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Saturday, August 7, 2010

Poaching in the Philippine skies

The well-publicized desertion by 25 pilots of flag carrier Philippine Airlines (PAL) last week was seen largely as a labor problem. However, aviation experts see their sudden exodus-to work for better-paying jobs in regional low-cost carriers and in the Middle East-as a proverbial canary in the mine, a prelude to worse scenarios not just for PAL, unless the country's carriers prepare themselves to deal with fast-changing realities.

The reality is that after three years of economic uncertainty, the world's aviation industry is slowly picking up and is poised to resume its aborted buildup of inventory for commercial jets in order to meet expected demands. Also with the trend is the increasing business for low-cost carriers (LCC), as more and more people take to air travel but with bottom line in mind. Commensurate with this development would be the need for more pilots, mechanics, avionics experts and fitters, cabin crew and those in related jobs called "mission critical skills" (MCS).

The LCCs have fueled that demand, including the entry of new players in the market, according to Boeing.

There are now 36 LCCs in Asia alone and their need for pilots and MCS is directly proportional to their growth. But the available heads, especially for aircraft captains, are limited so that these carriers often resort to poaching.

Jim Sydiongco, officer in charge of the Flight Safety Inspectorate Service, a division of the Civil Aviation Authority of the Philippines (Caap), estimates local LCCs such as Cebu Pacific, Airphil Express,  Sea air and Zest Air have about a combined total of 1,000 pilots. They are vulnerable to poaching if their  salaries and other perks are not on a par with those offered by foreigners.

PAL admits that as early as 2006, it had warned the government that its corps of experienced commercial pilots was being decimated by unchecked poaching by foreign airlines.

"In the last three years alone, Philippine Airlines has lost 74 of its well-trained senior pilots-nearly 20 percent of its pilot roster-to poachers," the airline said in March 2006.

It said it took, on average, 10-and-a-half years to graduate, train, qualify and nurture a pilot to the rank of captain of a B747-400 in a major airline. The total investment required for this decade-long process came up to P12.1 million.

"Deep-pocketed foreign carriers, seeking to save on cost, time and effort, bypass the long pilot-training and -maturing process by luring away experienced first officers and captains from the country's airlines," the airline said.

"They do this mostly through illegal means such as inviting the pilots to visit the airline's home base as tourists, and then providing them employment visas upon arrival. Another involves the airline's recruitment staff coming to Manila and lodging themselves in hotels and even embassies.

"They then surreptitiously interview and recruit pilots, signing them into employment contracts without the [Philippine Overseas Employment Administration's] approval, in violation of Philippine labor law."


CebuPac training at Clark

CEBU Pacific has an ongoing pilot training at the Clark Institute of Aviation that includes A320 simulator training, but figures of the number of their prospective pilots are not available.

CEB spokesman Candice Iyog, when asked how they prevent their pilots from being pirated, said: "We work hard at maintaining good relationship with our pilots." This might not sound very helpful but those who have worked with CEB said that they have an almost personal relationship with the carrier that is not found in any other airline.

Be that as it may, how will the Philippine carriers cope with the expected surge in demand for pilots and other "MCS" people in view of the accompanying increase in aircraft? The following figures would show how much commercial jets are needed in the years to come.

According to Boeing's "Current Market Outlook for 2010," airlines will need 30,900 new jets between now and 2029, with more than two-thirds of the demand for smaller single-aisle jets such as Boeing's 737 and Airbus's A320. "Airlines have seen a rebound in passenger and freight traffic this year and should return to profitability in 2011."

On the other hand, Airbus predicts worldwide passenger traffic to grow at an average of 5.3 percent over the next 20 years. Airbus said that although the global industry has been affected by high oil prices, instability in the Middle East and the tsunami disaster in Indonesia, the long-term prognosis is a strong rebound in traffic growth.

The Federal Aviation Authority (FAA) forecasts a rising demand for more aircraft and reports that passenger levels are returning to pre-9/11 levels, possibly exceeding 1 billion annually by 2015.

"The emergence of low-cost and regional airlines is leading the change. Their traffic has risen by 40 percent since 2000 to 269.5 million in 2004, with a 43-percent share in the market." Deregulation since 1978 has given rise to more options and lower fares and customers are driving this change, the report adds.

Aviation authorities point to a strong demand for pilots and MCS people due to the increasing number of LCCs, and poaching would eventually result due to the actual shortage of flyers.

Avelino Zapanta, president and CEO of Seair and UP professor of Air Travel Management, said the plight of PAL pilots is just the beginning of what looks like a mass exodus in the near future, unless the government intervenes. It could provide assistance in the form of subsidies to aviation schools and encourage more Filipino students to take up flying.

Zapanta cited earlier estimates that there would be 35,000 new deliveries of aircraft from both Boeing and Airbus until 2026, a figure not far from Boeing's and Airbus's latest figures of 31,000.

