The Sykes family took over US Aviation Academy in 2006 during one of the toughest times to be in the pilot training business.
Five years earlier, the Sept. 11 terrorist attacks rocked the industry. And just a couple of years later, the transportation sector, which is so heavily dependent on broader economic conditions, took another hit during the global financial crisis.
Airlines were hemorrhaging money and consolidating to stay alive. As a result, pilots weren’t being hired. American Airlines didn’t hire a single pilot for 13 years.
"We went through a phase there where it was really pretty rough,” said Mike Sykes, chief executive of Denton-based US Aviation Academy. “For a good decade or more, a lot of the senior guys in the industry had a bad taste in their mouth and they’re telling their kids and anyone else they can get in front of, ‘Don’t go down this path that I did. You’ll get furloughed, you’ll have all these problems, you don’t know if you’ll have a job the next day.’”
In the latter half of this decade, airlines started to get their feet under them as the domestic economy flourished. Airlines expanded networks. They hired employees to fuel growth.
But there’s a problem in the industry that’s been rearing its head the past few years.
Since the pilot pipeline had been dry for so long, when airlines started to flourish again and grow their networks there was a shortage of available qualified pilots. That was compounded with a key portion of the talent pool — military pilots exiting the service — diminishing as drones became more prevalent in the armed forces.
Companies like US Aviation are now grappling with an evolving industry. A decade ago entering the pilot industry was a daunting prospect. But today might be the best time for young pilots looking to make a career in the industry.
Looking international
Posters about flight safety line the walls of US Aviation headquarters. That’s not a shock. After all, it’s a pilot training business.
What’s noteworthy is the posters are printed in seven languages. For a small business in Denton that records revenue north of $20 million, its global reach is robust. The company has trained students from dozens of countries.
US Aviation didn’t train international students when the Sykes bought the company. That would change a couple of years later when the dearth of domestic demand forced the family to look halfway around the world for customers.
RELATED: For a look inside US Aviation’s flying school, click here.
The first overseas students came to Denton from India, and then US Aviation got a toehold in the Chinese market.
China’s 21st-century economic explosion is creating a market for middle-class air travel, and the country is hiring pilots in droves. US Aviation welcomed its first class of Chinese students in November 2008.
“Since that time, we’ve trained about 2,000 pilots for China,” Sykes said, adding that 5 percent of pilots in China today were trained by US Aviation. “That has been a major driver of our growth for the last 10 years.”
US Aviation’s customers in the Chinese market are actually the airlines, not the students. Airlines pay for students to come to Denton to learn how to fly.
In addition to teaching, US Aviation provides Chinese students boarding and runs a full bus system taking them from the school, to their apartments and shopping trips during their stay.
“Sometimes we say flight training is the easy part,” Sykes said. “It’s all the housing and the student services that can become a lot of work.”
Aging talent
Because pilot hiring was slow for much of this century in the U.S., that means the existing pilot base is aging rapidly toward the mandatory retirement age of 65.
In Boeing’s Pilot & Technician Outlook for 2019-2038, the aerospace manufacturer projected the world will need 804,000 new pilots to enter the industry over the next 20 years.
Most of those pilots, 645,000, are needed for commercial carriers in two regions. Asia-Pacific will need 266,000 new pilots and North America will need 212,000, Boeing projects.
The pilot shortage is already having real effects domestically. The shortage was a primary factor in Great Lakes Airlines, a regional carrier that operated in the western U.S., going out of business in March 2018.
“This is the latest example of the pilot shortage and its damaging impact on American businesses and communities,” the Regional Airlines Association said after the carrier shut down.
Importance in Texas
Texas has the most pilots in the country, according to the U.S. Bureau of Labor Statistics, and most of them live in Dallas-Fort Worth.
Dallas Fort Worth International Airport is American’s largest hub and Dallas Love Field Airport features the fourth-most daily departures for Southwest across its network.
An airline’s exposure to the pilot shortage differs depending on where they are in the industry pecking order.
