Airline Cutbacks Hit Smaller Airports Hard

Oct. 13, 2016
Airports are exploring new options to fight back against air service cuts brought on by the pilot shortage.

In the aftermath of the crash of Colgan Air Flight 3407 on Feb. 12, 2009, Congress pushed through more stringent training requirements for pilots. That, combined with a slew of retirements by major airline pilots and carriers cutting back on capacity, has led to spotty and canceled air service to smaller cities across the United States.

Michael Isaacs, manager of South Dakota’s Pierre Regional Airport, said the pilot shortage is a big story in his city. “Ten years ago, we were served by Mesaba Airlines as Northwest [Airlink] with two flights to Minneapolis, and Great Lakes Airlines, which flew three flights to Denver,” he said.

After the Delta Air Lines-Northwest merger, Delta decided it didn’t want turboprops in its fleet, said Isaacs. “We were one of 24 cities that Delta pulled out of. That was not part of the pilot shortage. It was just them restructuring their business model,” he said. “However, we were successful in forcing Delta to stay on the route until Great Lakes took over.”

In 2013, Pierre had eight flights a day: four to Minneapolis and four to Denver. “But then the training rule change came out. The effects of it started during our hunting season in October, where our enplanements are doubled,” he said. “So this pilot shortage hit us right at our peak season and it was very difficult.”

There were a lot of missed bags and people missed several days of hunting, Isaacs recalled. “We also went from eight flights a day down to six flights a day. Then we went down to four and then three,” he said. “But with high flight cancellations in the last couple of years, we averaged around 25 percent in cancellations, while our on-time performance rates were hovering in the 50- to 60-percent range, which led to us losing 75 percent of our traffic.”

It was devastating, said Isaacs. “But with the help of Senators John Thune (R) and Mike Rounds (R) and our governor, we were successful in bringing back money for [the] Essential Air Service [program],” he said. We were always an EAS community. However we hadn’t collected EAS funds since 2006.”

So the airport chose an upstart carrier, Kennesaw, Ga.-based Aerodynamics Inc. (ADI) in 2014 to take over its EAS flights after troubles with Great Lakes, said Isaacs. “ADI did have some initial startup problems, so they reorganized the company and rebid to provide scheduled air service in Pierre again,” he said. The city again chose ADI as its EAS provider and it started service as Great Lakes Express JetExpress with a 50-seat Embraer ERJ-145 regional jet on Aug. 15. Issacs said to-date, it has a 100 percent completion factor, with 88 percent on-time performance and 59 percent load factor, which is well above initial expectations. 

The airport hired an air service consulting firm, Mead & Hunt, to help, said Isaacs. “They were successful in getting us face time with some other regionals.”

But it’s been a challenge for Isaacs to encourage his community to use the new ADI service. “We've heard so many stories of people who missed weddings and funerals. There were just so many heartbreaking stories with the poor performance of the existing flights that we really had to take a gut check,” he said.

Instead of doing last-minute cancellations, Great Lakes pulled back its forecast of when pilots were able to fly, said Isaacs. “It actually produced less frequencies with higher performance, which improved its last-minute cancellation ratio,” he said. “They would cancel flights three weeks or more out so folks would not have to come to the terminal building to find out they were cancelled.”

Greg Kelly is chairman of Airports Council International-North America’s (ACI-NA) Small Airports Committee and executive director of Georgia’s Savannah Airport Commission. His committee is in the middle of an effort to help address challenges to small community air service.

“Right now, we’re establishing a priority list of goals and objectives to address issues including the pilot shortage, restrictions on new entrant airlines, air service access in the event of further airline consolidations and the future of interlining,” said Kelly. “We’re looking to develop strategies legislatively, administratively and internally.”

The plan is to roll out the committee’s recommendations at the annual Airports Council International meeting Sept. 25-28 in Montreal, said Kelly. “We want to not only have it for our members, but we also will try and ACI to adopt our plan as well,” he added.

Jonathan Ornstein is the chairman and CEO of Phoenix-based Mesa Air Group, which flies as American Eagle and United Express. At one time, Mesa had one of the largest 19-seat Beech 1900D fleets in the world, using its Air Midwest subsidiary to provide EAS service and flights to small communities.

