Growth will demand paradigm shift in pilot training

A report into Trends in Pilot Recruitment, Training and Employment from Dublin-based Sigma Aviation Services concludes that only a paradigm shift in training approaches can keep up with the growth forecast for the airline industry.

And, significantly, the 97-page Report also concludes that this required shift is most likely to be driven by operators and aircraft manufacturers, rather than by the training industry as it currently exists - because operators and manufacturers have the most to lose if pilot training supply falls short of demand.

To a greater or lesser extent there will be a shortfall in the number of pilots required to service the growth of the aviation industry during the period to 2020.

This shortfall will be caused primarily by the failure of the training industry to respond effectively to the increase in demand.

The most probable industry response will be a move to MPL style licensing and an increase in retirement age worldwide.

Pilot ratios will also reduce steadily over the period driven by a general move towards the low cost model.

Despite this, the demand for pilots will continue to outstrip supply for two reasons:

* The pilot demographic demands that large numbers of crew retire within the period.

* The training industry is institutionally incapable of rapid expansion.

Training schools compete with airlines for pilots. Whilst the latter can comfortably offer high levels of remuneration and state-of-the-art aircraft, the former can do neither.

The result will be an initial sudden exodus of instructors from flying schools as soon as the airlines begin to recruit aggressively.

We see no mechanism within the current structure of the training industry which will allow it to recover from this initial loss or subsequently to expand at anything like the rate required to service demand.

Consequently it is inevitable that operators will experience pronounced periods of disruption and a heavy training burden as poaching of experienced pilots and high churn rates cause an increasing burden on training departments.

This will result in a strong demand for contracting agency services and perhaps also a demand for outsourced training services.

We see little reason to differentiate between demand from LCCs or traditional operators – both will feel the effect of the shortage.

The principal differentiator will be the operator's employment regime. The most aggressive employers are likely to experience the greatest churn rate.

It is inevitable too, that the demand for experienced flying and simulator instructors will rise significantly, prompting a commensurate rise in salaries.

This may, for the first time, offer business opportunities for contracting agencies in the instructor market.

Within this pattern there is the potential for strong regional differences. There are multivariate factors at play which may cause stronger than anticipated variations between regions.

The increasing burden of regulation combined with air traffic congestion and a growing environmental lobby may retard the increase in demand for air travel in Europe. On the other hand passenger traffic figures for the Asia Pacific region point to an accelerating pattern of growth.

Regional differences and a generally strong global demand for pilots indicate good business opportunities especially for those companies who are able to source or develop new avenues of pilot recruitment.

We see little evidence to suggest that the overall demand for pilots in the Asia Pacific region will be significantly greater than Europe. However, this should not be confused with the demand for training services in the region.

With only 56 per cent of the training capacity of Europe but comparable fleet size and a greater forecast growth rate, it is not difficult to understand the acute need for new schools in the region.

We would emphasise caution in entering this regional market. The demand for training services although acute is likely to stabilise within the next two years and , as the crisis passes, we see an increasing likelihood that Western training providers will be dropped in favour of indigenous training sources.

We would also emphasise caution over the manufacturers' growth forecasts. The continuing high price of crude oil, combined with an absence of hedging opportunities puts the industry close to its tipping point. This suggests a rather less stable pattern of growth than IATA and the aircraft manufacturers believe.

Notwithstanding these caveats we do indeed see very strong business opportunities for companies who are able to provide the industry with newly qualified pilots or who can offer captains conversion facilities to airlines.

Finally we see a very strong requirement to secure a source of flying instructors for basic flying instruction and experienced pilots to service a rapidly increasing demand for synthetic flying instruction.

The supply of these two elements represents the industry's biggest problem and consequently offers the prospect of the greatest prize.