In the aviation world, getting a job at the majors — large carriers such as American, Delta, United, and Southwest — is highly desirable. Those jobs can pay hundreds of thousands of dollars annually and pilots with enough tenure pick their schedules to suit their preferences.
New pilots don’t walk into jobs at the majors overnight. They often spend years working for regional carriers earning far less money flying to smaller destinations.
Despite the impact to smaller regional carriers, the two aviation Goliaths in North Texas aren’t feeling the same effects.
How the pilot shortage affects Southwest
“We’re not having an issue finding and hiring quality pilots,” said Greg Muccio, director of Talent Acquisition for Southwest Airlines.
Southwest hires between 400 and 500 pilots in a typical year, Muccio said. But 2019 hasn’t been a normal year for the aviation community and for Southwest in particular.
Boeing’s 737 Max jet has been grounded since March when it crashed twice in a five-month period, killing 346 people. Because of the lack of Max planes in its fleet, Southwest delayed several pilot hiring classes this year.
Southwest could face hiring headwinds in the future, like the shrinking number of military pilots entering commercial aviation. Muccio estimated that Southwest used to hire 55-60 percent of its pilots from the military. Now, that number is 33 percent, he said.
And among the four largest players in the industry, Southwest is the outlier because it doesn’t have regional airlines acting as a pipeline for new pilot hires.
Muccio said he can “look into the landscape and see that is coming.” Because of that, Southwest is getting creative with forming its own pilot pipeline like other airlines have done.
The carrier unveiled a new program called Destination 225° in August. The program, named after the fact 225° marks the southwest direction on a compass, offers different paths for people who want to become pilots.
US Aviation is a part of Destination 225° by helping train current Southwest employees who want to become pilots. The program also offers pathways for flight novices, university students and ex-military pilots to make their way to the Southwest cockpit.
“Everyone still has to get to those minimum hours. We’re never going to hire below that,” Muccio said. “But giving someone a far more direct path to us is part of the idea behind the program.”
How the pilot shortage affects American
David Tatum, director of pilot recruitment for American, calls the time after the Sept. 11 terrorist attacks ‘The Lost Decade’ for pilot hiring.
That was when American didn’t hire a new pilot for 13 years. It was far from the only carrier to experience extremely soft pilot hiring during that decade, and Tatum said that period is contributing to the squeeze the industry is now feeling.
American has to keep pace with both adding pilots to support network growth and to keep up with retirements coming down the road. Tatum said over the next 15 years, American will lose 75 percent of its entire pilot workforce as they reach the mandatory retirement age of 65.
“There’s no other airline on the planet that’s retiring pilots at the rate that American’s doing,” Tatum said. “And that’s a good thing for those who are looking for a job because seniority is everything in the airline business.”
He said it used to take 20 years for a first officer to become captain at American. Now, narrow-body pilots can make captain in less than five years.
Starting after the American/US Air merger that created the world’s largest airline at the end of 2013, the company has ramped pilot hiring back up. This year, American will hire more than 900 pilots with plans in coming years to hire 1,000 pilots annually for the “foreseeable future,” the company said.
“The industry has a pilot shortage, but, to be clear, American Airlines does not have a pilot shortage,” Tatum said. “Because of where we sit in the food chain with pilots coming up through the ranks, we have exponentially more pilots to pick from than we have slots to fill.”
Within the more than 900 new pilots coming onboard at American this year, 55 percent come from its three wholly owned regional carriers, Tatum said. Forty percent come from the military and the other 5 percent come from other airlines and corporate aviation.
American has the benefit of its three wholly owned regional carriers acting as a farm system for new pilot hires.
Envoy Air, based in Irving, is the carrier’s largest subsidiary and will send more than 300 pilots to American this year. Envoy’s chief executive, Pedro Fábregas, is proud of the constant flow of pilots that come through his airline and make their way to American.
