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North America

SkyWest Launches Subsidiary Aimed at Busting the U.S. Pilot Shortage

Edward Russell
April 28th, 2023 at 12:08 PM EDT

SkyWest CRJ

SkyWest Inc. has launched its new subsidiary, SkyWest Charter, that aims to alleviate the captain shortage faced by many U.S. regional airlines.

SkyWest Charter has received all of the necessary U.S. Federal Aviation Administration approvals to operate as a charter airline, and completed the requisite proving runs, SkyWest Inc. Chief Commercial Officer Wade Steel said during a first-quarter earnings call Thursday. This allowed the new carrier to operate its first on-demand charter flight — for example, with a sports team or a private individual — earlier in April. The only outstanding approval needed is SkyWest Charter’s FAA commuter authority that allows it to operate scheduled charter flights.

“SkyWest Charter looks forward to raising the bar … and utilizing existing assets to deliver critical service in small and underserved communities,” SkyWest Inc. CEO Chip Childs said.

SkyWest Inc. unveiled SkyWest Charter last year as a way to get around pilot training hour requirements to alleviate the shortage and continue subsidized flights to small communities across the U.S. The subsidiary operates under the FAA’s Part 135 and 380 certifications that allows it to hire pilots with as little as 250 hours of experience compared to a minimum of 1,500 hours under the standard Part 121 certification used by all major scheduled U.S. airlines, including SkyWest Inc.’s main SkyWest Airlines operation. The tradeoff is that SkyWest Charter, under Part 380 rules, cannot operate planes with more than 30 seats, and its flights must operate outside of the capacity purchase agreements that SkyWest Airlines flies under with major carriers.

Cape Air, Countour Airlines, JSX, Southern Airways Express, and other small U.S. regional airlines already operate under Part 135 certification, though only Contour and JSX take advantage of the additional flexibilities allowed under 380 rules. Executives at this cohort of airlines have, by and large, said they do not face the same pilot and captain staffing problems as their larger peers, including Envoy, Republic Airways, and SkyWest Airlines.

SkyWest Inc.’s strategy has its detractors. The Air Line Pilots Association (ALPA), the largest airline pilots union, has repeatedly objected to the certification of SkyWest Charter. In a letter to U.S. Transportation Secretary Pete Buttigieg on Wednesday, ALPA President Captain Jason Ambrosi said SkyWest Inc.’s strategy would “roll back the clock and skirt the aviation safety rules.” He added that the Department of Transportation should bar Part 135-certified airlines from operating government-subsidized essential air service routes, and substantially increase funding for the program to ensure air service continues.

Airlines like Cape Air, Contour, and Southern hold the majority of essential air service contracts in the U.S. today. They dramatically increased their share of contracts last year as traditional regional carriers, including SkyWest Airlines, terminated contracts and ended routes due to pilot staffing issues.

Childs, in his comments Thursday, called ALPA’s objections “unfounded claims made by special interest groups.”

ALPA notably denies that the U.S. faces a shortage of pilots. It argues, instead, that the staffing issues faced by airlines are the result of low wages, rather than hiring or retirement requirements.

A historic increase in regional pilot pay rates led by American Airlines, and copied by others last year, has not succeeded in immediately ending the shortage. American CEO Robert Isom said Thursday that he expects the situation to take another 18-24 months — or into 2025 — to fully dissipate.

ALPA has also had few objections or comments to plans by airlines whose pilots it represents, as far as ending air service due to cockpit staffing issues. Pilots at SkyWest Airlines are not represented by ALPA or any pilots union.

“Prior to SkyWest Charter filing an application for a commuter air carrier authorization at the [DOT], ALPA did not sound the alarm regarding these classifications despite multiple opportunities to do so,” Childs said in a letter to Secretary Buttigieg Thursday responding to ALPA’s claims.

The progress on SkyWest Charter certification comes as the pilot shortage is easing in the U.S. Most regional airlines, SkyWest Airlines included, now say the situation is a captain shortage rather than one of overall pilots. Captains require additional hours above the 1,500 hours required for new-hire pilots.

Captain attrition at SkyWest Airlines stabilized during the first quarter, Steel said. This allowed the airline to raise its outlook for block hours — a measure of capacity at regional airlines operating under contract for major carriers — by 5 percentage points to down roughly 14 percent year-over-year in 2023.

“We continue to believe it will take some time over the next couple of years to rebalance our crews and restore production and full utilization of our fleet,” Childs said.

Executives at major airlines echo Childs view. Isom at American said Thursday that the regional pilot staffing situation has hit its “low point,” despite it likely taking up to two years to fully restore its regional fleet to pre-pandemic utilization levels. The Fort Worth, Texas-based carrier still has roughly 150 regional jets in storage, though Isom hopes it can reduce this number to roughly 100 aircraft by year end.

“Green Bay and Santa Fe and Springfield, Missouri, Panama City, [Fla.], those are all places that would demand more service right now, and they really can only be served with regional jets,” Isom said. “The largest issue that we are facing is the shortfall in pilots.”

American, Delta Air Lines, and United Airlines have exited 73 markets since April 2020, according to an analysis by Ailevon Pacific Aviation Consulting. Many of those reductions are attributed to the pilot shortage. Most of the affected communities still have flights on one of the three network airlines. However, several have lost all network carrier air service, including New Haven, Conn., Toledo, Ohio, and Williamsport, Pa.

SkyWest Inc. executives did not say when they expect the FAA to grant SkyWest Charter commuter authority. The airline cannot begin applying for essential air service contracts until it receives that sign off.

Utah-based SkyWest Inc. reported a $22 million net loss in the first quarter.

Updated with SkyWest comments from Chip Childs letter to Secretary Buttigieg.

Edward Russell
April 28th, 2023 at 12:08 PM EDT

Tags: North America

Photo credit: SkyWest CRJ Flickr / Caribb

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