Specialist
President at Midwest Express Inc
Agenda
- Causes, implications and potential responses to pilot shortage at US regional airlines
- Growth expectations for regional, mainline, LCC (low-cost carrier) and ULCC (ultra-low-cost carrier) players, as well as recent start-ups
- Opportunity for eVTOL (electric vertical take-off and landing) players at regional airlines
- Long-term outlook on pilot supply and ability to return to 2019 industry growth rate
Questions
1.
Could you discuss the demand environment for regional airlines? How has it been impacted over the past few years, and how have regionals recovered in comparison to the commercial airlines?
2.
We’ve heard a lot about the pilot shortage, and we’ve spoken to you about it in a previous Interview [see North America Regional Airlines – Pilot Shortage Implications & 2022 Outlook – 14 February 2022]. As we see mainline carriers pulling from regional partners to satisfy their capacity needs – a trend that has accelerated in recent years – how would you describe the impact this is having across regional, mainline and LCCs [low-cost carrier] players?
3.
Have any specific regional carriers been more or less impacted by the trends you highlighted? Has any player seen more significant pilot attrition than peers? Are any players somewhat insulated?
4.
What do you view as the core driver to the pilot issue? Anecdotally, I’ve heard forced retirement is a driver, that there are not enough simulators and that less pilots are coming out of the military.
5.
How do you expect regional carriers to react to pilot attrition in terms of their fleets and fleet management strategies? Will they start to make any changes, perhaps flying less or more 50-seaters?
6.
How should we expect aircraft utilisation to be impacted by the proposed changes to regional aircraft that you suggested?
7.
How will the return of international travel exacerbate or alleviate the regionals’ issues, including the pilot situation? We’ve seen international travel slowly recover, but what about a full return to 2019 levels of international and business travel? Will carriers start to prioritise international flights and pull more aggressively from regional peers?
8.
When do you expect a full return to 2019 levels of business and international traffic? Will we fully recover, or have we permanently lost some portion of business travel?
9.
What sort of wage inflation have you seen across the US airline industry, and what do you expect over the next few years? Could you differentiate among regionals, mainline players and LCCs for pilot wages?
10.
Are start-ups such as Avelo and Breeze faring any better or worse than mainline and regional carriers in recruiting pilots?
11.
Where are the start-ups getting pilots from? If they’re paying less than the ULCCs [ultra-low-cost carriers] and a bit more than the regionals, why are pilots coming to those players?
12.
Besides the Australia exemption, do any other loopholes exist that mainline carriers could potentially exploit in the coming months to alleviate pilot issues?
13.
I’ve seen the charts from Oliver Wyman that point to a structural imbalance in pilot supply and demand that could go on until, say, 2030. What can regional, mainline and LCCs do to combat these issues near term? It’s unquestionable that this is a problem, but what solutions can get the industry back to 2019 levels and the 2-3% growth path you alluded to earlier? How long will it take to get there?
14.
Could you talk through the opportunity that eVTOL operators have with regional carriers? How would their aircraft fit into carriers’ strategies on the shorter routes? Where could eVTOL fill in gaps, and where may it fall short in comparison to what regional carriers need from an aircraft?
15.
Is there anything else that you feel we should discuss when it comes to regional carriers and their outlook over the next few years?
16.
What’s your medium-to-long-term outlook for regional carriers? What are the worst- and best-case scenarios over the next 12-36 months, and what could help fix some of the issues or make things worse?
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