“Pilots come to work for me because in five years, they’re going to be pilots at American,” Fábregas told the Dallas Business Journal in October. “We hire the best of the best. And if American wants to hire the best of the best from me? That’s good. That’s the way it works.”
Despite the constant flow of pilots to the mainline carrier and other regional carriers feeling the pressure from the shortage, Fábregas said Envoy doesn’t have a pilot shortage. There was softness back in 2015 but for the last couple of years, “the classes are full,” he said.
Other aviation firms
Kevin Horan has been in the aviation industry for over three decades and now heads hiring for Dallas-based JetSuiteX, Inc., which includes brands JetSuite and JSX, as its vice president of Corporate Soul.
JetSuite is a traditional private jet charter company and JSX sells individual seats on charter jet-sized planes.
JetSuite employs 65 pilots and added four pilots a month for the first half of 2019.
JSX is the faster growing portion of the business and has been adding several new aircraft to its fleet. That side of the company has 117 pilots and hired between eight and 10 new pilots a month this year mainly to keep up with growth.
JetSuiteX, Inc. is on the smaller end of the spectrum in the aviation world. However, it’s been successful in creating a niche market where even though it’s feeling the effects of the shortage, the impact isn’t as drastic as other regional carriers, Horan said.
“I am touching every piece of wood in my hotel room as I say this,” Horan added.
There are a couple of reasons why this is the case, Horan said.
First, JetSuite and JSX aren’t beholden to the mandatory retirement age of 65 like American, Southwest and other big carriers.
Pilots aging out of that commercial aviation segment are a key recruitment demographic JetSuiteX, Inc. goes after. During his interview with the Business Journal, Horan was on a trip to Hawaii that included recruiting former Hawaiian Airlines pilots that have retired.
Also, JetSuite and JSX are heavily involved in tapping into minority pilot groups. Horan said the company has deep ties with organizations like Women in Aviation International, the National Gay Pilots Association and the Organization of Black Aerospace Professionals to make sure no potential talent pool is left untapped.
Carriers like JetSuiteX, Inc. don’t pay as much as the major carriers or offer the direct career path regional carriers like Envoy can offer. Therefore, it has to sell other parts of the business to get younger pilots on board.
One of the major draws is lifestyle. Horan said pilots are home about half of their flying days. So, if they are flying for six days, three of those overnights might be at home. The company’s goal is to get that figure to 80 percent.
Plus, he argues his planes are just more fun to fly. JetSuite and JSX fly aircraft like Phenom 100s, Phenom 300s, and customized Embraer 135s and 145s which are more hands-on than the machines the majors fly.
“You’re actually flying the airplane,” Horan said. “It’s not getting onboard a highly automated new aircraft and getting up in the air, pushing a few buttons and sitting back.”
Looking forward
One thing to watch heading into 2020 is impact the 737 Max’s return will have on pilot hiring.
When the plane comes back to commercial service — which American and Southwest project to happen in early March 2020 — dozens of jets will gradually be reintroduced into carriers’ networks.
Airlines will need to staff those planes, and that could strain an already tight labor market even further.
“I think a lot of us in the smaller carrier and regional world are a little nervous about when the Max actually goes back into service and the majors start back into their full swing hiring,” Horan said. “That may make it a little more competitive.”
The surge in demand is sure to be a boon for flight schools like US Aviation. During the time pilots weren’t being hired domestically, the preponderance of business for US Aviation came from international students.
Today, the split between students is 65 percent international and 35 percent domestic, Sykes said. By the end of 2020, he expects the split to be 50-50 as the domestic market continues to heat up.
Going through pilot school is expensive. Sykes said it costs $81,000 for students to attend US Aviation and recognizes that’s a lot of money.
He compares the cost to attending college, and with airlines upping pilot pay that’s helping offset some of the cost incurred by students going through pilot school. Carriers continue to implement creative strategies to make sure the pilot pipeline is filled for decades to come.
“We have not reached the peak of the demand curve yet. That’s still a number of years out,” Sykes said. “For a young person that’s thinking about aviation, there’s never been a better time.”
