More pilots will retire from the big three US carriers than are moving through the regional airline pipeline at the moment, a new report from Cowen finds.

American Airlines, Delta Air Lines and United Airlines need roughly 44,000 new pilots to replace the roughly 30,000 retirements, plus a forecast average annual growth rate of 1%, through 2030, analysts at the bank finds. However, the regional carriers – the "number one source" for mainline pilots – only employ around 14,000 cockpit crew members today.

American faces the largest crunch with roughly 69% of its pilots scheduled to retire, followed by 57% at United and 54% at Delta.

US regulations require pilots to retire when they turn 65, simplifying the calculation of coming retirements. The issue is exacerbated by the fact that US carriers hired few new pilots during the financially challenging first decade of the 2000s.

This trend is simultaneously driving the average number of seats per departure, and wages higher, finds Cowen.

"In part due to a lack of pilot availability at the regional airlines, as well as a lack of infrastructure at the busiest airports in the US, we are seeing seats per departure grow at the expense of departures per day," the report says.

All three mainline carriers have moved to shift to larger gauge aircraft over the past five years. Delta led the market in 2013 when it agreed to add 88 Boeing 717-200s with 110 seats to its mainline fleet, in exchange for more 76-seat regional jets and the removal of hundreds of 50-seat jets in its feeder fleet.

American and United followed Delta's lead in the subsequent years. However, the latter began expanding its small jet fleet again this year after hitting the 255-aircraft cap for its 70-76 seat regional jet fleet.

"We've got a temporary surge in 50 seaters in 2018 because we don't have a choice today," said Scott Kirby, president of Chicago-based United, on the issue in January. The airline hopes to convert those to large regional jets in the future, however, any scope relief from pilots will almost certainly entail wage increases and other concessions to mainline pilots.

United is already in negotiations with its pilots over their next contract, and American and Delta are expected to begin negotiations over their next contracts within the year. Cowen expects wages to trend higher at the carriers into the 2020s.

Starting rates for first officers in the carriers' smallest aircraft classes – the Embraer 190 at American, Airbus A220 and Boeing 717 at Delta, and Airbus A319 and Boeing 737-700 at United – are expected to rise from their current $88 per hour at American and Delta, and $85 per hour at United, says Cowen.

Any wage increases will impact the economics of these entry-level mainline aircraft, especially at an airline like United that continues to debate whether to invest in a so-called 100-seater like the A220 or E-Jet E2.

Pilot supply may be improving. Mesa Airlines chief executive Jonathan Ornstein said today that the regional carrier is getting indications of an increased supply from flight schools and other sources as training programmes have adapted to the 1,500h rule for new pilots that was implemented in 2013.

"We sense, overall, that things overall are getting somewhat better," he says, adding that Mesa is increasingly bullish on hiring.

Mesa operates Bombardier CRJ700s and CRJ900s, and Embraer 175s for American and United.

Source: Cirium Dashboard