Skills shortage continues to challenge aviation - how the industry can respond

The Covid-19 pandemic hit the aviation sector hard, with airlines forced to ground passenger fleets around the globe during lockdown and facing reduced passenger numbers when flights resumed once more.

Unable to generate passenger revenue, while simultaneously haemorrhaging money, some airlines diversified into cargo business.

But across the sector companies were still obliged to furlough or lay off large swathes of employees – from pilots and cabin crew to check-in staff and ground crew.

By the time travel restrictions eased and airlines were able to resume operations, many employees who had been made redundant had unsurprisingly found other jobs. In particular, significant numbers of experienced pilots released from their contracts did not return.

A 2021 study by Oxford Economics, reported in the Financial Times, showed that following the pandemic, 2.3 million jobs were lost across airlines, airports and civil aerospace groups – around a fifth (21%) of the pre-pandemic employee total.

“Following the pandemic, 2.3 million jobs were lost across airlines, airports and civil aerospace groups.”

In its third quarter 2023 aviation market review, Marsh Specialty noted that competition around hiring and retaining experienced staff continued to impact the sector at an operational level, with several airlines investing further in training academies and bursaries to address crew shortages.

There has been a further drain of experienced employees from the aviation sector, however, as employees have returned to significantly lower salaries – in the case of cabin crew, sometimes 50% lower than pre-pandemic levels – due to carriers’ ongoing uncertainty around revenue projections for the years ahead.

Upskilling for a changing industry

Airlines continue to invest in training to address these shortages, but they face a further challenge in that training programmes need to be upgraded to keep pace with an evolving aviation industry.

With increasing pressure on airlines to meet sustainability requirements, new aircraft technology is being developed incorporating equipment and software upgrades designed to make craft more energy efficient.

New and returning pilots, therefore, need upgraded technical expertise to manage potential changes in aircraft controls and performance.

Cabin crew also require re-training in accordance with regulatory changes – not only with respect to pandemic-related safeguarding issues, but also around how they attend to passengers in-flight.

“With increasing pressure on airlines to meet sustainability requirements, new aircraft technology is being developed”

This follows significant pre-pandemic ‘controlled flight into terrain’ events, and recent incidents including the blowout of an emergency exit door and a fatal clear air turbulence event which have highlighted passenger safety concerns.

As a consequence, there are likely to be stricter requirements for keeping passengers seated during flights. And an uptick in confrontations between cabin crew and disruptive passengers, including incidences of undue force being used by cabin crew towards passengers, is driving the need for more training in dealing with potential conflicts.

Upskilling of cabin crew will also need to incorporate training around potential regulatory variations in the different air corridors carriers operate in.

Ground crew concerns

Perhaps a greater concern for aviation insurers is the shortage of trained ground crew, which has implications for aircraft maintenance and airside safety issues.

The ground crew shortage is affecting airlines’ ability to turn flights around quickly – particularly impacting budget carriers and short-haul flights, which typically have tight turnaround times.

However, more importantly, it has also impacted safety standards, with some horrific recent fatalities involving inexperienced ground crew. Recent incidents including a wheel dropping off a craft’s landing gear and a section of engine cowling detaching after take-off have also thrown a spotlight on maintenance standards.

“Global supply chain pressures are also impacting the availability of spare parts, compounding repair delays and the return to service of aircraft.”

In its 2023 airline claims review, WTW said anecdotal evidence from its claims specialists suggested there has been an increase in minor incidents at busier airports, causing a rise in attritional claims that could be attributable to the loss of experienced ground crew in the pandemic.

The increase in minor incidents is also having a knock-on effect for the availability of repair slots with maintenance, repair and overhaul suppliers which, in turn, is impacting the speed with which damaged aircraft can be returned to service.

Marsh highlighted in its Q4 2023 aviation market review that global supply chain pressures are also impacting the availability of spare parts, compounding repair delays and the return to service of aircraft.

Added to the longer repair times needed for new technology like composite airframe materials, this presents a further growth challenge to the airline sector, adding to the pressure on employers to speed up training of new employees.

Growing demand

These staffing issues come at a time when passenger numbers are projected to increase – returning to pre-pandemic levels next year and expected to increase dramatically in the next 10 to 15 years, particularly in emerging economies such as India, China and Brazil.

Indeed, China is driving much of the expansion in airline business, with domestic manufacturer COMAC having launched a new narrow-body aircraft, the C919, to challenge the ubiquity of the Airbus A320 and the Boeing 737.

Meanwhile, the US internal airline market is also showing signs of significant growth, with a 6% year-on-year uplift in passenger traffic as of May this year.

With increased demand for experienced staff globally, particularly for pilots, there is likely to be greater movement of trained air and ground crew between countries.

In the UK, where insufficient numbers of new staff are being trained up to cope with demand from European networks, let alone wider international traffic, airlines are advertising for retired pilots to return to work, either as flight crew or to assist with training new staff.

A closer relationship

This necessitates close discussion between insureds – both airports and airlines – and their insurance providers to determine the scope of their business interruption coverage with respect to any potential flight delays and/or cancellations due to pilot shortages.

In balancing the increased demand for passenger services and revenue projections against the cost of expanding operations, carriers should also be in ongoing discussions with the insurers about the likely increase in values driven by the additional training costs and increased salaries necessary to attract the required numbers of trained staff – not least, as this will affect valuations for liability coverages.

“Carriers should also be in ongoing discussions with the insurers about the likely increase in values driven by the additional training costs and increased salaries necessary to attract the required numbers of trained staff”

Companies are also exploring technological solutions to short-staffing, although full automation of aircraft is likely to be restricted in the near-term to short-haul flights using vertical take-off and landing craft.

In the commercial airline market, however, experienced pilots and crew will still be needed, and any ground crew operations are likely to remain highly manual for the foreseeable future.

In engaging with both airlines and training bodies to sponsor vocational courses, the insurance sector can help the aviation industry recover more quickly and enable growth plans to be realised.