Pilot Shortage Threat In Aviation

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What is Causing the Pilot Shortage Threat in Aviation?
David Garderet
ECON 210 - Microeconomics
Embry-Riddle Aeronautical University - Worldwide Campus
Dr. Gerald N. Cook
February 12, 2018

What is Causing the Pilot Shortage Threat in Aviation? The aviation industry, often impacted by government regulations and fuel prices, has another looming hurdle it must address: pilot shortages. Pilot shortages can be traced to two economic impacts: (1) opportunity costs; and (2) supply and demand. The aviation industry will need to address these economic impacts to overcome pilot shortages. The effects of the emerging aviation crisis caused by pilot shortages extend beyond the airline industry into almost every conceivable sector, also
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“This is a can Congress kicked down the road” writes Murphy of The New York Times, referring to the 18,000 pilots slated to retire by 2022 (Murphy, 2016). These pilot shortages will in turn push the larger carriers to recruit more aggressively from their regional partners. This pilot pipeline from regional jets (defined by the Federal Aviation Administration (FAA) as those operations using aircraft with less than 90 seats, and whose routes serve mainly as feeders to the mainline carriers) into the major carriers (aircraft over 90 seats) is a critical factor in satisfying the demand for pilots industry wide (FAA, 2016). Pilot salaries and compensation packages continue to be a significant factor in the supply and demand of pilots. Normally in the marketplace, the price of a commodity, in this case the salaries pilots can expect to earn, would adjust upwards in response to a reduction in the quantity of pilots available when the demand curve remains relatively stable. However, the increase is salaries has not happened, or certainly not happened fast enough to match the shift in the supply curve (see figure 2…show more content…
The Navy is predicting a 10.0% shortage in 2020, according to Jon Ostrower in his article in CNNMoney article titled “The U.S. Will Face a Staggering Shortage of Pilots”, while the Air Force is expecting to be below its target number of pilots by 1000 in 2022 (Ostrower, 2017). Not only could this drastically affect the regional carriers operations, but also create a significant loss in service to smaller communities, up to 60 percent of which rely solely on the regionals for air service (Ostrower,
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