Monday, October 23, 2017

Air Force to Recall 1000 Retired Pilots

The Air Force has a pilot problem. It doesn't have enough. The service says that the problem is reaching "crisis" levels with a current shortage of 1500 pilots. Having exhausted all means to convince their current pilot force to remain in the service, and unable to increase the number of new pilots produced, the Air Force appealed to the President to revise an executive order allowing for the recall of up to 1000 retired pilots to active duty. President Trump signed this order last Friday touching off a firestorm of social media commentary.

In many ways, this problem has existed for decades, even stretching back to the 1980s when I first wore the green bag (flight suit). The issues are the same and the same arguments get made over and over. What has changed is simply the intensity of each issue affecting pilot retention. As the saying goes, you can't tell who's swimming naked until the tide goes out. And the tide has indeed gone out.

Inflow Minus Outflow

Air Force personnel managers are charged with managing the pilot force to maintain appropriate force levels. They not only manage the total number of pilots, but also the personnel levels existing at various career stages. They attempt to keep a surplus or deficit from existing anywhere along the career "pipeline". Tools at their disposal are the management of training rates, promotion rates, and incentive programs used to either retain pilots or to encourage them to separate.

Looking at the inflows, the number of pilots that the Air Force can train in a given year, there was a huge reduction in initial pilot training capacity dating from the end of the cold war. Training bases were closed and resources were reassigned. Total pilot production was reduced from about 1500 to 500 pilots annually in the early 1990s. That number has recovered somewhat; about 1100 pilots were produced in 2016. The Air Force is attempting to ramp this production back up, but planners estimate that a maximum of 1400 pilots per year is the ceiling given current numbers of training aircraft and other resources.

It is on the outflow side, however, that the problem becomes clear. In short, pilots are bailing out of the military to take airline jobs—just as they always have when the airlines come a calling. It is here where the pilot retention problem really looks like a rewind of the 1980s. Back in the late eighties, the airlines were on a hiring tear, scooping up as many ex-military pilots as they could get their hands on. 

I specifically recall being asked to participate in a round table discussion with the wing commander to address the issues of why pilots were leaving the service. The complaints I heard back then are eerily similar to the ones being voiced today. Pilots chafed at too many non-flying additional duties (affectionately known as "queep"), not enough flying time, and a lack of leadership. Here is an example of the unrest from the comments of my blog (in the original):

...additional duties that have nothing to do with flying, PME (professional military education-ed) requirements to get promoted that have to be accomplished in off duty spare time, 24/7 on call status, exercises that have little to do with flying, PT (physical training-ed) requirements that have to be prepared for in spare time, mountains of regulations based on a single act of buffoonery with the goal of preventing bad judgement from ever happening again, i.e. The Shotgun Approach to problem solving, time off is time off. Not everyone wants to be a four star general/politician/professional staff officer but, the senior AF brass expect everyone to jump through time wasting hoops to be prepared for that minute possibility.

One factor which currently helps to push pilots out of the service which largely did not exist back in the 1980s is the deployment rate. Deployments, or long term tours away from home lasting weeks or months, are now the rule rather than the exception. Air Force pilots flying tactical or theater based aircraft can expect multiple, lengthy, deployments during their career. No amount of incentive money will likely dissuade these pilots from exiting the service once their service commitment is over.

When the Airlines Hire, Pilots Leave

So are pilots actually leaving the service in numbers greater than they have in past airline hiring surges? A 2015 Rand study which examined the issue of fighter pilot retention, defined a measure of total active rated service (TARS) to measure the retention of pilots. Denoted in years, it measures the average length of time a pilot remains on active duty.

As you can see, the rate at which pilots leave the service (thereby shortening their active duty years) roughly corresponds with airline hiring, verifying that in spite of conditions in the military, when the airlines are hiring, pilots will leave.

This makes sense for many reasons. At the 10 year point of a military pilot's career, there are often many lifestyle changes including marriage and children. The excitement and travel which provide much of the allure of being a military pilot may have lost their lustre. The early part of a military pilot's career involves becoming an expert in the operation of their weapons system, but as time progresses, the focus will switch to grooming for leadership positions and away from flying.

