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Turns out, pilots are crucial to running an airline

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January 17, 2024
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Turns out, pilots are crucial to running an airline

CATHAY PACIFIC Airways Ltd. is facing a crisis of its own making. While the problems started in 2020 at the height of the COVID-19 pandemic, the current drama of canceled flights and a rush to rewrite the airline’s operational handbook was foreseeable, and preventable.

The first sign of danger came in December, when hundreds of flights were canceled over the Christmas-New Year period due to a shortage of pilots. The airline blamed a higher-than-normal rate of illness. Cathay then scrapped around a dozen flights per day through the end of February — including the peak Lunar New Year period. The bigger problem, as Bloomberg News reported, is that many pilots have hit their 900-hour cap. In order to limit fatigue, international regulation limit pilots to flying no more than 900 hours in any rolling 12-month period.

Aviation operations are very systematic, flights schedules are planned months in advance, and airlines have full transparency over their pilots’ past, present, and future flight hours. That Cathay allowed so many crew to get close to the 900-hour cap indicates either a lack of planning, or more likely, an inability to prevent this from happening even months out from those limits being reached.

Cathay had been warned. In June, the pilots union said a return to the pre-pandemic level of flights wouldn’t be possible until the carrier filled an existing gap of around 1,400 experienced pilots. By August, the total flights Cathay was operating had exceeded the number of captains required to fly them — an early indicator of what eventually ensued in December. According to the union, Cathay had around one-third the number of pilots in August that it employed at the end of 2019, just before the pandemic struck.

Every airline in the world was impacted by COVID. As borders shut, flights dried up and aircraft were parked in deserts. There was nothing for pilots to do. Many were fired. Cathay closed its regional carrier, Cathay Dragon, in October 2020 and cut hundreds of pilots. All up, it reduced headcount by 8,500, or 24% of staff, across the broader Cathay group, the company announced.

It then rewrote pilot contracts with a simple ultimatum: Take the new deal or leave. With no other jobs available, over 2,600 pilots signed. Permanent cuts were made to base salaries, pension contributions, and an education allowance, the Hong Kong Free Press wrote.

Singapore Airlines Ltd. also made large-scale retrenchments, equal to about 20% of headcount. But with the help of the government, it redeployed many workers to healthcare roles and later reversed wage cuts implemented during the pandemic. As a result, staffing at Singapore Air and its affiliate Silk Air at the end of its fiscal year ending March 2023 was just 7% below the same period in 2019. It’s on track to hire 2,800 more crew by the end of March.

Even before the pandemic, Cathay’s situation was murky. Once a proud symbol of the former British colony, its return to profit in 2018 after back-to-back losses was overshadowed by pro-democracy protests the following year. Rather than help the airline cope with a drop in passengers during those months, Beijing summoned the head of Cathay’s key shareholder — the Swire Group — and demanded rectification after some staff were seen siding with protestors. While the airline did get a bailout from the government, the lack of trust seemed to escalate during COVID, including strict quarantine requirements for crew.

Airlines are all competing for pilots, but Cathay is looking desperate. Last week, the company updated its operational handbook to allow pilots to apply for promotion to captain after just 3,000 flight hours, instead of the previous 4,000. Aviators climb through the ranks by logging hours and flights, and becoming captain is the pinnacle. This adjustment appears aimed at luring pilots to the airline, or to keep them there, by making promotion easier. It also ensures the operator can keep flying. We shouldn’t assume that lowering the benchmark for promotion is less safe, but it is important to note the timing of such a move: when Cathay is short of captains.

Cathay’s actions over the past few years — even preceding COVID — make it look like an airline that’s not particularly pilot friendly. For example, its 2018 contract cut pay by around 40% and was cited by the company as a reason for its high rate of crew exodus.

Airlines knew that a pilot shortage was coming. Back in 2013, Boeing Co. forecast the global aviation industry would need to hire 498,000 new pilots over the coming decade. More than 192,000, or 39%, would be needed in the Asia-Pacific region. A year later, it bumped up that estimate by 7% to 533,000. It would raise that forecast again in subsequent years, and in the 2018 outlook — the year Cathay cut pay and benefits for pilots — Boeing noted that “the pilot labor supply has continued to tighten amid strong global air traffic growth.”

Despite clear evidence that pilots were hard to come by, and knowing that it could not operate without them, Cathay Pacific’s management approach has been to make the airline less and less attractive to cockpit crew. Recent one-time bonuses and a reduction in promotion thresholds are mere Band-Aids to the more systemic problems it unleashed upon itself.

If Cathay wants to keep flying uninterrupted schedules, and expand its operations, then the first step will be to recognize the importance of the pilots who keep the airline in the skies.

BLOOMBERG OPINION

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