The ratio of plane to pilot is 1:9, or one airplane for every nine pilots. Following Boeing's and Airbus's 31,000 figures, that would translate to 280,000 pilots, says Cris Zenarosa, former Japan Airlines executive and Caap consultant.

Zenarosa said that in their lifetime, airplanes never stop flying unless undergoing checkup or maintenance; in contrast, pilots have to fly a limited time every month for health and other reasons, so that you have a situation where more pilots are needed for every aircraft.

Airbus's aircraft projection says single-aisle jets comprised 71 percent of their production, which would be about 21,000 A319 and A320 types-ideal for LCC operations.

Boeing, on the other hand, says that single-aisle units like the B737 would account for 65 percent or about 19,000 airplanes destined for LCCs.

However, the world's crop of newly graduated pilots amounts to only a few hundred a year. India graduates 250 students and many more of their student pilots go abroad to enroll. The Philippines has no accurate figure, but is estimated to graduate a few hundreds a year out of 56 flying schools registered until the first quarter of 2010, according to Capt. Nestor Pasano, Flight Operations Safety Inspector of the Caap.

If we multiply the number of planes by the number of pilots, mechanics, fitters, cabin attendants, and avionics engineers needed, then we are looking at a potential hundreds of thousands of  MCS in high demand, Zapanta said.

It's not just the pilots who are leaving. He noted that 1,159 mechanics have left the country for better-paying jobs abroad.

"The growth forecast dovetails with the global market indicators, "Zapanta added, saying that the annual demand for pilots, on a regional basis, would show the following: China, 1,789 pilots; Southeast Asia, 1,199; Near East Asia, 1,163; Middle East, 655; and Southwest Asia, 462.

In 20 years, the total demand for pilots in the following regions would be: China, 35,700; SEA, 23,980; NEA, 23,260; ME, 13,100; and SEA, 9,240 for a total of 105,300 pilots.

By comparison, the United States today has 72,000 commercial pilots, according to Pasano.

If we factor in the estimated 30,000 pilots who are due to retire in 10 years, then the mad scramble for pilots, or poaching as others see it, would become a certainty, Zapanta said. Besides the proliferation of LCCs, the aviation industry has to deal with the Middle East, India and China as "awakened giants" whose insatiable demands for growth, in many aspects of the economy, distorts the market, said Zapanta.

"China will need 55,000 captains in the next 20 years," according to George Lim of Boeing, while Barry Grimrod of Oriental Aviation cautions that safety records might be jeopardized because of pilot shortage.

Local demand continues to outstrip supply since there are only 150 pilots who graduate yearly in the Philippines, according to Asian Pacific Aviation, a consultancy firm. The APA sees no meaningful government participation in the aeronautics sector, except for the Philippine State College of Aeronautics (Philsca), the only government-run aviation school in the country.

"It takes about eight to 10 years to produce a commercial jet pilot, according to Sydiongco, a former PAL captain and A340 check pilot. He said it takes about 1,200 flying hours-about three years of flying-to be certified an A320 pilot. He said those who have logged about 1,200 flying hours are thus the most vulnerable to poaching.

"They are young, hungry for higher salaries because of their growing family and adventurous enough to be assigned anywhere on the planet," said Sydiongco, who himself used to be a pilot in India.

To take advantage of the expected demands in MCS, the government must subsidize aviation colleges and flying schools to turn out more graduates, said Sydiongco, a view shared by Zapanta.

Zapanta said that since the country was successful in turning out thousands of seamen from hundreds of maritime schools and they are now the ubiquitous hands in ships and boats all over the globe, maybe it's time the government extends help to schools that churn out pilots and other "mission critical skills."

"There are about 8 million overseas Filipino workers  comprising 23 percent of the labor force, maybe it is time that the Philippines produce more MCS," he said, "otherwise, if we are not able to stem the outflow, then the country would face a serious problem."

At the moment, he said only one school has been provided with government subsidy and that is the Philippine State College of Aeronautics Flying School, where Zapanta also teaches.

The Middle East has recognized this problem and has now reported that a number of flying schools have cropped up to cater to the industry's manpower shortage.

Their solution is a two-pronged strategy: first, more local young people are encouraged to go into aviation career; and second, the available training facilities are urged to meet international standards needed to operate in today's competitive industry.

Fortunately for the region, improvements in the latter have already been getting a headstart, according to reports. Earlier this year, Emirates Aviation College announced an expansion of its popular MBA program in Aviation Management.

To be launched later in the year, students will have the flexibility to study a diverse range of professional vocational and academic programs in locations including Dubai, Singapore and the UK.

"One of the biggest issues for the year is meeting the challenge of supplying the aviation industry with the sheer numbers of specialized manpower it needs in order to flourish and expand over the coming year," said Mohammed Yousuf Al Budoor, senior vice president, Academic Wing, Emirates Aviation College (Aerospace & Academic Studies).

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