At work here also is the psychology of the airline seniority system. Nearly every measure of quality of life in the airlines is determined by one's seniority, or hire date. Logic dictates that if a pilot has decided to eventually go the airline route, an earlier rather than later departure from the military will be better. This "fear of missing out" no doubt drives many pilots off the fence onto the side of the airlines, but it also presents an opportunity to help solve the problem.

Can it be Fixed?

Anything can be fixed given enough money and imagination, which unfortunately, seem to be in short supply these days. From a merely economic point of view, matching airline pay rates dollar for dollar might help, but the calculus would then be why work harder for the same money? To beat this problem with money will require quite a bit more than the military is willing (or able) to pay.

To their credit, Air Force leadership has recognized the toll that nonstop deployments have taken on the force and are moving to reduce them. Other initiatives include keeping pilots in the cockpit and out of staff positions by utilizing non-pilots for those staff positions.

One possible solution to the airline seniority problem might be for the airlines to interview, provisionally hire, and guarantee military pilots a seniority position based on that interview date. This type of program would mirror the "flow-through" programs which some regional airlines have with their mainline counterparts.

Requiring a longer service commitment seems to be a well that has run dry. Currently at 10 years from completion of training (up from six when I joined in 1982), the length of that commitment will eventually dissuade the best and brightest who have other options. 

Then, of course, there is the brute force method, of which an involuntary recall of retired pilots would be a showpiece. Other levers include the use of a "stop-loss" program which simply closes the door to pilots leaving the service prior to retirement. Invocation of a stop-loss seems the more likely course in lieu of a retirement recall. I have personal experience with that, being prevented from retiring for awhile back in 2003.

The last policy prescription I'll offer is to simply define the problem away. It still escapes me as to why we're deploying state of the art fighters against Pashtun goat herders in the Hindu Kush, especially when the place will look like we were never there a year after we leave.

In Conclusion

The Air Force's pilot retention problem is the same as it ever was. When the airlines hire, pilots leave. The complaints about the service being made today echo not only those I heard back in the 1980s, but also those of Joseph Heller's Yossarian voiced in Catch 22. Creative management and incentives will help stop the bleeding, but the tide of a world wide pilot shortage is a powerful force.

Captain Rob Graves is a veteran airline pilot and retired Air Force officer. He currently flies a Boeing 737 for a major American airline where he has over 25 years of experience. His Air Force career included instructing future USAF pilots in the T-37 primary jet trainer, aerial refueling in the KC-135 Stratotanker, and conducting worldwide logistics in the C-5 Galaxy cargo aircraft.

Saturday, October 14, 2017

The Real Reason that Southwest Just Announced Hawaii

As you probably know by now, Southwest Airlines announced their intention to serve Hawaii this past Wednesday night. There has been speculation about if and when Southwest Airlines would begin service to Hawaii for years. Driving these rumors is the fact that they've been removing many of the obstacles holding them back from flying to the islands.

For instance, flying long distances over water requires specially equipped and maintained aircraft. Known as Extended Operations (ETOPS) certification, the aircraft and crew have to demonstrate an ability to lose an engine and to safely divert to an alternate airport. Southwest has been operating ETOPS compliant aircraft, and trained their crews in over water navigation procedures several years ago. So why did they wait so long to start service?

One reason to not serve the Hawaiian Islands is that it is a very difficult market in which to make money. This may seem counterintuitive as Hawaii is one of the premier vacation destinations in the world, but let me explain.

Leisure or Business?

Airlines rely on two types of passengers to make money: business and leisure. Business passengers are by far the more profitable customers as they are usually on a tight timeline, and are not generally flexible in their travel plans. Many times they have to travel at the last minute. These factors mean that airlines can charge business passengers a lot of money which ends up making them high margin customers.