Doubling in size in the past three years and growing its fleet to 133 large regional jets by September, Mesa is one of the regional carriers continuing to attract pilots. However, the airline has been outspoken about the damaging effects to the industry since the FAA training rule change in 2013.

“Basically, the new rules took many of the most qualified candidates out of the market. These were kids coming out of terrific colleges with four-year degrees and 300 to 400 hours, who are probably among the best qualified to fly new-generation equipment,” said Ornstein. “So now you have this gap where those who would normally be coming into commercial aviation have to forget all their good training and fly around banners or flight instruct to build time.”

This is politically motivated, said Ornstein. “And it’s a shame, because at the time when we're desperately trying to find high-quality jobs for people exiting college, we have cut that option off in aviation. It's just horrible,” he stated. “There are literally hundreds of foreign flights flying into the most congested airspace on the East Coast and the West Coast. A guy who trains in Arizona for Lufthansa can fly a wide body jet into JFK [Airport] with only 500 hours. It makes no sense."

The current flight training rule is a continuation of the misguided policies that eliminated Part 135 operations for up to 30 seats, said Ornstein. That rule, passed in 1995, said that Part 135 operators were only allowed to operate aircraft with fewer than 10 seats. It was an attempt to boost safety on regional airlines in the wake of the American Eagle Roselawn, Ind., crash in October 1994.

“Back then, Mesa quit the Regional Airline Association because we believed the rule would wipe out the Part 135 business. It dealt a devastating blow and thousands of jobs were lost as a result,” he said.

There were more than 1,500 airplanes in passenger service under Part 135, said Ornstein. “Think about all those aircraft and all those smaller cities that were served. Look at New Mexico. Mesa had 13 flights a day from Albuquerque to Farmington. We had nine flights a day between Albuquerque and Roswell. I don't think there's service anymore,” he said.

Pierre Airport’s Isaacs agreed. “Now there are even less student pilots, down substantially from 10 or 20 years ago. There's less people wanting to become pilots,” he said. “The cost to become a pilot now, with the increased training requirement, is almost at the level that you need to become a doctor or an attorney.”

Jim Sullivan is the chief of operations for Santa Monica, Calif.-based Surf Air, a private air travel club that offers members unlimited monthly flights using a fleet of eight-seat Pilatus PC-12 single-engine turboprops. It flies to a mix of commercial and business aviation airports from the Bay Area and the Los Angeles metro area, along with Santa Barbara, Truckee/Lake Tahoe, Nevada, Napa, Monterey, Sacramento, Palm Springs and Las Vegas.

Surf Air was formed by three young visionaries nearly four years ago, said Sullivan. “The founding CEO was previously the lead man for the vice president of the United States and he traveled quite a bit on short notice using one-way tickets,” he said. “He was always selected to go through the secondary screening process and his travel was such a hassle because of it.”

He could literally walk up to the vice president and give him a hug, yet when he travelled to the airport, he was treated like a criminal, said Sullivan. “So he put together a think tank to look at how to make travel more convenient,” he said. “They stumbled across this idea of creating a private airline using the private aviation facilities of an airport and make it as affordable as they could.”

Three years later, Surf Air is approaching 3,000 members and 12 aircraft, with nearly 100 flights a day, said Sullivan.

So many of Surf Air’s routes are the old legacy airlines trunk routes, said Sullivan. “The basin to the Bay is one of the biggest markets in the country. There are quite a few of our markets where we compete directly with the legacy carriers,” he said. “However, we also fill a void that may have been left by the regional airlines, like Carlsbad to LAX. We’re taking what was a commercial route and serving it, at least on one side, by private aviation at a private airport.”

But Surf Air has also created new routes that no longer exist, like San Carlos to Truckee, said Sullivan. “There probably was a service from San Francisco to Truckee at some time in the past, with PSA or Wings West,” he said. “We look for these unique markets where we can take our private aviation terminal and connect it with an airport where there may not be existing commercial traffic.”

