Doom and Gloom
05-23-2008, 05:53 PM
#1
Gets Weekends Off
Thread Starter
Joined APC: Mar 2006
Position: Contract purgatory
Posts: 701
Doom and Gloom
With all the industry doom and gloom as of late, a number of questions tabled to others as well as myself about the timing of getting into the industry, and the subsequent responses, I thought I might give a bit of a personal opinion on what I see going on. As always feel free to comment and debate, not that I that needs to be said.
First, the price of oil. It's ridiculous, makes no real sense as it hasn't been related to supply and demand for about $70, and has been this way for quite some time. This isn't the first time this has happened, although it is debatably the worst. OPEC will not move on capacity as there has been a general surplus for some time (the oil companies then started to talk about production capacity but down here in little old New Zealand I apparently can get as much as I want), and increases made in the recent past have done nothing. China is sucking up kerosene based products like jet fuel and diesel, but much of their increase is due to a number of current infrastructure projects, least of which is the Beijing Olympics. So, huge cuts in airline capacity followed by a steep decline in usage by China this autumn, as well as across board disbelief in the current price anyway (by traders and analysts other than those employed by the oil companies), will likely lead to the same event that has occurred every other time this has happened; the price of oil will tank (no pun intended). As for the excuse that there is trouble in Africa, when is there not trouble in Africa.
I'm sure holes could be cut into that opinion, but looking at history I reckon it is pretty close to likely. I made it however to lead into my main point, which is that, personally, I think it is a pretty darn good time to get into aviation (much like it's probably a good time to buy property, of you follow my thinking here). I've been through two downturns, the first of which was during the time I obtained my first job. So, to the point. . .
Not all airlines have been losing money as of late, though all will likely start to pretty quickly if the price does not come down (we will be cutting capacity we are told) but, the point to keep in mind is that not all have. EK, CX, QF, NZ, WJ, have all turned a nice profit. BA made one of the biggest ever this past year on already record prices and Southwest continues to make money. On the other hand the big US carriers have lost money hand over fist even though they have been able to shed huge amounts of debt and expenses, with a huge negative affect on their respective pilot groups. They have very old fleets that suck gas and maintenance, and they under employed when they came into profit, all be it for a very short time. They also have CEO's who pull massive, I mean in the tens of millions of dollars massive, bonuses for losing money through horrible planning and massive lack of foresight. On the other hand you have a guy like Geoff Dixon, like him or not, who has made about half a billion dollars per year for QF for the past number of years and who has taken a considerably smaller amount.
OK, it's turning into a bit of a rant, but you get the point (I hope). Oil will come down, maybe not next month but likely by the end of the year. It most certainly will when everyone starts parking airplanes and trucks and the usage plummets. The smart airlines, Air NZ included, appear to understand this as they are still in the very real dilemma as to how they are going to crew their airplanes in the not too distant future. EK alone requires better that 300 pilots per year for the foreseeable future, and they'll probably need many more when the big American carriers consolidate and sell off their premium slots to the competition (don't laugh, just remember Pan Am and Eastern did exactly that before their demise), and they pay, and you don't have an ulcer worrying about your job being there. I guarantee that Air NZ will keep up with hiring, later than expected indeed, but they will. All those pilots that were supposed to retire at 60, but are now able to stay will still retire. I really don't see the big US carriers doing anything about that as they are too busy putting out their ever present fires.
Just take a look at flight global, or any other web site looking for crews worldwide and you'll get the idea of what the requirement is. It will likely slow down here for a while as nobody makes money and starts to pull routes, but when the price of fuel comes down (I don't see that as a broad assumption but you may; up to you) and those routes become profitable again, the airlines will go back in and the demand for pilots will be even greater.
So who cares if you are in flight school now, or just about to start, you're not looking for a job now and you won't be until you're qualified. If you really want it then it is simple, be positive and be aggressive in your search for the right job and you will do very well in the future. It's a great job and a great life; for me, all of it has been including the times I was living in a log cabin in the middle of nowhere de-icing a C185 at 0600, by myself, with no hangar. But if you like 9-5, Monday to Friday with your travel to very cool destinations relegated to maybe a couple of weeks per year then that's great too.
Was that a bit much?
First, the price of oil. It's ridiculous, makes no real sense as it hasn't been related to supply and demand for about $70, and has been this way for quite some time. This isn't the first time this has happened, although it is debatably the worst. OPEC will not move on capacity as there has been a general surplus for some time (the oil companies then started to talk about production capacity but down here in little old New Zealand I apparently can get as much as I want), and increases made in the recent past have done nothing. China is sucking up kerosene based products like jet fuel and diesel, but much of their increase is due to a number of current infrastructure projects, least of which is the Beijing Olympics. So, huge cuts in airline capacity followed by a steep decline in usage by China this autumn, as well as across board disbelief in the current price anyway (by traders and analysts other than those employed by the oil companies), will likely lead to the same event that has occurred every other time this has happened; the price of oil will tank (no pun intended). As for the excuse that there is trouble in Africa, when is there not trouble in Africa.
