Pilot Career Center - Global
Pilot Career Center - Global

Pilot crisis has Horizon Air grappling with industry’s new reality

Horizon Air grappling with industry’s pilot shortage

2017 09 29

2017 09 29

Poor pay has hit the supply of pilots at regional airlines, forcing the Horizon Air unit of Alaska Air Group to cancel hundreds of flights. CEO Dave Campbell says Horizon is fighting for its existence. He’s raised pay, added signing bonuses and boosted recruitment.

 

 By Dominic Gates - Seattle Times aerospace reporter

In a late July meeting with dozens of Horizon Air employees, Chief Executive Dave Campbell pleaded with flight attendants and pilots to go beyond the call of duty. He had a plan to fix the acute pilot shortage that had already caused hundreds of canceled flights and curtailed its flight schedule this fall, but difficult months lay ahead, he warned.

“This is one of those gut times when we have to put our heads down and fight through it,” Campbell told his employees. “If we don’t do this, we will not only stop growing, we will cease to exist.”

The crisis at Horizon Air reflects a broad problem with the nation’s regional airlines, though nowhere has it hit harder than at the Alaska Air Group subsidiary, which carries passengers on shorter flights throughout the Pacific Northwest and beyond.

 

Pilot shortage attracts new blood

• Of almost 144,000 U.S. holders of airline-pilot certificates, 30 percent will reach mandatory retirement age within a decade.

• In the past four years, the FAA has issued more than 32,000 new airline-pilot certificates, nearly twice the number in the previous four years.

• Horizon has just hiked base starting pay to nearly $40,000 a year, added signing bonuses of $20,000 to fly the Q400. It also pays an annual performance bonus in the region of $5,000.

Source: FAA, Horizon Air

 

While the life of a pilot at the major airlines is lucrative and even glamorous, the entry level to the career in the U.S. is flying for regional carriers like Horizon — a rite of passage where the work is more of a grind, the conditions are less comfortable and the pay has been poor.

Though they are responsible for the safety of crew and passengers at 35,000 feet, pilots at Horizon until this summer earned starting pay of about $30,000.

For much of the past decade, regional airline pilots had limited opportunities to advance in the profession. With the onset of an acute pilot shortage at the regionals, pay and career prospects are finally changing across the industry, not least at Horizon.

Still, it’s a struggle to recover from years of stagnation.

Thousands of Horizon Air passengers’ flights have been canceled or changed this year, creating frustrating waits at airports and seriously disrupting travel plans.

And even though Horizon Air has cut its flying schedule from September through at least January due to the pilot shortage, with Alaska Airlines and rival regional carrier SkyWest Airlines taking up the slack, it’s still facing continuing cancelations in the reduced schedule.

Horizon canceled 600 additional flights in September and has canceled 700 in advance for the month of October.

One Horizon first officer midway through his first year, who asked not to be named because he spoke without company authorization, said the pilot shortage wasn’t a surprise that fell out of the sky but had been predicted for years.

“It blows my mind that we could be caught unprepared,” he said.

 

Pilots return to flight

Horizon’s hope for the future fills the classrooms at its operations center in Portland, where its latest crop of newly hired pilots is in training.

Here, pilots learn how to use the airline’s state-of-the-art navigation systems to fly into small airfields, such as Wenatchee, with difficult approaches. They master flying either the Q400 turboprops or the new Embraer E175 jets that make up Horizon’s fleet of about 60 aircraft.

One of them, pulled back into the career after a long break, is Bridget Gies, hired in July.

A former Navy pilot, Gies flew carrier-based Hawkeye airborne early-warning turboprop aircraft as well as military cargo versions of that plane. She went on to become an advanced instructor training pilots in T-45 Goshawk jets.

When she came out of the military in 2003, the industry was contracting in the wake of the 9/11 attacks. Hiring at U.S. airlines plummeted for more than a decade while management forced pay cuts and pension freezes.