While Surf Air doesn’t fall under the FAA’s 1,500-hour training requirement, it still faces hiring challenges, said Sullivan. “We have no problem on the supply side, because we have a vast pool of interested pilots. But we do have a challenge retaining them,” he noted.

The company is looking at different options. “We’re going to look at clearly defining for pilots their Surf Air benefits and career advancement. We may hire a pilot right out of college who starts with us and then through relationships with other airlines, we could provide an exit point for that pilot once they meet the training or experience requirements for those interested in that path,” he said. “We also have a lot of second career-type folks that work for us who are not leaving. They are attracted by the fact that they are home at night. So that’s an advantage for folks who have other responsibilities and family commitments.”

Surf Air hopes to announce partnerships with different aviation companies on pilot career advancement, said Sullivan. “We acknowledge where we fit in this world. We may be a transitional airline for a lot of folks, but if we can get predictability, that will help us.”

Middleton, Wis.-based aviation consultancy Mead & Hunt works with around 50 small and non-hub airports on air service issues. Jeffrey Hartz, a senior air service consultant for the firm, says these markets have been impacted the most by the FAA’s revised pilots training rules and that some predictability would be welcomed.

Looking at the past two years, the pilot shortage has been a game changer for lots of smaller markets, said Hartz. “But if you go back up to 20 years, the loss of turboprop aircraft has had a broader impact. We saw a lot of communities drop to flights to a single hub or even no service altogether,” he said. “Look at Carlsbad, [California’s] service to LAX on United Express. They lost that because there is no longer enough [30-seat] Brasilia [turboprop] service.”

The pilot shortage has been incredibly difficult for Mead and Hunt’s clients, but it’s a paradox, said Hartz. “If you look at the airline industry, it’s as good as or even a better business climate for them. Aircraft are cheap to acquire and fuel is stable, at low prices,” he said. “So it’s frustrating to see this pilot shortage, making it almost impossible for regionals, which continue to shrink in small and non-hub cities.”

Some regionals are able to fill new-hire classes, said Hartz. “But the mainline carriers are also hiring, so there’s a strong pull from the top to hire pilots from regionals like Mesa and SkyWest,” he said.

Mesa is fortunate because it has a growth plan, so it is attracting pilots, said Ornstein. “The fact is that we can offer people a real career and continue to show them a career path.”

Unlike a lot of regional airlines that pay signing bonuses to people for coming to the company, we took a different path,” he said. “We give bonuses to employees who recruit people to come to Mesa. Our people are our best recruiters, and we have paid out almost a million and a half dollars in bonuses to them. As a result, we have the biggest recruitment staff of any regional airline.”

Mesa is also looking to create a cadet program with a number of flight schools like the one it recently launched with Sierra Academy, said Ornstein. “We're trying to help [new pilots] bridge that gap to get from the 250 to 400 hours they have, up to whatever they need,” he said. “We’re thinking about buying a [Part] 135 operation, like a farm team. It’s important to give people a career path all the way through.”

Surf Air has a great opportunity before it, said Sullivan. “We’ve proven that our model works in California, and we’re looking to roll it out across the country in different geographic areas. It works anywhere between two population bases with an appropriate stage length and an airport on either side,” he said. “We’ve been very public in saying we’d love to be in Texas and Florida. There also looks to be a great market in the Northeast and the upper Midwest.”

The company currently operates 12 Pilatus PC-12s. “If we were to exercise all our options over the next few years, we’ve got 53 more airplanes coming,” said Sullivan.

The airline industry is moving toward larger planes that are flying less frequency, said Isaacs. “That's the overwhelming message that I hear from the airlines when we go to industry conferences. So if that's the case then we really need to hone in on this,” he said. “The magic wand solution would be to find a way to attract more pilots and more students to the industry, either through higher pay or a combination of better working conditions and higher pay.”

Hartz is recommending that his clients continue to interact with airlines. “Make them aware of opportunities because airlines are doing addition by subtraction. They are always looking at new routes and adding frequencies, either by replacing existing routes or squeezing more utilization out of their aircraft,” he said. “The ones that are doing well are engaging with their airlines and working with their communities to push for routes, when they make sense.”