A bank's perspective on the pilot shortage

[mijbil]

Here is an interesting third party perspective of how one bank's research department (National Bank) views the pilot shortage and the projected future costs to airlines of pay increases. There is even have a chart showing how many ATPLs have been issued since 2007. (I've looked elsewhere but not been able to find the numbers). They also offer an assessment of why 147 people (in 2022) trying to get a job in the US is not as big a factor as one might think - yet. WestJet is mentioned in parts but was not a focus of the paper.

[YC87DRVR]

Cue the Transat pilots to be triggered. Will they snap at the bank as they do when anyone else says their business is underperforming?

[CanadaAir]

Here is an interesting third party perspective of how one bank's research department (National Bank) views the pilot shortage and the projected future costs to airlines of pay increases. There is even have a chart showing how many ATPLs have been issued since 2007. (I've looked elsewhere but not been able to find the numbers). They also offer an assessment of why 147 people (in 2022) trying to get a job in the US is not as big a factor as one might think - yet. WestJet is mentioned in parts but was not a focus of the paper.

Thank you for this.

2021
10,000 pilots and co-pilots working at Canadian airlines (including all the smaller passenger carriers that we do not reflect in our capacity analysis above)"

150 going to US in one year, is more than 1%

[fish4life]

Some incorrect things in that the delta pilots got an increase of 7.2 billion not a total contract value of 7.2 billion as an example.

[Blueontop]

“if Air Canada's pilots were to receive wage increases similar to the recently negotiated WestJet pilot union deal (+24% over four years), we estimate the total potential increase in overall costs for Air Canada would be 1.5% in total (or 0.375%/year over four years)”

“In dollar terms, a 1.5% increase in costs for Air Canada (using our 2023 forecast as a baseline) would be ~$282 million (over four years). To put this in perspective, a $282 million cost swing would be the equivalent to a ~5% change in the price of jet fuel for Air Canada, which is a price swing experienced regularly for the airline industry.”

See it’s written right on the first page of the article. They can afford far more and are banking on just moderate gains in pilot compensation. Aim higher, far higher than this.

This should disseminated by ALPA all over the country to prove to anyone that claims the airlines can’t afford to pay more and that pilot compensation is probably the cheapest expense the airlines have.

When the cost of a part goes up, or the cost of fuel goes up, the airline, just has to suck it up and pay it. There’s no discount for Canadian fuel or aircraft parts. Why should there be one for Canadian pilots? There shouldn’t be.

[mmm...bacon]

Buried in there is also this paragraph:

As we have opined in prior research, we highly doubt all this new competitive capacity will be deployed as we do not believe the Canadian market can support all the growth plans of the airlines aspiring to be much larger players. In addition to the likely financial/capital challenges we expect will be an impediment to growth, one of the biggest constraints will be the availability of pilots. The capacity growth plans of the airlines in our analysis, including those of the more established carriers, implies total fleet growth of 228 aircraft off a base of 650 in operation in mid-2023

As Sir Freddie Laker opined may years ago - it’s all about getting [paying] bums in seats. If there’s not the passenger numbers to support the seats available, then stagnation/deflation/failures will occur.. One wonders about the future of the grand plans of Lynx, Flair, and Porter.

[yowflyer23]

“if Air Canada's pilots were to receive wage increases similar to the recently negotiated WestJet pilot union deal (+24% over four years), we estimate the total potential increase in overall costs for Air Canada would be 1.5% in total (or 0.375%/year over four years)”

“In dollar terms, a 1.5% increase in costs for Air Canada (using our 2023 forecast as a baseline) would be ~$282 million (over four years). To put this in perspective, a $282 million cost swing would be the equivalent to a ~5% change in the price of jet fuel for Air Canada, which is a price swing experienced regularly for the airline industry.”

See it’s written right on the first page of the article. They can afford far more and are banking on just moderate gains in pilot compensation. Aim higher, far higher than this.

This should disseminated by ALPA all over the country to prove to anyone that claims the airlines can’t afford to pay more and that pilot compensation is probably the cheapest expense the airlines have.

When the cost of a part goes up, or the cost of fuel goes up, the airline, just has to suck it up and pay it. There’s no discount for Canadian fuel or aircraft parts. Why should there be one for Canadian pilots? There shouldn’t be.

What a great read. My favourite line was this one:

“Even at a 40% increase in pay rates, we still calculate a modest 2.5% increase in total costs for Air Canada (or 0.625%/year over four years)”.

