H

Literature Review

Introduction

The new ATP rule requires pilots to have six times more flight hours than previously required to work as a commercial co-pilot, which affected student pilots training in terms of duration to finish the flight training, increased cost of training, and seeking different career choices (Depperschmidt et al., 2015). In fact, this has impacted regional airlines financially as they suffered from the increased cost to hire and increased pilot pay as well. As pilot supply substantially decreased, the regionals had to take drastic steps towards attracting pilots such as increasing pay and offering bonuses (Lutte, 2018). One of the most critical issues that this rule contributed is the subsequent massive pilot shortage to the industry (Caraway, 2020). Although the rule was essentially created to enhance the airline safety record, it has been controversial as to whether this rule has actually contributed to increasing safety. We reviewed past studies pertaining to the topics involved in this research, which are the 1,500-hour ATP rule; safety, the ATP rule, and experience; the nature of accidents; impact on collegiate flight training program; pilot shortage; and cost to hire.

Cost to Hire

The U.S regional airlines operate approximately 44% of all U.S scheduled commercial flights serving around 64% of U.S scheduled service airports (Lutte, 2018). Major airlines such as Delta, American Airlines, United airline, and Southwest cover around 70% of the domestic market (Lutte, 2018). Regional Airlines work in conjunction with major airlines on a contractual manner as a route feeder where the regional airlines provide air service for small communities to connect major airlines’ routes (Lutte, 2018). This gives opportunities for small airlines to operate these routes where major airlines cannot operate profitably. The regionals generate their revenue through Capacity-Purchase Agreement (CPA) where major airlines pay the regional a fixed rate in return for having their small routes fully operated by the regionals, which includes the aircrafts and the flight crew members. That means, regional airlines are obligated to operate their contractual routes even if they are operating at a loss (Klapper et al., 2019).

Therefore, in light of the reduced pilot supply due to the 1,500-hour rule, regional airlines took actions to attract pilots by offering appealing incentives and raising the base salary to meet the increased demand (Lutte, 2018). Air Line Pilots Association (ALPA) studied 15 regional airlines to examine the average hourly pay in regional airlines before and after the ATP rule from 2007 to 2017 (Nikle et al., 2018). The study showed that the average hourly pay rate in regional airlines in 2007 was $22.25 whereas in 2017 it increased to $38.33, which is about a 72% increase. For instance, Endeavor airline, which is wholly owned by Delta, had an hourly pay rate of $20.73 in 2007 while in 2017 it substantially increased to $50.16 (Nikle et al., 2018). This shows that due to the low pilot supply, regional airlines had to offer more hourly pay and incentives to attract pilots so they could keep operating their contractual routes. Thus, this has cost them a lot of money leading to financial struggles. On the other side, this has benefitted pilots working at the regional airlines because their pay increased substantially. The average hourly pay at the regionals increased from $24.01 in 2011 to $38.33 in 2017 (Nikle et al., 2018). Therefore, although regional airlines suffered from the increased cost to hire pilots, pay scale adjustments have benefitted regional pilots and achieved the long-awaited goal.

Due to the difficulty of hiring pilots and increased cost caused by raising base salary and bonuses, some regional airlines went bankrupt. In fact, the number of regional airlines has decreased over the last decade from 71 to 61. For example, Republic airlines filed bankruptcy although it had been making profits for straight eight years. However, the pilot shortage and the ATP rule caused substantial financial struggles that Republic airlines could no longer keep operating with low pilots as hiring pilots became so costly (Klapper et al., 2019). Pilot shortage triggered regional airlines to make drastic measures to meet their demand, which in return caused increased cost of hiring pilots and further financial problems that some regionals went bankrupt.

Reference

Depperschmidt, C. L., Bliss, T. J., & Casebolt, M. K. (2015). The effect of public law 111-216 on collegiate flight programs: Perceptions of aviation faculty and flight center personnel The Collegiate Aviation Review International, 33(2). https://ojs.library.okstate.edu/osu/index.php/CARI/article/view/7451/6852

Lutte, B. (2018). Pilot supply at the regional airlines: Airline response to the changing environment and the impact on pilot hiring. Journal of Aviation: Aerospace Education, and Research, 27(1), 1-22. doi:http://dx.doi.org.portal.lib.fit.edu/10.15394/jaaer.2018.1749

Caraway, C. L. (2020). A looming pilot shortage: It is time to revisit regulations. International Journal of Aviation, Aeronautics, and Aerospace, 7(2), 3. doi:http://dx.doi.org.portal.lib.fit.edu/10.15394/ijaaa.2020.1470

Klapper, E. S., & Ruff-Stahl, H. (2019). Effects of the pilot shortage on the regional airline industry: A 2023 forecast. International Journal of Aviation, Aeronautics and Aerospace, 6(3), 2. doi:http://dx.doi.org.portal.lib.fit.edu/10.15394/ijaaa.2019.1321

Nikle, A., and Bjerke, E. (2018). US regional airline pay scale changes. International Journal of Aviation, Aeronautics, and Aerospace, 5(2), 10. doi:http://dx.doi.org.portal.lib.fit.edu/10.15394/ijaaa.2018.1233