If you live in Devils Lake, Jamestown, Fort Dodge, Mason City, Ironwood, or Thief River Falls, you’ve just lost your only commercial air service link. Great Lakes Airlines pulled out of those cities on February 1 due to, according to a press release on the airline’s website, “the severe industry-wide pilot shortage and its relative acute impact on Great Lakes.”
Great Lakes is an interesting little airline, to put it mildly. The airline (which will once again fly nowhere near the actual Great Lakes edit: and in this case, the Great Lakes are actually the Great Lakes of Iowa, but they still don’t fly all that close), has made its living over the years primarily thanks to the federal government. See, most of the Great Lakes-served cities are Essential Air Service (EAS) markets. That program dates back to deregulation when small cities were afraid they’d lose service when the free market took over. They were right.
Were it not for these government subsidies, airlines would have pulled out of these cities long ago. But thanks to those subsidies, Great Lakes has been able to build its network over the years. But Great Lakes is still an anomaly. While there used to be plenty of airlines flying 19-seat props in these markets, that began to dry up when rules became more strict on how those airplanes could be operated. Despite that, Great Lakes has soldiered on.
After growing recently, however, it looks like Great Lakes has bit off way more than it could chew. On February 1, it effectively shuttered its recently-added Minneapolis hub with only flights to Watertown, Iowa South Dakota remaining. Why is this happening? According to Great Lakes, the recent pilot rule change that requires a minimum of 1,500 hours before being allowed to fly commercially has created a real shortage that is hitting the airline hard.
Dropping 6 cities sounds pretty dramatic, but consider that 4 other cities on the route map are dropping off in the next couple months as well because another airline won the EAS bid. So we are seeing pretty significant shrinkage here. Great Lakes says it simply can’t get the pilots it needs to fly its airplanes, and the operation is suffering.
Flightstats only tracks about half of Great Lakes’s flights, but of those that were tracked in the last couple days in January, about a quarter were canceled. The airline simply can’t maintain its operation as scheduled, so something had to give.
Now, you have to wonder if this is an isolated issue or if the pilot shortage will hurt other airlines and cause chaos around the country. Well, we already have United blaming the pilot shortage for the timing of the closing of its Cleveland hub. (I’ll be writing about that in-depth tomorrow.) But the reality is that it should, at least for now, only hurt the smallest airlines that pay the least.
Great Lakes was bound to be one of the first to feel the pinch here. The airline pays incredibly low wages. A starting first officer gets $16 an hour. That translates into $15,360 a year if you can somehow swing 80 hours a month. Even an 11-year captain on the Beech 1900 won’t clear $35,000 in a year flying 80 hours a month. That’s low. And you aren’t flying to glamorous locations either. This is really hard flying for low pay.
With that in mind, you’d expect that in any kind of pilot shortage, the lowest-paying operator doing hard work is going to suffer first. The greater the shortage, the higher up the food chain the problem will climb.
The mainline legacy airlines aren’t worried about their operations. They have a huge pool of pilots in the regional ranks that would gladly jump at the chance to move on up. The top tier regionals are probably a little more afraid. They still have a pool of places to pull from, including guys like Great Lakes. But the buffer isn’t as big. It’s the guys on the bottom that should be most concerned.
What does this all mean for the future? Well, let’s whip out a basic supply and demand curve. If the demand for pilots exceeds the supply. then the airlines are going to have to start paying more to entice people to come onboard. For that reason, while mainline operations folks aren’t worried, the bean counters are. After all, if wages go up, then regional carriers are going to require larger payments from the mainline airlines to continue service. And the bring it all full circle, it’s those small city flights that are more vulnerable to wage increases.
You’d think this would be a gradual trend, but there are a lot of pilots retiring in the next few years. The supply of pilots will shrink very fast if there aren’t more people coming into the profession at the beginning of their careers. Something is going to have to change.
