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Pilot light
Whilst Indian aviation traffic has more than tripled over the past seven
years, this has been accompanied by pilot shortages. The issue has come
back in focus given recent instances of fraudulent qualifications being
used by some pilots to get commercial licenses. Whilst the safety risks
remain low given the airlines’ internal training regime, the pilot supply is
likely to see some disruption. To meet the continuing need for pilots,
reforms are necessary. In the near term, the Air India pilot strike is likely
to boost loads but may eventually pressure yields after the strike.
Pilot shortages - a recurring theme
q Domestic passenger air traffic in India has grown from 16m in FY04 to 53m in FY11
q Through this, pilot shortages have been a recurring issue given high fleet growth
q IATA expects domestic passengers to grow at 13% per annum over the next
decade, requiring the Indian domestic fleet to more than triple
q Pilot requirements will also rise. Currently, 15% of pilots in India are expatriates
The recent scandal in context
q There have been nine incidents of pilots being found with fraudulent qualifications
q The bulk of pilots were such that they had fulfilled only a part of the 200 hour
training requirements. However, they had since gained substantial experience and
were not lacking in capability. As such, they did not pose an imminent safety risk.
q There was only one instance where the pilot had major skill gaps and posed a risk
q Our discussions with Jet and Spice Jet indicate that the airlines themselves do
conduct a round of internal training and provide 50-60 hours on simulators before
assigning to flight operations. However, they do remain dependent on commercial
pilot licenses issued by the DGCA for the initial screening
q The DGCA is now doing background checks on all pilots who have been issued CPLs
as well as training schools, although no external agency has been retained for this
Reform necessary
q Beyond the immediate issue, there is a necessity of reform pilot schools to ensure
that pilot supply scales up without sacrificing quality
q The historic solution of hiring expatriate pilots is also out of favour now
q In the meantime, the CPL issuance process is reportedly seeing a slowdown
The Air India strike and its impact
q The recent strike by Air India pilots has also had an impact on the industry
q Near term yields and loads for the private sector players have benefitted
q However, there is a risk of yields coming under pressure now that Air India has
resumed services. During the September 2009 quarter, which coincided with the Jet
strike, the company had seen a 20% QoQ drop in yields as it tried to regain market
share while Spice Jet saw a 14% drop in fares
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Pilot light
Whilst Indian aviation traffic has more than tripled over the past seven
years, this has been accompanied by pilot shortages. The issue has come
back in focus given recent instances of fraudulent qualifications being
used by some pilots to get commercial licenses. Whilst the safety risks
remain low given the airlines’ internal training regime, the pilot supply is
likely to see some disruption. To meet the continuing need for pilots,
reforms are necessary. In the near term, the Air India pilot strike is likely
to boost loads but may eventually pressure yields after the strike.
Pilot shortages - a recurring theme
q Domestic passenger air traffic in India has grown from 16m in FY04 to 53m in FY11
q Through this, pilot shortages have been a recurring issue given high fleet growth
q IATA expects domestic passengers to grow at 13% per annum over the next
decade, requiring the Indian domestic fleet to more than triple
q Pilot requirements will also rise. Currently, 15% of pilots in India are expatriates
The recent scandal in context
q There have been nine incidents of pilots being found with fraudulent qualifications
q The bulk of pilots were such that they had fulfilled only a part of the 200 hour
training requirements. However, they had since gained substantial experience and
were not lacking in capability. As such, they did not pose an imminent safety risk.
q There was only one instance where the pilot had major skill gaps and posed a risk
q Our discussions with Jet and Spice Jet indicate that the airlines themselves do
conduct a round of internal training and provide 50-60 hours on simulators before
assigning to flight operations. However, they do remain dependent on commercial
pilot licenses issued by the DGCA for the initial screening
q The DGCA is now doing background checks on all pilots who have been issued CPLs
as well as training schools, although no external agency has been retained for this
Reform necessary
q Beyond the immediate issue, there is a necessity of reform pilot schools to ensure
that pilot supply scales up without sacrificing quality
q The historic solution of hiring expatriate pilots is also out of favour now
q In the meantime, the CPL issuance process is reportedly seeing a slowdown
The Air India strike and its impact
q The recent strike by Air India pilots has also had an impact on the industry
q Near term yields and loads for the private sector players have benefitted
q However, there is a risk of yields coming under pressure now that Air India has
resumed services. During the September 2009 quarter, which coincided with the Jet
strike, the company had seen a 20% QoQ drop in yields as it tried to regain market
share while Spice Jet saw a 14% drop in fares
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