Many of America’s airlines are in a world of hurt due to a pilot shortage, and they aren’t the only ones.
On July 5, Scandinavian Airlines, which does significant business in America, filed in New York for Chapter 11 bankruptcy to reorganize after it tried and failed to reach an agreement with its pilots’ union and the pilots voted to strike.
“The Scandinavian bankruptcy filing wouldn’t have come right now without the pilots’ strike,” Gary Leff, author of the influential View from the Wing blog, told the Washington Examiner. “However, they’re in the process of pursuing a cost-cutting program facilitated by a bankruptcy filing. It’s a tactical filing. The airline has sufficient near-term liquidity, but that alone doesn’t mean they’d have avoided the courthouse.”
He cautioned, “I wouldn’t attribute the strike, followed by the filing, to a pilot shortage as such.”
The Scandinavian bankruptcy is slightly more complicated than simply “the pilot shortage,” but the trail of breadcrumbs is hard to ignore.
Because of what is effectively a worldwide pilot shortage, airlines are having a hard time running their regular routes, leading to an indeterminate but significant number of cancellations. The pilots’ unions are thus pressing their advantage by insisting on substantial pay hikes.
Many airlines agree to the hikes to keep the engines spinning. Scandinavian was not willing to meet such demands, which the pilots took to be an indication that they either should put up or shut up. So they put up picket signs.
“We have finally realized that SAS doesn’t want an agreement,” said Martin Lindgren, SAS Pilot Group chairman. “SAS wants a strike. We hope we will be able to return to the negotiating table and meet, but it requires that the employer makes a move.”
The Scandinavian strike alone could affect as many as 30,000 passengers a day, though that doesn’t mean all those passengers will be left stranded.
Some analysts saw the pilot shortage coming and sounded alarms. The consultancy Oliver Wyman did a poll of “flight operations leaders” in 2019 and wrote about it in a later report. It found that “62% listed a shortage of qualified pilots as a key risk.”
The reasons for this possible shortage differed by region. In America, the anticipated problems were “an aging workforce facing mandatory retirement, fewer pilots exiting the military, and barriers to entry, including the cost of training.”
Then COVID-19 happened.
Demand grew modestly by 4.1% in 2020 before the pandemic shut down much of the world, according to Statista. However, after lockdowns, demand plummeted by 65.9%.
“Nearly overnight … the conversation shifted from shortage to surplus. For carriers that were struggling with pilot supply, this has provided a momentary reprieve,” the Oliver Wyman report said.
The firm warned that this surplus “will not last, and decisions taken today to survive the coronavirus pandemic may threaten the ability of airlines in some regions to recover and grow in the future.”
Airlines offered early retirements to many pilots as a cost-saving measure. Additionally, many pilots didn’t clock in enough hours and thus faced the prospect of mandatory retraining.
Heading into 2022, a joint survey by Goose Recruitment and FlightGlobal found that “one in five trained pilots” was “still facing unemployment despite the numerous changes that have been made to permit air travel more freely” and that worldwide, ”38% of pilots” were “still not flying.”
Demand for air travel has roared back this year faster than airlines can get pilots back into cockpits. It’s up 51%, per Statista.
That rapid demand growth would not be easy for any industry to accommodate and would be a challenging problem for industries requiring large capital outlays. Unfortunately, we’re seeing what those growing pains look like now: increased ticket prices, flight cancellations, and labor unrest.
