Sr. Aviation Journalist Alex Martinez investigated the pros and cons of United buying a flight school (Westwind School of Aeronautics) to add to its already existing Aviate partner-program to handle the increasing pilot shortage.
United’s buying a flight school
It is not the first time that an airline buys a related business to get ahead. In 2012, Delta bought from ConocoPhillips the Trainer refinery in Pennsylvania to tackle the escalating fuel cost. Now another airline buys a related business, is it worth the effort?
When Delta bought the Trainer refinery in April 2012, the price of oil per barrel was around $112 dollars.
Earlier in the week, United Airlines bought their own related business, Westwind School of Aeronautics, a flight school.
We investigated whether these purchases make sense to airlines and if they make a profit.
The pilot shortage is real
Don’t get me wrong, the pilot shortage is real and is becoming gradually more acute for each year that passes. The mandatory federal age for a pilot to retire is at 65, and half of its pilots are reaching this age.
United is speeding up efforts to recruit 10,000 pilots to replace those that would retire in the next decade.
The strategy to get there is not easy
While getting to the numbers to replace the number of pilots on a year per year basis increase, there are still major barriers to upcoming pilots like myself. These barriers need to be removed or become more accessible.
For instance, some of the barriers are:
- It cost around $80,000 to become a Commercial Pilot
- For U.S. Pilots it requires 1,500 hours before becoming a First Officer
Although there are some exceptions for students and the military, those requirements are steep to meet.
Airlines have partnerships with Flight Schools and Universities specialized in Aviation
Many airlines have partnerships with Flight Schools and Universities.
For instance, some universities with these partnerships are:
- Embry-Riddle Aeronautical University (my alma mater)
- Polk State College
- Florida Institute of Technology
- Middle Georgia State University
- Middle Tennessee State University
- Minnesota State University – Mankato
- University of North Datoka
Many universities have a Memorandum of Understanding. This helps students going to pilot jobs immediately and for the airlines to fill some of the vacancies.
United’s current list of Aviate partners
This is United Airlines Partners shortlist of its Aviate program. As mentioned before it has some of the universities mentioned before while expands on other partners.
Removing my Aviation Hat, Replacing it with my Business Hat
We have talked about aviation. However, aviation is a business. I like to approach things in a balanced way so I can give voice to my business side of things.
Returning to the beginning of the article, Delta bought the Trainer refinery in April 2012. The price back-then of oil per barrel was around $112 dollars. Today, the price of oil per barrel of West Texas Oil (WTI) or the US is $50.84 and (Brent Crude) or the international price is $54.87.
A year ago, there was an article by Reuters that explains that Delta wants to offload that Trainer refinery.
Having an oil refinery isn’t as cost-effective as it was in 2012. Delta now wants a buyout and to find a long term jet fuel contractor.
I understand that comparing an oil refinery and a flight school is like comparing apples and oranges.
However, understand that a related business can bring additional costs not foreseen in the first place when an airline buys such a business.
Delta’s purchase of a flight school
Delta bought the Comair Aviation Academy in the 2000s. Around 2010 it was sold off to Flight Training Acquisition LLC (FTA) with the backing of Lincolnshire Management and GTI Group, to become Aerosim Flight Academy. Finally, in 2016, L3 Harris bought Aerosim Flight Academy becoming L3 Harris Flight Academy.
If we take this as a case study, it was less than 10 years from purchasing a related business to become a spinoff and divested.
It is my personal belief that the solution to this pilot shortage is within the airlines, aircraft manufacturers, and the government.
Keep on reading before sending an email criticizing:
The airlines and the U.S. Air Force have a pilot shortage. Airlines and the Air Force are tackling the shortage with different strategies and initiatives.
Why not agree to a mega flight academy facility with a curriculum brought from the different universities? The government and the airlines pay a percentage and the aircraft manufacturers provide technical support and simulators to keep this academy running.
Those coming to this academy will sign a non-competition agreement which either will have to dedicate a certain amount of years to either the airlines or the U.S. Air Force to get their costs reduced.
If such an agreement is violated it would mean paying the complete cost of tuition in order to become a pilot.
Everyone is part of this “joint-venture” and the U.S. Air Force and the Airlines have their way of keeping their Return on Investment in an academy while starving off costs.
What do you think about United buying a flight school? Do you have a better idea? I’m open to comments, suggestions and ideas. You can contact me here.
Alex Martinez Rivera
Featured Image: Lake Mead, Nevada. Unsplash.