The raising of the mandatory retirement age in 2007 from 60 to 65 suppressed hiring for a further five years.

Gies stepped away, raised her stepdaughter, took care of older parents, got a couple of degrees and made multiple trips to Africa as a volunteer for wildlife conservation projects.

Yet she never lost her love of flying, and over the years she kept her hand in, occasionally flying small private planes.

“There’s something about that moment, rolling down the runway,” Gies said. “That moment when you take off is just fraught with possibilities.”

Now, at 49, she’s embarking on a career as an airline pilot — learning the new automation and navigation technology that’s entered the cockpit since she left.

The timing is right for her, said Gies, and, “Certainly, it’s a really opportune moment in the industry because of the pilot shortage.”

Horizon has just hiked base starting pay for pilots to between $35,000 and $40,000 a year. It’s paying a $10,000 signing bonus to those like Gies who’ll fly the E175 jets, and twice that to pilots who select the Q400 turboprops. In addition, it pays out an annual performance bonus in the region of $5,000.

 

From stagnation to advancement

Gies is entering the airline pilot pool at a moment of both crisis and change.

After 9/11, pilots at regional carriers found themselves stuck for years at low pay, unable to move up to the majors and still paying off their flight-school loans.

Depending on the track taken, earning the pilot’s license and logging the flight hours necessary to be hired by a regional airline can cost as much as $200,000.

One Horizon first officer, who asked not to be named, recalled earning less than $40,000 a year in the late 2000s after flying for the airline for five years. His family qualified for about $900 a month in federal food stamps. Today, he’s still got $20,000 in debt remaining from his flight training.

Louis Smith, president of Future and Active Pilots Advisors (FAPA), a consulting firm that helps aspiring pilots enter the profession, said it’s no wonder that there are thousands of qualified pilots “back in the woodwork who are doing something else other than flying.”

But “sentiment is changing,” he said. “They see the airlines profitable and pay and benefits getting better.”

One pilot drawn out of the woodwork was Mike Ramaha, 38, a former Marine who learned to fly by paying for his own lessons while stationed in Japan, then used the GI Bill to get his instructor rating in 2008.

That’s the year the global financial crisis hit, extending the airline downturn. In 2009, according to FAPA data, the major U.S. airlines hired just 30 pilots, down from 1,299 the previous year.

Three years ago, Ramaha got the necessary flight hours to earn his airline transport pilot license, but with a wife and three kids to support, he decided he couldn’t afford to join an airline.

“I wanted in, but the timing wasn’t right,” said Ramaha. “Pay wasn’t what I wanted it to be.”  Instead, he took a job as a sheriff’s deputy in Southern California for a couple of years.

This year, with the airline pay hikes kicking in, he quit law enforcement and in January joined Horizon as a first officer. “You are looking at about $3,200 per month take home,” said Ramaha. “For a guy who just finished, that’s pretty good.”

Sparking with energy and optimism, he describes the new opportunities to advance.

By 2013, some first officers had been stuck in that role for a decade and more. Now the upgrade to captain at Horizon can take less than three years. That comes with a salary that rises to $125,000 at the top end of the scale.

And the opportunity to move on to a major airline at dramatically higher pay is equally accelerated.

Since 2012, the major U.S. airlines have turned the corner, reaped huge annual profits and added airplane capacity. Hiring picked up dramatically in 2014.

Thanks to the pipeline of regional pilots eager to move up, there’s no shortage of pilots at the majors. They have been hiring pilots from the regional carriers at a fast clip.

Ramaha said Horizon captains he’s talked to tell him they can be picked up by the majors after just 500 hours of pilot-in-command time.

“You are looking at 3½ or four years,” said Ramaha, “It’s a pretty quick turn.”

A first officer at Alaska, now the fifth-largest U.S. airline, will start at base annual pay, without bonuses, of $57,000. A captain at Alaska starts with base annual pay of $174,000.

