Why are airfares so high?
It can’t be just inflation- it isn’t!
Thanks for finding Full Throttle. Please share and subscribe here. Full Throttle posts twice a week. Follow me on Twitter, Instagram, and Linkedin.
I just flew across the country. The fare I paid would have bought a first class ticket last fall. Instead, for all that money, I flew in economy. A friend sent me an email last week noticing the same thing. A flight from New York to Los Angeles, in coach, for $1,500, he exclaimed! As he told me, “that’s insane.”
We all know that gas and fuel prices have skyrocketed the past several months. That inflation accounts for some of the higher cost of airfares, but there is something else going on. Airlines have been forced to cancel flights just as we reach a very busy summer travel season. Alaska Airlines was one the latest carriers to say it will continue to cancel about 4% of flights into June.
PILOT SHORTAGE
The reason? There aren’t enough pilots. Boeing projects that over the next 20 years the world will need 612,000 pilots (130,000 in North America). But the shortage is more severe in the short-term.
During the COVID lockdown the number of flyers dropped by 96% according to the trade group Airlines for America (A4A). That led to early retirements for some pilots. More are coming. Aviation has a demographic problem, a lot of pilots are reaching retirement age.
(Credit: United Airlines)
With vaccines and boosters making Americans feel more secure, they want to fly. In a statement A4A says, “the rapid uptick in domestic air travel has triggered the need to hire additional employees in almost all operational areas to meet demand.”
"UNDER-APPRECIATED"
United Airlines CEO Scott Kirby made this point on the company’s recent earnings call. He called this dilemma, the pilot shortage, “under-appreciated.” Kirby laid out the numbers in blunt terms. There is a need for 13,000 pilots in 2021, he says, and that number will be higher next year. However, only between 5,000 and 7,000 pilots are being trained each year.
United Airlines CEO Scott Kirby outlines the pilot shortage during the company's earnings call. (Credit: United Airlines)
United Airlines alone is trying to hire 200 pilots per month. Because of the shortage, United opened its own pilot academy to train aviators.
Despite seeing several airlines canceling flights and reducing routes, there is not complete agreement that there is a pilot shortage. The CEO of Spirit Airlines believes there is only a need for 10,000 pilots this year and says that goal can be reached. It is a sentiment that is shared by a major pilot’s unions too.
SHORTAGE OR NOT?
The Airline Line Pilots Association has produced its own fact sheet claiming there are enough pilots in the pipeline. The problem, the union says, is that some of the airlines, bailed out by taxpayers three times during the lockdown, did not plan well for the dramatic rise in travel.
There are some political considerations here. Some of the regional airlines that fly under the branding of the major carriers and feed into their hubs want to make it easier to get pilots into the cockpit by reducing the number of flying hours needed before getting a commercial pilot’s license.
(Credit: Republic Airways)
These regional airlines are hit the hardest during a pilot shortage. Flying for a regional can serve as an entry-level airline job. Pilots get experience with the regionals, and then the majors poach them for their mainline systems.
So is there a shortage or not? I decided it was time to talk to someone who really doesn’t have a horse in this race, so I contacted Embry-Riddle Aeronautical University.
"TREMENDOUS DEMAND"
The answer came from Dr. Ken Byrnes, Chairman of the University’s Flight Training Department who told me there is, “a tremendous demand,” for pilots. “There are an enormous number of jobs out there,” he said, adding that students see a path to the cockpit. Do we have a pilot shortage? His simple answer, “yes.”
Prof. Ken Byrnes of Embry-Riddle Aeronautical University explains the pilot shortage situation.
ONE PILOT'S VIEW
On one leg of my trip I sat next to a pilot who was on his way home from an international flight. He came up through the pilot training system and is now flying a Boeing 787. He confirmed what I learned while researching this newsletter. There is a shortage and even he had to pay quite a lot (even with his discount) for an upcoming personal trip.
So, the pilot shortage has led some airlines to cancel flights, reduce routes, or both. That means fewer seats for all of us who want to fly right now. It is the simple economic theory of supply and demand. More demand with fewer seats means my friend may have to pay $1,500 if he wants to fly from NY to LA.
(Cover photo credit: Justin Sullivan/Getty Images)