News Backgrounder
Pilot shortage stymies Japan’s LCC growth
June 1st 2014
Japan’s newest low-cost carriers are struggling to cope with acute cockpit crew shortages, which have constricted the carriers’ network operations and taken much needed cash from their bottom lines. Read More »
And the end of the problem is not in sight.
Japanese aviation analysts believe the damage to the market credibility and profitability of the new airlines could be devastating, as new, foreign managed budget carriers move into Japan’s lucrative domestic skies.
All Nippon Airways (ANA) affiliate, Vanilla Air, announced in mid-May that a cockpit crew shortage, due mostly to the startup airline’s failure to employ enough pilots, would force the carrier to cancel 154 flights, or about 20% of its services, this month at an estimated cost to the airline of US$1 million in lost sales. More cancellations were not ruled out.
Tomonori Ishii, president of Vanilla Air, the airline that emerged from the failed joint venture, AirAsia Japan, reported that it had lost three captains because of retirement and health issues.
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| Tomonori Ishii, president of Vanilla Air |
In late April, Japan’s first home grown low-cost carrier, Osaka (Kansai)-based Peach, announced cancellation of 2,088 flights between May and October, which is 16% of the carrier’s scheduled services. It blamed the cutbacks on crew illness and the company’s failure to meet hiring quotas.
Eight of the airline’s 52 captains have been sidelined by injury or illness, Peach’s president, Shinichi Inoue, told media when he announced the route changes. Peach had already cancelled 448 flights in May and June before the new service reductions were announced.
These unexpected developments highlight the delicate balance of cockpit crew supply and demand and echo the summer of 2008, when low-fare carrier, Skymark, was forced to cancel nearly 700 domestic flights because of crew shortages.
Japan’s Ministry of Land, Infrastructure, Transport and Tourism (MLIT), is concerned about the shortages. A study of pilot and technical staff supply issues in Japan is expected to be completed next month.
Flight schools in Japan produce about 150 cockpit crew a year. By 2030, the estimated number of new pilots needed by Japanese airlines annually is forecast at 400. Adding to the pressure of the 2030 deadline will be the retirement of many qualified captions now in their 40s.
“To make up the difference, new steps are needed,” said Kazunori Morisaki, a senior analyst with Tokyo think tank, Japan Aviation Management Research. Japanese carriers could recruit more foreign crew and the supply of pilots from the Self Defense forces could be increased, but more, newer, sources of flight crew need to be developed in Japan.”
Until now, the Civil Aviation College of Japan has supplied about 40% of the country’s pilots. More recently, other establishments in Japan, such as the private Hosei and Tokai universities, are offering cadet pilot training programs.
Morisaki said Japan’s declining birth rate exacerbated the problem. “So we need to consider the future pilot shortage more fundamentally. Many other Japanese industries will have similar manpower problems,” he said.
Immediate fixes may not be enough. Since 2012, several home-grown low-cost airlines have launched in Japan and competition is intensifying as carriers offer attractive pay and working conditions to address their cockpit crew shortages.
Vanilla has been able to augment its flight crew by ‘borrowing’ captains from parent, ANA, in the last four months. ANA is expanding its operations and can’t help for much longer. Meanwhile, Vanilla said it is focusing on reducing cancellations and boosting on-time performance, instead of expanding routes and flight frequency. One source of crew supply, pilots who lost their jobs when Japan Airlines was in bankruptcy protection, has dried up.
Peach, also connected to ANA, may be able to count on similar crew loan measures. They will reduce planned flights on domestic and international routes from their main base at Osaka’s Kansai International Airport.
Rival LCC, Jetstar Japan, backed by Qantas and Japan Airlines, has so far secured additional captains through an in-house training program. Such programs could help Peach and Vanilla, but take time to develop and bring results. All three airlines use A320s, adding to the pressure.
And competition continues to heat up. China’s Spring Airlines Japan, is set to launch services this month with B737s, while the ebullient AirAsia Group boss, Tony Fernandes, plans to re-launch an AirAsia branded Japan LCC in 2015. All this will have an impact on the pilot market.
“For some Japanese LCCs, 2030 is already here,” said Morisaki.
