the high costs of training U.S. non-military pilots has shifted over time from employers onto perspective learners, who must often personally finance education costs, in many cases, over $500,000 without any government assistance.
      In 2009, after the crash of a commercial airliner, the FAA increased the flight training hours required for U.S. commercial airline pilots from 250 to 1,500 hours, a figure that is cost prohibitive for most student pilots.
      The Commercial Pilot Certificate at 250 hours will allow them to get their Flight Instructor Certificate (CFI).
      Their flight instructor certificate will allow them to get paid for teaching others to fly.
      This method is generally regarded as the best way to build up to the 1,500 hours if they plan on working for the airlines.
      Their only other option to build their hours would be to pay for them.
      But, even then, the major carriers usually require “seasoning” flight time over the FAA 1500-hours requirement, which usually involves flying at regional carriers for a few years at a low salary.

     Pilots as folk heroes… Here at the movie premiere depicting his epoch landing of a USAir A320 in New York City’s Hudson River is “Captain Sully” Chesley Sullenberger (center) with actors Tom Hanks (left) and Aaron Eckhart (right) as the film Sully opened in London last year.
      Delta Air Lines pilots take part in an informational picket at Minneapolis-St. Paul International Airport on Thursday, Sept. 15, 2016. In December DL pilots agreed to a new contract that delivers a 30 percent pay raise by 2019.
     Swedish pilot Maria Pettersson smiles from the cockpit of a Ryanair aircraft. She currently has more than 200,000 followers on Instagram.

Flight Time Exported

Because of this, some 250-hour trained U.S. pilots opt to sign on to airlines in countries like China, Europe, and the Middle East, which also face pilot shortages but only require 250 hours of flight training and pay high compensation.

Pilots For All Seasons

      To make matters worse, the pressures placed on the commercial airline industry exacerbate the shortages the U.S. military already faces.
      Pilots serving in the military accumulate extensive training during their service, which costs the U.S. Government more than $10 million over their first “gate” of 10 years.
      These highly trained pilots are considered seasoned by the large commercial U.S. airlines shortly after separation from the armed forces, thereby avoiding years of seasoning at smaller airlines or regional carriers.
      This makes them very attractive to the major commercial airlines.
      As a result, their earning potential is considerably greater than a starting civilian flyer with 1500 hours.
      Therefore, rather than spending years seasoning at a low salary, they immediately earn the major airline union pay scale and benefits and are also being offered considerable bonuses to leave the military at their first gate of 10 years.

Filling Pilot Ranks From Military

The risk of the commercial airline sector cannibalizing the capacity of the U.S. military is real, and the size of demand in the commercial sector dwarfs any surplus pilots the military trains, meaning commercial recruitment of military pilots will have a direct and immediate impact on sustainment.
Think about this as well—every pilot who leaves the military early for a commercial job costs the U.S. taxpayer over $10 million to replace.

No Other Choice?

If the commercial industry does not develop ways to recruit and train sufficient non-military pilots and merely continues offering military pilots huge incentives, the military may have to resort to appropriate actions to maintain the force needed for national defense.
Unless the U.S. commercial airline industry solves this problem, they may not be able to take full advantage of the growth that could result from President Trump’s planned and pending business policies.
Bill Boesch

Mr. Boesch started his career in global transportation and logistics in 1965 working for Seaboard World Airlines. He later joined Flying Tiger Airlines and Emery Worldwide. Mr. Boesch then left Emery to become Pan American World Airways’ Senior Vice President where he headed both Passenger and Cargo Sales and Operations. He left Pan Am to lead American Airlines’ Cargo operation and retired from AA in 1998. Under his direction American became a world leader in the air cargo and logistics business.
     Mr. Boesch was part of the extensive on site planning and support of the Iraq drawdown, involvement with the Afghanistan operations, and has worked on all aspects of the Civil Reserve Air Fleet (CRAF) from both an airline and government standpoint.
     Mr. Boesch has also served as Chairman of the International Air Transport Association (IATA) Cargo Executive Subcommittee in 1996 and 1997, Vice Chairman of IATA’s Cargo Committee. Mr. Boesch served on the Board of Directors of Air Cargo Incorporated, Air Cargo International, The International Air Cargo Association (TIACA), Envirotainer, Cargo Logistics Solutions, Deutsche Post/DHL Global Mail, al Seqir and consulted for major U.S. companies including Flight Safety.
     Mr. Boesch is the recipient of numerous awards including the Lifetime Air Cargo Achievement Award, the Ellis Island Medal of Honor and various awards from the U.S. Department of Defense.
     Mr. Boesch is presently continuing his work for the U.S. Government and heads up The Council For Logistics Research.

To Read Part 1 of This Series, Click Here
To Read Part 2 of This Series, Click Here
To Read Part 3 of This Series, Click Here
To Read Part 4 of This Series, Click Here
To Read Trump Effect—India Walks Softly Carries Big Stick, Click Here
To Read Trump Effect—Implications Of A Trump Trade War, Click Here
To Read Trump Effect—Trump Across The Pacific, Click Here

Awards Leave Some At A Loss

Most promising start up 1983, innovative marketing technique award winner 1996, lifetime achievement award 2011, last train home 2017 . . .

