By PhillipC of Flickr
The following graph should help illustrate why the Spirit airlines pilot projection does not include retirement numbers. The’re just not many pilot retirements to be had in the next couple of decades at airlines like Spirit. If we assume the average pilot hired by Spirit is 35 years old (which is a conservatively high number- it could be closer to 30), retirements worth projecting won’t begin to appear until after 2030.
Spirit Airlines Longevity Breakdown at the end of 2013.
What does this mean for pilots? First it should be noted and can be seen in the projections that growth from a small to a big airline is the fastest way to get propelled into the high seniority percentages. For those fortunate enough to catch these large fleet size increases, seniority and subsequently opportunity can come quickly. Opportunity could be upgrade, bidding control, and base preference.
This growth is directly controlled by the number of aircraft that come on the property not as replacements but as growth. Once the aircraft orders are finished and an airline has reached a mature stage, growth in this form all but stops. This extreme growth is only feasible when starting with a relatively small airline.
A couple of questions pilots should probably ask when exploring the opportunity to work for a “high growth airline”.
1.) Is this growth sustainable?
Can the projected growth of a high growth airline be sustained? An airline needs access to capital to be able to get airplanes and incorporate them into their airline. If an airline cannot convince its sources of capital to risk their money in an aircraft investment then aircraft are delayed or orders are canceled. For most public airlines the board of directors are heavily involved in this decision making process. Airlines can also lease airplanes through aircraft lease company’s. Without sufficient income leases could also be compromised or canceled.
The basic question remains can the business model employed by an airline in its competitive environment justify its thirst for airplanes? So how can pilots get a “pulse” of the overall strength of an airline. A lot of factors affect an airlines financial strength. Annual and Quarterly reports known as 10-k and 10-Q’s are a great place to start. Most public airlines will have access to this information on their websites. Another place to get good information is the Bureau of Transportation Statistics. All airlines public and private are required to submit statistics to the BTS. This website has attempted to provide a way to search through much of this information. The airline financial analysis page provides links to the website’s reports that are powered by the BTS numbers.
The key is, does the airline provide a return on investment large enough to cause investors to want to spend more money on additional growth? Essentially is this a business worth investing in. If the return on investment is low then, investors will likely put money elsewhere to reap a larger return. In some cases like Virgin America these investors spend money even when the airline is losing money because the investors think the return on investment later on down the road will be large enough to justify their initial investment. History is full of examples of investors thinking one thing but reality doing another. I do not claim to know what the future of Virgin holds, but it is something worth thinking about.
For an airline like Spirit the business model allows them to drive revenue, and that revenue helps them become one of the most profitable airlines in the US by margin. That revenue and margin pays for future airplanes.
2.) What part of the wave is a pilot on?
So you have identified a high growth airline that has a good business model and is profitable enough to justify its growth. That is an essential first step, but even with this step if you time it wrong you could be stuck on the bottom of the seniority list for a very long time. What part of the growth phase is this airline in? How much more market is there for it to grow? A good example of an airline that recently reached a mature phase and market saturation is Southwest airlines. Southwest airlines grew steadily and quickly for many years. But now that the number of markets remaining for them to enter has diminished, pilot upgrade times have increased. This does not mean that Southwest is a bad place to work, it just means that upgrade opportunity is not what it once was there. As a side note, Southwest has one of the most sustainable trip mixes(good option of efficient trips) and compensation packages in the right seat of any airline in the industry. The reserve work rules at Southwest could probably allow a pilot to sit in the right seat of a B737 with little seniority movement and still not experience burnout after a few years. However, at a another airline that might not be the case.
What part of the wave a pilot is on is one part of the equation in determining whether or not an airline is the right fit for a pilot.
