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BPO Journal

Saturday, May 06, 2006

Outbound flight

Interesting article in the Wall Street Journal about the newest twist in global outsourcing - U.S. pilots fleeing the depressed North American airline industry to work in far reaches of the world where aviation is booming. The Journal points out:
After the 2001 terrorist attacks stifled air travel and sent the U.S. industry into its deepest decline ever, more than 10,000 U.S. pilots were laid off, and many more took early retirement. Despite subsequent hiring by a few healthy carriers, including Southwest Airlines, thousands haven't been able to find new flying jobs at their old pay grades.
Not until now. The airline industry is expanding rapidly in China, India, Southeast Asia and the Middle East. As these regions grow more affluent and loosen aviation restrictions, the demand for travel is soaring. Existing carriers are adding routes, and several new airlines are in order. So, like British and Australian pilots who have long taken their skills offshore, more Americans are plying their trade wherever they find work. Apparently, U.S. pilots are working as far afield as Bolivia, China, Qatar and Vietnam. Hong Kong-based Cathay Pacific Airways and Singapore Airlines are hiring more Americans, as are carriers in Taiwan and South Korea, and increasingly, in India.

The trend is symbolic of a growing global shortage of well-trained commercial pilots. The Journal points out:
Aerospace giant Boeing Co. estimates the global jet fleet will grow to more than 35,000 airplanes in 2024, from fewer than 17,000 in 2004. Boeing pegs demand for new pilots at nearly 18,000 a year through 2024. China alone will need more than 35,000 new pilots over 20 years, and the rest of Asia will need 56,500, the company estimates. Many countries are currently unable to train enough pilots at home. The result: a global bazaar where experienced pilots go to the highest bidder.
Norwegians and Venezuelans are flying in China, Egyptians and Russians in India, Jamaicans and Iranians for a Japanese carrier. And as the airlines face challenges of training enough "mature captains" quickly, they're responding by filling in with expatriates. Four out of five pilots at Qatar Airways are foreign. There are 120 to 150 foreign pilots in mainland China. And India counts more than ever. Deregulation has spawned startup airlines, an influx of international flights, and 20% annual passenger growth. India's potential demand is over 2,500 new pilots by 2010. At Jet Airways, the nation's largest private carrier, 111 of its 685 pilots are foreign. Air Deccan has 75 foreigners among its 250 pilots, and is setting up its own flight school in Bangalore.

The incentives are strong too. India's Air Deccan is offering $8,000 to $15,000 a month to foreign captains, according to Mr. Gopinath, the managing director. A captain in the U.S. on Northwest's smallest jet earns about $9,000 a month, while a captain on United Airlines' largest plane earns about $15,000, according to a recent survey by Air Inc. William Goodwin left the U.S. in 1994 after working for two airlines that went under and a third that was acquired. He jumped to Korean Air in 2000, where as a captain of 747s he earns $152,000 a year after Korean taxes. The 54-year-old pilot says he hopes to stay until he retires at 60. Mr. Baedke, the former Northwest pilot who now flies out of Honolulu for Jalways under a crew-leasing contract, earns $100 an hour, or $105,000 last year. He expects to begin training next month to become a captain, a process he says could take 2 1/2 years. If he succeeds, his pay will climb to $150 an hour for the first 50 hours flown each month, and $180 an hour for anything exceeding that.

This flight has all the signs of a permanent structural shift. Perhaps, the foreign carriers are employing U.S. pilots only temporarily until they can staff up with their own citizens. But the pilots are warming up to it while the Airline Pilots Association back home worries about brain drain and much the same issues that India munched while its software engineers explored and continue to explore US horizons. Friedman forgot to write about this one in the flat world.

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