I'm sure holes could be cut into that opinion, but looking at history I reckon it is pretty close to likely. I made it however to lead into my main point, which is that, personally, I think it is a pretty darn good time to get into aviation (much like it's probably a good time to buy property, of you follow my thinking here). I've been through two downturns, the first of which was during the time I obtained my first job. So, to the point. . .
Not all airlines have been losing money as of late, though all will likely start to pretty quickly if the price does not come down (we will be cutting capacity we are told) but, the point to keep in mind is that not all have. EK, CX, QF, NZ, WJ, have all turned a nice profit. BA made one of the biggest ever this past year on already record prices and Southwest continues to make money. On the other hand the big US carriers have lost money hand over fist even though they have been able to shed huge amounts of debt and expenses, with a huge negative affect on their respective pilot groups. They have very old fleets that suck gas and maintenance, and they under employed when they came into profit, all be it for a very short time. They also have CEO's who pull massive, I mean in the tens of millions of dollars massive, bonuses for losing money through horrible planning and massive lack of foresight. On the other hand you have a guy like Geoff Dixon, like him or not, who has made about half a billion dollars per year for QF for the past number of years and who has taken a considerably smaller amount.
OK, it's turning into a bit of a rant, but you get the point (I hope). Oil will come down, maybe not next month but likely by the end of the year. It most certainly will when everyone starts parking airplanes and trucks and the usage plummets. The smart airlines, Air NZ included, appear to understand this as they are still in the very real dilemma as to how they are going to crew their airplanes in the not too distant future. EK alone requires better that 300 pilots per year for the foreseeable future, and they'll probably need many more when the big American carriers consolidate and sell off their premium slots to the competition (don't laugh, just remember Pan Am and Eastern did exactly that before their demise), and they pay, and you don't have an ulcer worrying about your job being there. I guarantee that Air NZ will keep up with hiring, later than expected indeed, but they will. All those pilots that were supposed to retire at 60, but are now able to stay will still retire. I really don't see the big US carriers doing anything about that as they are too busy putting out their ever present fires.
Just take a look at flight global, or any other web site looking for crews worldwide and you'll get the idea of what the requirement is. It will likely slow down here for a while as nobody makes money and starts to pull routes, but when the price of fuel comes down (I don't see that as a broad assumption but you may; up to you) and those routes become profitable again, the airlines will go back in and the demand for pilots will be even greater.
So who cares if you are in flight school now, or just about to start, you're not looking for a job now and you won't be until you're qualified. If you really want it then it is simple, be positive and be aggressive in your search for the right job and you will do very well in the future. It's a great job and a great life; for me, all of it has been including the times I was living in a log cabin in the middle of nowhere de-icing a C185 at 0600, by myself, with no hangar. But if you like 9-5, Monday to Friday with your travel to very cool destinations relegated to maybe a couple of weeks per year then that's great too.
Was that a bit much?
05-24-2008, 10:49 AM
#5
Gets Weekends Off
Joined APC: Oct 2006
Position: Various
Posts: 462
My buddy who flys for Kalitta worked one of their job fairs the other week. He said there were 1,000 pilots in line to talk to them about a handful of seats in some of their upcoming classes.. he said the line was filled with 6,000 - 15,000 hr captains from ATA, EOS, Skybus, Aloha, and the military.. Not a good time for anybody. People will always need to fly. It's just a matter of how much you're willing to sacrifice to drive the bus.
05-24-2008, 01:57 PM
#7
Gets Weekends Off
Thread Starter
Joined APC: Mar 2006
Position: Contract purgatory
Posts: 701
I know that there many pilots out there with big time, but I wouldn't worry too much about it frankly . . . unless you are attached to the US that is. I do have to agree that the situation there is not very good at all. That said, two of my friends there have recently scored jobs, one with World and another with Evergreen. And for those who are willing there are still, and will remain to be, lot's of job's offshore. It'll slow down for a while, but so what, you wanted to go golfing for six months anyway. . .
And really, I just don't see the price staying up for ever, if too much longer. Nothing real is driving it and the best airlines are going into a money losing situation now; that isn't sustainable. Parked trucks and airplanes mean drop in demand. When it starts to go it will go down with the same nonsensical rate with which it has risen. At least that is what has happened the last three or four times during the latter part of the 1900's, so I see no reason why not. Nothing like a good bubble.
The US airlines do have a heck of a lot of guy's in there who would have retired if it had not been for the bloody airlines complaining to congress that they needed the crews. Well, just watch the attrition rate over the next 24 months.
Yea, I'm an optimist for sure, but I'm not stupid, nor am I unrealistic; I leave that to CNN.
And really, I just don't see the price staying up for ever, if too much longer. Nothing real is driving it and the best airlines are going into a money losing situation now; that isn't sustainable. Parked trucks and airplanes mean drop in demand. When it starts to go it will go down with the same nonsensical rate with which it has risen. At least that is what has happened the last three or four times during the latter part of the 1900's, so I see no reason why not. Nothing like a good bubble.
The US airlines do have a heck of a lot of guy's in there who would have retired if it had not been for the bloody airlines complaining to congress that they needed the crews. Well, just watch the attrition rate over the next 24 months.
Yea, I'm an optimist for sure, but I'm not stupid, nor am I unrealistic; I leave that to CNN.
