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Old 12-15-2006, 07:04 AM   #1 (permalink)
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Default Industry Growth and Projected USAF Retention

A USAF LTC from Personnel attended the Sep Air Inc conference in DC. He was there to gather intel on where the industry is going and how the USAF needs to plan it's retention. If you know what to look for, it's great information. The way I read it, if you're in the USAF, stay (if you can stomach the deployments) because the bonuses are going to get better. If you're starting out, there is lots of growth for the future. The problem is, is that it's aimed at the lower paying LCC and Regional market. Cargo is set to grow, but how long will it be until the cargo guys start their own LCC market to cut wage costs in their business templates? Read on....it for entertainment purposes only!



=====================
TALKING PAPER ON AIR INC. AIRLINE PILOT CAREER SEMINAR TRIP REPORT

1. Purpose of the TDY: Attend Air Inc Airline Pilot Career Seminar to gather information on airline hiring projections in order to help develop rated force retention policies.

2. Date, Location, A1P Attendees: Saturday, 23 Sep 2006; Hyatt Regency Hotel in Reston, VA; Attended by 3. Attendees Org/Level: Other attendees were prospective airline pilots and various airline industry representatives; no other official military representation 4.

Results/Outcomes:
* Day-long presentation was opened by Mr. Kit Darby, President of Air Inc, the recognized standard-bearer in airline industry hiring consultation
* Mr. Darby’s presentation began with a 90-minute overview of short- and long-term airline health forecasts followed by detailed lectures on airline hiring advice
* Hard copy of all presentations can be found in the AF/A1PPR office
* World air traffic is expected to grow at 4.9% annually and U.S. air traffic is expected to grow 3.2% annually through 2025
* A fundamental shift in the airline industry toward the low-cost carrier model and regional jet service has driven average aircraft load factors to record highs of 83% that in turn have caused U.S. airlines to realize profits for the first time since 911
* Total U.S airline profits for 2006 expected at $3B and climbing to $8+B by 2010
* Under the low-cost airline business model airlines are also flying each aircraft longer hours (8% more) which translates into a higher aircrew/aircraft ratio
* The world airline fleet size will more than double between 2006 and 2025. The U.S. fleet alone will grow from 5,915 commercial aircraft to 9,453 aircraft86% of deliveries will be regional jets and single-aisle aircraft (B737-type)
* The world air cargo industry is expected to grow at a staggering 6.1% annually through 2025another segment which will double its fleet size to 3,800 aircraft
* International aviation rules are expected to relax mandatory retirement requirements from age 60 to 65; the U.S. may follow suit, however, this is not expected to have a significant impact on overall hiring requirements, as many pilots may not elect to stay until age 65
* Despite recent news about airline bankruptcies and pension fund collapses, total compensation packages remain strong, especially for new hires acquired under the new employee/employer combined contribution structures; a 30-yr career UPS pilot can still expect to earn over $10M, the average major airline pilot will earn well over $6M
* Airline pilot civilian/military relative percentages expected to remain at approx 50%/50%
* Air Inc is forecasting 8,000 10,000 new commercial pilot hires per year through 2010
* In 2006 the majors will hire 2,500, the nationals 2,600, the jet operators 3,500, non-jets 2,000, and the fractionals 1,000 for a total of 11,200 new hires in 1 yr
* None of the above predictions account for war, terrorism, or a major rise in energy prices; they do incorporate validated world GDP and economic growth models

5. Recommended A1P Staff Action:
* Recognize that the airline industry has fully recovered from 911 and already today presents a credible and growing "pull" force upon the Air Force, Air Force Reserve, and Air National Guard’s pilot resources
* Airline needs will reduce Air Reserve and Air National Guard manning that will in turn invite active duty pilots to leave the Air Force and take their place;
* Air Force Reserve and Air National Guard are concerned about FY10 and FY11 "drought" years when few active duty pilots will be eligible for separation due to transition from 8-yr SUPT ADSC to a 10-yr ADSC
* Five years of high GWOT (Global War On Terrorism for you civilian types) tempo is creating a "push" from the Air Force
* The Air Force must monitor the situation closely and be prepared to exercise conventional (ACP-style) (ACP is Aviation Continuation Pay.. which is a bonus every year in addition to your salary... big money usually)and unconventional retention mechanisms to meet warfighting mission requirements
* Air Force should whole-heartedly support the FY09 "ACP Cap Authority Increase" ULB initiative to raise the legal annual ACP authority from $25K to $40K/yr
* Aggressively work to restore full FY08-09 ACP funding after being directed to absorb a 10% officer bonus program funding cut; net affect of this cut on ACP would be to reduce new contract offer values by 20% beginning in FY08 ($25K/yr reduced to $20K/yr)
* On-going and fluid force shaping initiatives may ultimately reduce overall pilot needs in FY10 compared to the Air Force’s current rated force growth projections; present retention policy models are based on only a 40% retention rate prediction for FY10

