The Pilot Shortage Era

It’s likely not a shocker to most of you reading this - business aviation is enduring a pilot shortage. The media has driven this one home - but it will become more and more relevant the further the robot army tries to push in on our lives. Business aviation is not the only segment, commercial airlines are also facing a shortage. Jefferies estimated that pilots were short around 5,000, according to a June 2023 AIN article. This will cause a paradigm shift in how we look at pilots, pilot salaries, and combine it with the proposed automations of the flight controls, and it’s bound to look a lot different within five years, let alone ten.

When you compare worldwide commercial airline revenues of $510 Billion to BizAv’s $24 Billion, it doesn’t take a pie chart to understand the respective magnitudes. Worldwide aviation is a diverse market with many segments, commercial aviation is a narrower market, performed at large scale, and business aviation is a niche market. We could argue the dynamics on pilot salaries between segments (commercial v. corporate), but the fact remains that corporate pilots are making less money than commercial pilots and this is a natural pull in the wrong direction for BizAv. Right or wrong? Not for me to say, but I know what I’d do if I had 100 MM to invest…

My brain screams “market correction”, but I will hold that thought for now. I don’t mind ruffling feathers for journalistic integrity and in respect to an open mind, but the night is young! Disruptions are coming - but it’s a necessary evolution. In life, in business, in relationships, and in every system known to man, we have a tension-based system. A preemptive factor, or set of factors, creates tension, and the tension drives change. This creates a feedback loop of adaptation and subsequently evolution of the business, the marriage, the process, etc. It’s cyclical and some of the best investors of our time have understood cycles better than most.

The Problems

• Poached Pilots - Major Contention
  Major commercial airlines are hiring large numbers of pilots to crew new aircraft deliveries. These airlines can offer superior compensation and benefits compared to business aviation operators. This has led to poaching of BizAv pilots.

• Cost of Pilot Training

  The costs of pilot training and certification have risen steadily over the past decade, making it more expensive for aspiring pilots to accumulate the required flight hours. This has reduced the pipeline of new pilots entering the field.

• Age of Pilots Approaching V_Ref

  Many experienced pilots in business aviation are approaching mandatory retirement age, causing attrition.

• Aircraft Size Matters
  Light and mid-size jet operators are more likely to leave for commercial airlines.

Outside Perspective

• Equalizing supply/demand equation. Corporate pilots were over supplied for many years.

• BizAv was subsidizing training for commercial sector, now they have to focus on retention or form alliances.

• BizAv owners and operators need to build pipelines to funnel capable pilots. They have been in the works, but my suspicion is that this will become a normalized practice with effective marketing practices to younger generations as Boomers exit the marketplace.

• Charter prices will increase - for a bevy of macroeconomic reasons, let alone pilot shortages.

• This “market correction” will have a large lag-time due to barrier to entry on training and costs, and regulatory training-period requirements.

• Aviation is a unique industry as far as market corrections and their duration. It requires collaboration, and above all else, a first-principles, long-range viewpoint and mindset.

Wild West Thought

Create a “Pilot-as-a-Service” business. Train, certify, and lease pilots to operators. Create a quality standard, a look, a feel, and a brand of pilot, while taking care of their pension and benefits. Operators have plug and play on demand pilots. You could setup an application and have operators and pilots on a tokenization system of smart contracts, where payment is made automatically when a route is completed. Smart contracts go hand in hand with automation of the flight deck - which we now know is coming. Pilots-as-a-Service is not so much for the current setup where passion and human interaction is preferred, but if pilots become “flight deck managers”, this could be a viable model. Not advocating for or against, just throwing it out there..

Compound Knowledge

The Oracle of Omaha & The Circle of Competence:

• Know your strengths and the areas you have deep knowledge (industries, business models, processes, systems, airframes).

• Stay inside your circle.

• Expand the circle over time, gradually, always underestimating what you think you know. Stay humble. Go big, take risks, but inside the circle.

• Read, read, read. Books are the best way to gain competence. Downside risk of reading a book is almost zero, while the upside could be orders of magnitude greater than you can imagine.

Knowledge Key

Meditations is the personal journal of Marcus Aurelius, the legendary Stoic philosopher and emperor of Rome in the 2nd century AD. It was never meant to be published.

This journal was Aurelius' private record of his deepest thoughts and guiding principles. It was discovered years after his death, salvaged from the ashes of a fire by one of his servants.

Immortal Wisdom & Value from Thousands of Years Ago. Some of the greatest minds of our time have used this book to shift their paradigm.

Ace

Ace doesn’t fool around but he knows how to have a good time. A timeless man who once told the Red Baron where he can go.

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