Aviation Agency President Bryan Del Monte joins Cheddar News to break down the labor crisis currently facing the airline industry.

Opening Bell

Aviation Agency President on the Airline Industry Staffing Shortage

for more on this brian del Monte, president of the aviation agency is joining us brian good to have you we know airlines have had a really tough summer with thousands of delays and cancelations impacting the industry. And I have to ask you, what exactly is it in your opinion that is really driving all of this chaos that so many are experiencing? Well, uh, lack of pilots, lack of planes, lack of mechanics and a level of demand that the airlines thought was gonna take 10 years, not two years to recover. Yeah, really good note. Especially as you mentioned mechanics, I think we hear a lot about staffing shortages. We think about pilots, the unions and also things like baggage handlers. But there are so many employees across the board that kind of are overlooked in this conversation like mechanics. I've also heard about air airline staff in airports actually working in the different areas and divisions. Um what do you think airlines can do as this high demand um, is here now and they didn't really anticipate that demand coming back for several years. And what do you think the airlines really got wrong here? Well, let me begin with that last part first. What did the airlines get wrong? Okay. Um, it may or it may not be their fault when you know, airlines are very good at using, basically if you ever wanted to know when calculus would help you in your job work for the airlines because they use a lot of mathematics and a lot of modeling to figure out well what's going on with travel demand. That's why you're always able to get that seat. It seems like right up until the door closes yet somehow the plane leaves and it's totally full, right. That type of mathematical modeling that they use told them That it was gonna take 10 years to travel to recover. And so they made all these bets about how many airline, you know, airplanes they needed, how many pilots, they were gonna need flight attendants, baggage, whatever. And they made all those bets predicated on looking at, I would imagine 2007 and 9-11 as their models. No one could have predicted the tsunami of essentially aggregate demand. And it's not just travel, it's everything. You know, it's hard to get your hands on anything still because there just isn't enough. Well, the same is true with travel. So you know, what did they do wrong? Well, I guess they didn't have a better crystal ball, but I'm not sure anybody could have number one in terms of just all this chaos and what to do There. You know, the, they're in a catch 22 to me. The obvious way to reduce the problem would be to dramatically raise fares that would then reduce the amount of demand going through the system and would bring the level of travelers down to a manageable level. If of course they do that everyone's gonna scream holy hell Because they received, you know, $40 billion dollars in in subsidies and bailouts. So I don't know what they can do here. Honestly, they're all good notes and really great insight especially as we are still experiencing this particular travel season, but we're hearing in the fall from so many guests and experts that have come on the show that ticket prices are set to be down. I know people are already shopping for fall season tickets because they are lower. Do you think that that is a mistake because one of the solutions you mentioned is hiking prices to maintain a level of demand that they can actually accommodate? Well, I do think The simple answer to that question is I'm not sure I need to look at the data, if if they're dropping prices, they probably believe things like interest rates, the availability of credit, uh, discretionary spending is going to fall and so they're reducing prices to make sure again that they maintain that utilization, I mean most airplanes need about 80% or better in order to be profitably utilized. So if they're dropping prices, it would be my expectation that that is a result of them believing that the economics of the future isn't going to be better than now. And so, so, so that's why they're doing, they're doing that. I mean, we'll see, you know, the airlines typically over sell, they typically run into capacity at high times summer and thanksgiving and I imagine it'll just be odious. We'll have to see. But as a guy who flies like two or three times a month, I can tell you, I haven't seen this busy in a very long time. Yeah. My takeaway from our conversation is in addition to math and data, you also have to factor in human nature and I think we've all been just so pent up over the past couple of years that everyone is willing to splurge on travel. I do want to circle back to the idea of this labor shortage and how that's impacting these airlines. Is there something you think they could be doing differently there especially given positions like a pilot takes months, sometimes years of training. It's also very expensive and not necessarily something they can fix with new, higher incentives. Well, there's a short term and there's a long term right solution to that problem. As you pointed out, you can't take a guy and in a week you suddenly qualify, you know, qualified to fly a commercial aircraft, right? There's just even at high rates of training, you can't, you can't get people trained fast enough. So there's a short term and there's a long term solution in the short term, they're going to have to muddle along pay incentives and everybody is going to be kind of scratching for the same same pie. Um, you know, there are certain aspects of the uh, airline supply chain if you will, that can be solved faster than things like pilots and mechanics. Okay. Uh, long term, I'd argue that the airlines have to look at the investment in pilots no differently than they look at the investment in the parts that they put on that airplane. They have parts that they put on airplanes that are worth a quarter of a million dollars. That's about what it takes to make a new pilot. I'm a little confused as to why the airlines can't figure out, well, we need a constant supply of pilots otherwise we can't fly our planes. Why they can't, you know, figure that out in terms of the financial cost. So long term there are some solutions that are going to have to unfold in the short term you're stuck. That's really interesting. And thinking of a pilot as an investment just as you would with any other instrument on the plane. Um, I do also want to ask you about something that we're hearing in terms of route routes being cut, Popular routes being cut from domestic airlines here in the U. S. Also internationally for a number of different reasons. You mentioned the government subsidies and the bailouts that these airlines saw during the pandemic. Do you anticipate the government steps in again and gives airlines some amount of stimulus like we saw during the pandemic? Well, I sincerely hope not, I realize that may not be a particularly popular position to take. But uh, let's review the last round airlines for America and the airlines in the United States said, give us all this money and will ensure that airline travel will remain intact. Taxpayer held up their end of the log and I'll just leave the story there. I think, in part politically, their problems, you know, as the airlines is the fact that we held up our end of the log. Yeah, BRian del Monte, president of the aviation agency, is so good to have your insight on this. Thanks for joining us here on Cheddar News.