Leisure passengers, on the other hand, often plan their vacations well in advance, and are more cost conscious as opposed to time sensitive. Add in that money used for vacations is discretionary, meaning that a small increase in cost may mean going to a cheaper destination or not going at all, and you can see that airlines are competing for these passengers on price. The leisure market ends up being a high volume, but low margin business. And Hawaii is the quintessential leisure market.

Another factor in the Hawaiian market is of the airlines' own making. That factor is their loyalty programs. Decades ago, the airlines figured out that giving away free flights to loyal customers was a great way to keep those customers from jumping ship (so to speak) to another carrier which beat them by a few bucks on price. One of the premier destinations for loyalty program redemptions, however, was Hawaii. This meant that the airlines found themselves flying full airplanes to the islands with very few paying customers, a huge number of them being redeemed "miles" flights.

The type of aircraft being flown can also affect the profitability of a particular market. Wide-body aircraft carrying several hundred passengers enjoy an economy of scale which lowers costs. The fixed costs of maintaining gates and ticket counters are essentially the same for all airliners, so an airline flying wide-body aircraft can spread those costs over more customers. This is a disadvantage for airlines with only narrow-body aircraft such as Alaska and Southwest.

All of these reasons have made Hawaii a difficult market that up to now Southwest has elected to forego. But something made them change their mind, and that something was from outside their company.

It's War!

In April of 2016, Alaska Airlines announced their intention to acquire Virgin America creating a west coast powerhouse airline with national aspirations. For decades, Alaska was content to serve their fiercely defended home turf of Alaska from their Seattle hub, along with west coast routes including Mexico, while only occasionally venturing east of the Mississippi.

The addition of the Virgin America network added a robust transcontinental capacity giving the new entity a significant east coast footprint. They also decided that the time was good to challenge Southwest for primacy in one of the largest markets in the country: California.

Southwest has long been the primary carrier for California intrastate travel having wrested the old PSA routes away from USAir back in the early '90s. Flying California intrastate routes as many as six times daily, Southwest has more or less had that market sewn up until earlier this year. Starting in March, Alaska announced new service and frequency to cities such as Burbank and Sacramento, Southwest strongholds. A fare war has subsequently broken out with fares as low as $57 for intrastate travel.

No Holds Barred

Fare wars, while good for airline travellers while they last, can be brutal to the bottom line. Alaska did not start this fight without intending to either win, (unlikely) or at least to grab a good chunk of Southwest's California market share. A war of attrition will batter both airlines' financial results even though Southwest is somewhat better positioned to prevail as they have lower overall costs than Alaska.

Alaska, though, does have some tricks up their sleeve which will keep them in the fight. One is that they have codeshare agreements with 15 other airlines to include large international carriers like British Airways and Emirates. Southwest does not codeshare at all. Funneling passengers into a worldwide network brings in revenue and exposes their product to more potential customers.

The other feature that Alaska has is Hawaii. They've been flying there for years, even though it may not be a huge revenue generator. And this is an ace in the hole when you are fighting for California. As it turns out, over half of all Hawaii tourists originate from California. 

The whole point of loyalty programs is to capture customers who will then fly one particular airline for both business and leisure travel. When you are trying to build brand loyalty, as Southwest is, not serving one of the largest nearby leisure destinations means that you are inviting your customers to fly on your biggest competitor. This is the real reason that Southwest has finally decided to fly to Hawaii.

In Conclusion

A fare war over California means that there are huge consequences at stake. Alaska is attempting to establish a larger presence on the west coast after their merger with Virgin America, while Southwest does not intend to let one of their largest markets be challenged. In order to compete against this new attack, Southwest has to offer their customers access to Hawaii unless they want to see their customers fly on the competition for both business and leisure.

Captain Rob Graves is a veteran airline pilot and retired Air Force officer. He currently flies a Boeing 737 for a major American airline where he has over 25 years of experience. His Air Force career included instructing future USAF pilots in the T-37 primary jet trainer, aerial refueling in the KC-135 Stratotanker, and conducting worldwide logistics in the C-5 Galaxy cargo aircraft. He is the author of This is Your Captain Speaking, an aviation blog. It can be found at He also writes for Any opinions expressed are solely his.