Aim for 40%.

[Blueontop]

“if Air Canada's pilots were to receive wage increases similar to the recently negotiated WestJet pilot union deal (+24% over four years), we estimate the total potential increase in overall costs for Air Canada would be 1.5% in total (or 0.375%/year over four years)”

“In dollar terms, a 1.5% increase in costs for Air Canada (using our 2023 forecast as a baseline) would be ~$282 million (over four years). To put this in perspective, a $282 million cost swing would be the equivalent to a ~5% change in the price of jet fuel for Air Canada, which is a price swing experienced regularly for the airline industry.”

See it’s written right on the first page of the article. They can afford far more and are banking on just moderate gains in pilot compensation. Aim higher, far higher than this.

This should disseminated by ALPA all over the country to prove to anyone that claims the airlines can’t afford to pay more and that pilot compensation is probably the cheapest expense the airlines have.

When the cost of a part goes up, or the cost of fuel goes up, the airline, just has to suck it up and pay it. There’s no discount for Canadian fuel or aircraft parts. Why should there be one for Canadian pilots? There shouldn’t be.

What a great read. My favourite line was this one:

“Even at a 40% increase in pay rates, we still calculate a modest 2.5% increase in total costs for Air Canada (or 0.625%/year over four years)”.

Aim for 40%.

This is a phenomenal read and blueprint on their plans and thoughts going into negotiations. We Canadian pilots are just simps and will take whatever crumbs they feel like letting drop from their table.

Big takeaway, yes there is a pilot shortage, yes that will constrain growth but don’t worry the airlines won’t have to pay much more to attract the shrinking talent pool.

ALPA should be disseminating this all over to the union reps and union members. It says exactly what they can afford!

Everyone professional pilot on avcanada should read this, maybe the most significant document I ever seen.

[TG]

When the cost of a part goes up, or the cost of fuel goes up, the airline, just has to suck it up and pay it.

You mean clients (Passengers) Will have to suck it up and pay for it!? That's where the ball will roll at the very end no?
The money have to come from somewhere somehow.

[Blueontop]

When the cost of a part goes up, or the cost of fuel goes up, the airline, just has to suck it up and pay it.

You mean clients (Passengers) Will have to suck it up and pay for it!? That's where the ball will roll at the very end no?
The money have to come from somewhere somehow.

Yes just like the AIF’s, the price of gas, parts and anything else that is passed into the consumer.

Oh and CEOs 233% raises…

[CanadaAir]

“if Air Canada's pilots were to receive wage increases similar to the recently negotiated WestJet pilot union deal (+24% over four years), we estimate the total potential increase in overall costs for Air Canada would be 1.5% in total (or 0.375%/year over four years)”

“In dollar terms, a 1.5% increase in costs for Air Canada (using our 2023 forecast as a baseline) would be ~$282 million (over four years). To put this in perspective, a $282 million cost swing would be the equivalent to a ~5% change in the price of jet fuel for Air Canada, which is a price swing experienced regularly for the airline industry.”

See it’s written right on the first page of the article. They can afford far more and are banking on just moderate gains in pilot compensation. Aim higher, far higher than this.

This should disseminated by ALPA all over the country to prove to anyone that claims the airlines can’t afford to pay more and that pilot compensation is probably the cheapest expense the airlines have.

It could cost even less.

Does anyone own a calculator?

AIF fees go up $10. No one cares.

NavCan increases fees. No one cares.

Pilots want an extra $2 per hour/per available seat and the sky is falling.

150 seats x $2 = $300 hr. Average WJ flight is prob 3 hours. That’s $6 a ticket to give a proper raise.

Time to stop the tail wagging the dog.

[Arnie Pye]

Why not aim for 233% and settle for 90%?

[co-joe]

...

Aim for 40%.

No, aim for 233%, but settle for 40% if it comes with the working condition improvements you absolutely need.

[cjp]

This article is a cold bucket o' water wake up call for everyone who's accepted a contract recently.

Essentially - management doesn't expect pilots to fuss, and the costs are absolutely negligible for everything you've negotiated.

Don't even start at 40% in your head as a reasonable increase. At this rate it should be everything including the kitchen sink.

You should take Delta's new contract, which is the one to beat I'm told, change Delta to Air Canada, and accept nothing less.

See how National Bank reacts after that.

[Blueontop]

This article is a cold bucket o' water wake up call for everyone who's accepted a contract recently.