     Air Cargo Europe bestowed another blizzard of air cargo awards at its “Gala Dinner” in Munich last Wednesday.
      Trade shows, industry organizations, and especially publications are handing out awards left and right.
      There are awards for everything, from company of the year, to person of the year, to most influential, to lifetime service.
      Forgive our skepticism, but something about this rings a bit hollow when air cargo folks sit down to a $75 or $150-a-plate trade show dinner to pat themselves on the back.
      The idea of recognizing and awarding exemplary effort is as old as organized business itself.
      But right now award giving seems a bit over the top, if not inappropriate.
      First of all, there are too many awards.
      Awards, truth be told, are money makers, especially for the publications who in some cases passively encourage candidates to buy full-blown advertising programs, pleading with readers to “vote for us.”
      Forgetting everything else, isn’t there something a tad less than believable going on here?
      Advertising programs and event and table sponsorships sold as part of an awards package are a set up, period.
      The guys on the street here in New York City would call it a kickback, pure and simple.
      Hard working companies and people in air cargo don’t need that kind of grief at what should be a moment of enlightenment and reflection for a job well done.
      Award announcements go something like:
      “Our readers have decided…”
      In some cases, nobody knows how many of these readers really participated in the surveys.
      The prerequisites for the vast majority of awards are totally nebulous. For example:
      “Best Cargo Carrier of Europe,” “Outstanding Cargo Carrier of Asia/Pacific Indian Subcontinent,” and so on.
      This time of year, a worldwide inflation of accolades has popped up like white asparagus in Germany.
      What has developed is a sort of awards overkill. In our humble view, it has reduced the credibility and devalued those few awards with a basis in thorough and scientific approach.
      So… is there a fix here?
      Maybe if the major and most respected cargo carriers form a sort of informal alliance demanding a reduction in the number of awards to a comprehensible cipher number—let's say, four or five per year honoring different transport and service categories along the entire supply chain.
      In past rants about industry awards, we have wondered why IATA or FIATA or some other multinational and neutral body might not manage awards by initiating and conducting those surveys in close cooperation with international airfreight and transport media.
      Instead, IATA—while still not in the awards loop—has at least acquiesced to another publication’s award shindig during WCS every year. No doubt, there is plenty of constructive thought out there when it comes to the giving and receiving of air cargo industry awards.
      A highly placed air cargo executive who asked to go unnamed thinks awards committees need to look a little closer as they go about the business of recognizing true winners:
      “We think too much of our senior teams and not enough of the people making it happen every day at the terminals, sales offices, and GSSA locations.
      “Air cargo needs to recognize the great job all our people do to make this industry successful.”
      “Maybe there should be some new award categories to include a broader spectrum of people and businesses.
      “There are plenty of other categories that could and should be considered outside of the aforementioned ‘narrow band’ of award recipients as the industry gears up for the rest of 2017.”
      Performance should be based on profitability and the views of customers.
      Another thought is that maybe the focus should change. Maybe air cargo should skip the awards altogether in favor of a series of fundraisers to help the legions of people all over the world that were thumped to distraction by out-of-control, politically driven prosecutors in the U.S., EU, and elsewhere when air cargo was targeted for alleged price fixing.
      OK, perhaps that suggestion is a bit farfetched, but the point should be made that as a great, honorable, and flexible industry, our awards process at almost every gathering resembles a dead heat on a carousel.
      In the meantime, there is no doubt the air cargo awards trend will continue.
      Can we at least say it’s about time to make air cargo honors more rewarding by making them more believable?
      Your move…
Geoffrey

WhiteCover

     Emirates Group (EG) posted an AED 2.5 billion (U.S. $670 million) profit for the financial year ending March 31, 2017, down 70 percent from 2016.
      Revenue reached AED 94.7 billion (U.S. $25.8 billion), an increase of 2 percent over last year’s results.
      Emirates Group’s cash balance decreased by 19 percent to AED 19.1 billion (U.S. $5.2 billion) “mainly,” EG said, “due to the repayment of two bonds on maturity and ongoing high investments into its fleet and aircraft related assets.”
      Emirates SkyCargo accounted for 13 percent of the airline’s total transport revenue.
      Revenue of AED 10.6 billion (U.S. $2.9 billion), marked a decline of 5 percent over last year, while tonnage carried slightly increased by 3 percent to reach 2.6 million tons.
      FTKM decreased by 8 percent, reflecting the strong downward trend across the industry, and the weakening of major currencies against the U.S. dollar.
      SkyCargo’s total freighter fleet remained unchanged, with 15 aircraft: thirteen Boeing 777Fs and two Boeing 747-400Fs.
      In addition to belly-hold capacity to Emirates’ new passenger destinations, Emirates SkyCargo launched new freighter services to Phnom Penh (Cambodia), as well as new links between Dubai-Oslo and Delhi-Hong Kong. During 2016-17, Emirates SkyCargo inaugurated Emirates SkyPharma, anchored by a 4,000-square meter, purpose-built facility dedicated to handling temperature sensitive pharmaceutical shipments at Dubai International Airport. Emirates SkyCargo also launched White Cover Advanced, a protection solution designed for temperature-sensitive cargo.
Geoffrey

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