And with seniority comes fewer trips, more control over scheduling, and more days off. “Yes, you start at the bottom. But after eight months, my schedule is already better,” Ramaha said. “Next month, I have 16 days off.”

 

Empathy and integrity

While this quickened pace of career advancement is now attracting new hires to the pilot profession, it’s also created a draining attrition rate at the regionals.

That’s a major part of Horizon CEO Campbell’s problem.

In an interview, he said that while his airline has hired 189 pilots this year, it has lost 111 to the mainline carriers.

Horizon today has about 700 pilots and by the end of next year wants to have 750 to 800. At the same time, “We’ll probably lose about 30 percent of current pilots to the mainline carriers,” he said.

To cover its needs, Horizon plans to hire 300 pilots by the end of next year.

Since Horizon says it has about 70 newly hired pilots currently in various stages of training, it will need to refill those trainee classes all over again perhaps three more times by the end of 2018 — a daunting prospect.

Newly hired pilots train inside a classroom at Horizon Air’s operations center at Portland International Airport. They are learning to use navigation systems that allow them to fly into small airports with difficult approaches. (Dominic Gates/The Seattle Times)

One reason Horizon finds itself in worse shape than other U.S. regionals is that last year it was slow to react to the market as salaries increased.

Horizon signed a 10-year contract agreement with its pilots in February 2016 that placed it as the top-paying regional. But by June, salaries elsewhere had soared.  “We went from No. 1 to No. 13,” said Campbell.

At the same time, Horizon placed a billion-dollar order for those new E175 jets, setting out an ambitious growth plan. It didn’t hire enough training pilots to handle the jet training.

With Horizon struggling to staff its planes, parent company Alaska Air Group has given some of its fall flying either to Alaska Airlines or to contract regional carrier SkyWest.

SkyWest, the largest regional carrier in the U.S., by next year will be flying 30 Embraer E175 jets for Alaska, a figure recently bumped up by five aircraft specifically to cover Horizon’s capacity shortfall.

Campbell’s compensation last year was $1.9 million. A calm, charismatic presence, he doesn’t duck hard questions, responding with detail about what’s gone wrong and how Horizon must move forward.

None of the pilots interviewed for this story — with or without company approval — blamed him personally for the crisis, instead praising his integrity and his empathy.  Still, he accepts full responsibility. He doesn’t blame Alaska Air Group, saying that letting SkyWest cover some of the shortfall is the right thing to do for passengers.

“The buck stops with me,” Campbell has repeatedly told his employees as he’s laid out his plan to fix the problems.

He’s bumped up starting pay for new hires by one-third and added signing bonuses that serve to reduce debts from pilot training.  Current pilots are paid 150 percent premium pay for extra flying. (Campbell initially offered 200 percent, but the union objected that this was more than allowed in the contract, so he had to pull back.)

“Historically, Horizon has always been top tier,” Campbell said. “We’re back at top tier.”

He’s hired 15 extra training pilots with another 27 to start soon.

A new vice president of flight operations, John Hornibrook, an Alaska Airlines captain, is charged with doubling Horizon’s new hire capacity and speeding up the training.

Campbell is also supporting industry requests that Congress relax federal rules such as the safety requirement for 1,500 hours of flight time to achieve a pilot’s license.

He argues that some time spent in advanced simulators should be counted toward that target, and would be both cheaper and more effective than “flying around in circles in the desert.”

Last month,an industry body appointed to advise the Federal Aviation Administration (FAA) voted to recommend such a change despite opposition from the main pilots’ union.

Campbell insists the current crisis is merely a pause in the Horizon growth plan, and that his ambition to expand the airline remains.

In addition to the 33 firm orders for E175 jets on Horizon’s books, there are options to buy 30 more from Embraer with deliveries to start in 2019.

Campbell said by 2019 he wants to be ready to take those options.

“I want this company to be in a position then where we can secure any growth that Alaska has,” Campbell said.

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