Last edited by HSLD; 12-19-2006 at 02:33 PM.
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Old 12-15-2006, 10:17 AM   #2 (permalink)
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....you can't start a lcc cargo company that can compete with brown, fdx, and dhl.
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Old 12-15-2006, 10:18 AM   #3 (permalink)
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The USAF is paying it's pilots an avergage of $100,000 to leave the Air Force in FY07, because it thinks it has too many pilots. '07 is going to see a flood of USAF pilots getting out. My squadron alone has 7 people alone, leaving under the early out program. As of right now the USAF doesn't seem to concered about keeping guys in. But then again they are always a day late and a dollar short in manning issues.
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Old 12-15-2006, 10:29 AM   #4 (permalink)
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Quote:
Originally Posted by cruiseclimb View Post
Cargo is set to grow, but how long will it be until the cargo guys start their own LCC market to cut wage costs in their business templates?
Set to grow?...where ya been?..it has been growing for over 40 years...and it is almost impossible to have an LCC in the cargo market...well u could try but u wouldn't compete with fdx and ups...u need about 500,000 trucks employees and 600 heavy jets along with millions of tracking devices, tugs, loaders, deiice trucks, and of course giant sort facilities... the list goes on...

Last edited by CaptainMark; 12-15-2006 at 11:53 AM.
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Old 12-15-2006, 10:29 AM   #5 (permalink)
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I think I agree with Lil' J. The barriers to entry in the parcel delivery/overnight freight biz are pretty high. A PAX carriers service obligation ends at baggage claim, not on a winding rural road 57 miles from the airport the Caravan flew into.
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Old 12-15-2006, 11:43 AM   #6 (permalink)
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I flew for Swift Aviation, owned by Jerry Moyes, the founder and majority share holder of Swift Trucking, the single largest trucking company in the world. He told me the single reason he didn't get into air freight/cargo is that he didn't want to step on the toes of Fedex and UPS, both of whom are HUGE clients of his.. The Barriers to entry are indeed VERY high.

The future for growth in jobs lies in ACMI and this is why ACMI pilots may need to re-focus their efforts from "Getting hired at UPS or Fedex" to getting their pay/QOL up close to par with the later.
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Old 12-15-2006, 12:37 PM   #7 (permalink)
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Quote:
Originally Posted by cruiseclimb View Post
* Day-long presentation was opened by Mr. Kit Darby, President of Air Inc, the recognized standard-bearer in airline industry hiring consultation

Where's that vomiting smilie when I need it?
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Old 12-15-2006, 01:04 PM   #8 (permalink)
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Quote:
Originally Posted by CE750 View Post
I flew for Swift Aviation, owned by Jerry Moyes, the founder and majority share holder of Swift Trucking, the single largest trucking company in the world. He told me the single reason he didn't get into air freight/cargo is that he didn't want to step on the toes of Fedex and UPS, both of whom are HUGE clients of his.. The Barriers to entry are indeed VERY high.

The future for growth in jobs lies in ACMI and this is why ACMI pilots may need to re-focus their efforts from "Getting hired at UPS or Fedex" to getting their pay/QOL up close to par with the later.
I want to know more about that last sentence...I'll have to research ACMI companies. Please name a few. Are any traded on NYSE or NASDAQ?

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Old 12-15-2006, 01:13 PM   #9 (permalink)
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I want to know more about that last sentence...I'll have to research ACMI companies. Please name a few. Are any traded on NYSE or NASDAQ?

-LAFF
Gemini Air Cargo
Polar/Atlas
Southern Air
Falcon Air
Express.net
Cargo360
Centurion Cargo

but to name a few.. most are privately held, and small.

I think in the future, we may see some of these more savvy operations emerge as larger players in the global cargo market. There could also be some merger's and acquisitions among them over time.
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Old 12-15-2006, 02:43 PM   #10 (permalink)
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Quote:
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Gemini Air Cargo
Polar/Atlas
Southern Air
Falcon Air
Express.net
Cargo360
Centurion Cargo

but to name a few.. most are privately held, and small.

I think in the future, we may see some of these more savvy operations emerge as larger players in the global cargo market. There could also be some merger's and acquisitions among them over time.
How about Lufthansa Cargo, Korean Air Cargo, Singapore Airlines Cargo, Cathay Pacific Cargo, China Airlines Cargo, EVA Cargo, Japan Airline Cargo, Air France Cargo, British Airways Cargo, and Cargolux ? Ten very large cargo operators.

Americans need to wake up and understand that business IS global. Today. In 2004, FedEx was sixth in the world with respect to the total international scheduled freight ton-kilometers (FTK's) flown. FedEx was THE only US carrier in the top ten. Using total scheduled FTK's, FedEx was first, and UPS was second.

We need to look beyond our shores. There is a lot of competition on there. Competition for everything. Jobs. Air Cargo services. You name it. My soapbox really doesn't have anything to do with this forum, but it's my belief that people in this country should worry less about race and whether there is a Christmas tree at Sea-Tac airport and more about getting off their a$$es and getting an a decent education to compete in a global economy.

Ok, I have a nosebleed. Off my soapbox. "Bartender. Beer please."
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