Pilot shortage will erode US discounter’s low-cost edge: United executive
A shortage of pilots will increasingly erode cost advantages long enjoyed by US discount airlines while improving the competitive position of behemoths like United Airlines. That is according to United head of corporate development Michael Leskinen, who on 23 February pointed to the USA’s controversial “1,500-hour” pilot rule as driving the change, which he calls a “new paradigm”. “We have never had a better set up,” says Leskinen, who is also United’s vice-president of investor relations and president of United Airlines Ventures, the airline’s technology investment arm. “The set up we have over the next three to five years is better than anything I’ve ever seen in my career,” adds Leskinen, speaking during a Barclays’ investor conference. Leskinen backed his comments by describing broad changes now affecting the US airline industry. He notes carriers are unable to expand their fleets as quickly as they would like due to Airbus and Boeing being unable to keep up with delivery commitments – a result of aerospace manufacturing supply constraints. He also says limited supply of pilots will increasingly hinder the ability of ultra-low-cost carriers (ULCCs) and low-cost carriers (LCCs) to maintain cost advantages. “There is no carrier out there – whether its a regional carrier, an LCC or a ULCC – that can attract pilots unless [they] want to pay the going rate for pilots,” says Leskinen. “The incremental capacity from legacy carriers is going to be [at] similar cost, or lower cost, than incremental capacity coming from the ultra-low-cost carriers.” “It is a new paradigm,” he adds. In search of new pilots, some US airlines – notably regional carriers – have significantly hiked pay in recent years, even offering $100,000 bonuses to new hires. Large legacy airlines – American Airlines, Delta Air Lines and United – are now negotiating new contracts with their pilots’ unions. Some ultra-discounters have a several more years before their pilots’ contracts become amendable. But those discussions will determine the degree to which discounters maintain their chief competitive advantage.<br/>
https://portal.staralliance.com/cms/news/hot-topics/2023-02-27/star/pilot-shortage-will-erode-us-discounter2019s-low-cost-edge-united-executive
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Pilot shortage will erode US discounter’s low-cost edge: United executive
A shortage of pilots will increasingly erode cost advantages long enjoyed by US discount airlines while improving the competitive position of behemoths like United Airlines. That is according to United head of corporate development Michael Leskinen, who on 23 February pointed to the USA’s controversial “1,500-hour” pilot rule as driving the change, which he calls a “new paradigm”. “We have never had a better set up,” says Leskinen, who is also United’s vice-president of investor relations and president of United Airlines Ventures, the airline’s technology investment arm. “The set up we have over the next three to five years is better than anything I’ve ever seen in my career,” adds Leskinen, speaking during a Barclays’ investor conference. Leskinen backed his comments by describing broad changes now affecting the US airline industry. He notes carriers are unable to expand their fleets as quickly as they would like due to Airbus and Boeing being unable to keep up with delivery commitments – a result of aerospace manufacturing supply constraints. He also says limited supply of pilots will increasingly hinder the ability of ultra-low-cost carriers (ULCCs) and low-cost carriers (LCCs) to maintain cost advantages. “There is no carrier out there – whether its a regional carrier, an LCC or a ULCC – that can attract pilots unless [they] want to pay the going rate for pilots,” says Leskinen. “The incremental capacity from legacy carriers is going to be [at] similar cost, or lower cost, than incremental capacity coming from the ultra-low-cost carriers.” “It is a new paradigm,” he adds. In search of new pilots, some US airlines – notably regional carriers – have significantly hiked pay in recent years, even offering $100,000 bonuses to new hires. Large legacy airlines – American Airlines, Delta Air Lines and United – are now negotiating new contracts with their pilots’ unions. Some ultra-discounters have a several more years before their pilots’ contracts become amendable. But those discussions will determine the degree to which discounters maintain their chief competitive advantage.<br/>