Essentially - management doesn't expect pilots to fuss, and the costs are absolutely negligible for everything you've negotiated.

Don't even start at 40% in your head as a reasonable increase. At this rate it should be everything including the kitchen sink.

You should take Delta's new contract, which is the one to beat I'm told, change Delta to Air Canada, and accept nothing less.

See how National Bank reacts after that.

100 fuckin %

[Inverted2]

Interesting article thanks for posting. Did mention the Jazz raise probably won’t be enough with still only 2% annual raise.

[BigQ]

Hurry up, then, the North American consumer is tapped out and it's starting to look very likely for a deep recession starting Q4 2023. Get those gains asap

[RippleRock]

...

Aim for 40%.

No, aim for 233%, but settle for 40% if it comes with the working condition improvements you absolutely need.

Where is this "settle for 40% coming from?? That would be a 100% FAIL.

We can do some simple math. A COL adjustment ALONE will require a 49% uplift to even equal the "buying power" we had in 2002. THAT'S NOT A RAISE. A raise would be any improvement on top of that. In addition the Company has "strip mined" our contract since then to the tune of "hundreds of millions"....that's a direct loss, likely not to return.

If we set our bar low, don't expect the professional WACON to actually improve in this country. 40% won't get us anywhere close to our US counterparts and other Star Alliance partners wages. We will still be "the lowest of the low" or "bottom feeders" on the pilot landscape. At 40% we will still be far, far below the Hawaiian pilots who currently dwell at the bottom of the Legacy Carrier graph in the Comparator Document released by ALPA. Look and see where 40% puts us.

There is no one to replace you, TFW or not, no one will satisfy the insurance company who under-writes us. EVERYTHING stops. Plus no one would live the lifestyle we put up with daily. No one.

I'm seriously wondering if there is any hope for this group. 40% would be no "win", not even close.

KNOW YOUR WORTH.




FWIW, you guys who think this document is "good" are playing right into the Company line. They use WestJet as a "direct" correlation to what we can expect at AC. REALLY??? WestJet pilots were absolutely demolished by their Management adversaries. Their "wage uplift" doesn't even rank on any chart as far as Legacy Carriers doing similar work on this Continent. There isn't a chart that "units" that low. If I'm wrong, show me the math. It doesn't lie, subvert truth or make excuses.

[Blueontop]

...

Aim for 40%.

No, aim for 233%, but settle for 40% if it comes with the working condition improvements you absolutely need.

Where is this "settle for 40% coming from?? That would be a 100% FAIL.

We can do some simple math. A COL adjustment ALONE will require a 49% uplift to even equal the "buying power" we had in 2002. THAT'S NOT A RAISE. A raise would be any improvement on top of that. In addition the Company has "strip mined" our contract since then to the tune of "hundreds of millions"....that's a direct loss, likely not to return.

If we set our bar low, don't expect the professional WACON to actually improve in this country. 40% won't get us anywhere close to our US counterparts and other Star Alliance partners wages. We will still be "the lowest of the low" or "bottom feeders" on the pilot landscape. At 40% we will still be far, far below the Hawaiian pilots who currently dwell at the bottom of the Legacy Carrier graph in the Comparator Document released by ALPA. Look and see where 40% puts us.

There is no one to replace you, TFW or not, no one will satisfy the insurance company who under-writes us. EVERYTHING stops. Plus no one would live the lifestyle we put up with daily. No one.

I'm seriously wondering if there is any hope for this group. 40% would be no "win", not even close.

KNOW YOUR WORTH.




FWIW, you guys who think this document is "good" are playing right into the Company line. They use WestJet as a "direct" correlation to what we can expect at AC. REALLY??? WestJet pilots were absolutely demolished by their Management adversaries. Their "wage uplift" doesn't even rank on any chart as far as Legacy Carriers doing similar work on this Continent. There isn't a chart that "units" that low. If I'm wrong, show me the math. It doesn't lie, subvert truth or make excuses.

Not sure what you mean by saying the document is “good are plying into the company line”? My point along has been that it shows exactly how little the powers that be think of Canadian pilots and how little they expect pilots to actually accept. The document is “good” because it shows mathematically to anyone that says the airlines can’t afford to pay more that yes the airlines can afford a lot more. (Cough cough Alexis) not sure who you trying to convince here, ya had me at hello

[JHR]

Unfortunately the new contract will likely be an epic fail. But rest assured there will be many that defend it!