A Regional Tale as Old as Time

Edward Russell
October 4th, 2021 at 12:01 AM EDT

Hiring challenges at regional airlines is a tale almost as old as the industry. That fact was on display at the Regional Airline Association (RAA) Leaders Conference in Washington, D.C., last week when executives from a wide range of carriers cited the issue as one of their most pressing challenges as the sector emerges from the Covid-19 crisis.

Cape Air President Linda Markham put the issue in perspective when she said the Hyannis, Mass.-based carrier has been working on the pilot shortage for at least 12 years. And the pandemic appears to have only made matters worse. “Because of all the furloughs and early retirements [at major carriers] we are hearing a huge sucking sound now. We have a problem with both pilots and technicians now,” she said.

Asked how staffing issues have affected Cape Air’s operations, Markham said the airline has had to make “tactical” schedule cuts across its map because of these issues. The airline operates a far flung network connecting small cities — including many under the U.S. government’s Essential Air Service subsidy program — with large airports in the Caribbean, New England, Midwest, and Montana. 

Pilot sourcing is a long standing issue for regional carriers. This really came to the forefront after new training and hour requirements — the “1,500 hour” rule — were implemented in 2013 in response to the fatal Colgan Air 3407 crash in 2009. According to a recent Oliver Wyman report, after an abundance of pilots in 2020 and 2021, North American carriers will face a shortfall of nearly 10,000 pilots by the beginning of 2022 and that number will only rise as the decade continues. Regional airlines, as the entry point for most would-be pilots into the industry, bear the brunt of that shortfall.

But the pandemic has only exacerbated other labor challenges, as with maintenance technicians, for the sector. Empire Airlines, which operates turboprop freighters for FedEx, CEO Tim Komberec said airlines face all kinds of new competition for graduates from airframe and powerplant — or A&P — schools, including from Otis Elevators and the growing wind energy sectors. He and other airline executives are focused on growing the pipeline of trained technicians — a tough lift in an economy that increasingly favors white-collar work over skilled trade jobs — to meet their future needs. Though segment giant SkyWest Airlines has a unique approach to the problem: “We’re having to identify where there are pockets of A&Ps and we’ll put a maintenance base there,” said CEO Chip Childs.

Like everywhere, entry-level ground staff positions are the hardest to fill. This is true across the airline industry — and the U.S. economy broadly — with incoming Southwest Airlines CEO Robert Jordan saying last month that the shortage is so bad in the airline’s Dallas home that he received an application for a job at a local Whataburger restaurant when he picked up a recent order. None of the regional airline executives suggested that they could begin handing out applications onboard flights. At least not yet.

One thing a labor shortage does is drive up costs. And that makes operating profitably a challenge, especially for notoriously thin margin regional airline businesses. This fact, plus the pending retirement of 50-seat regional jets from U.S. fleets and the relentless drive towards greater scale and efficiency, has Republic Airways CEO Bryan Bedford anticipating a further culling of regional players — perhaps to half the number there are today — over the next decade. Asked how this shakeout will occur, he expects this to occur through attrition as smaller, weaker operators close their doors — as Compass Airlines, ExpressJet Airlines and Trans States Airlines did in 2020 — with their flying redistributed among the remaining players.

“I see the industry splitting where all of a sudden small is beautiful again,” said Bedford. By this, he sees “fewer, extremely large-scale players” and more “niche-y small guys,” citing Cape Air as an example of the latter.

Asked for her response on Bedford’s comments, Markham said Cape Air has “always known that.” Indeed, the airline has been involved in some of the more interesting developments in the regional space. In addition to being one of the first to address the pending pilot shortage 12 years ago, Cape Air is the only operator today that has hands-on experience working with an OEM developing an entirely new airframe. That collaboration with Italy’s Tecnam produced the nine-seat P2012 Traveller that began revenue flights with the carrier in February 2020. Cape Air flies 25 Travellers today and anticipates operating 30 by year-end.

Cape Air’s experience is expected to come in handy as the flurry of proposed electric aircraft enter the market. The airline was the first to commit to an electric aircraft — Eviation’s nine-seat Alice — two years before such commitments became popular at the Paris Air Show in 2019. And Tecnam is using the Traveller as the platform for the electric P-VOLT that it’s developing with Rolls Royce. Cape Air and Widerøe among the first customers for the new Tecnam model. The largest in-development electric model is Heart Aerospace’s 19-seat ES-19 turboprop that has commitments from Finnair, Mesa Airlines and United Airlines.

That’s where Bedford’s future “niche-y small guys” sit: At the intersection of the emerging electric vertical takeoff and landing (eVTOL) aircraft segment and future small electric propeller aircraft, like the Alice and P-VOLT. eVTOLs are, for now, considered essentially air taxis with seats for typically four people flying high-frequency, short flights connecting airports with nearby city centers and suburbs — think Irvine to LAX in Southern California. The sector has created so much buzz that even Airbus is getting in on the action with its own CityAirbus model. And many expect the electric propulsion technology developed for eVTOLs and small props to be the basis for future electrified large passenger aircraft.

The big question mark around electric aircraft is their timing. It easily takes 5-10 years for an entirely new aircraft to move from the drawing board to revenue passenger service, and that’s with standard jet fuel-powered engines. No one knows how long it will take for global aviation regulators, not known for their speed, to approve this new generation of electric engines and then the airframes they will power. Some eVTOL developers, including Archer Aviation and Joby Aviation, say their aircraft will be carrying passengers by mid-decade but few expect those timelines to hold. Asked at the conference when the Alice or P-VOLT could enter revenue service, Cape Air Senior Vice President James Goddard — a driving force behind the drove Traveller development — would not provide a firm date saying he defers to “smarter people than me.”

“It’s a long ways off before you’re going to take 76-passengers in something that’s not powered by Grade A jet fuel,” said Childs. He expects electric large regional jets, like the Embraer E175s that SkyWest flies, to be at least 10-15 years away.

Edward Russell

Edward Russell
October 4th, 2021 at 12:01 AM EDT

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