Helicopters Magazine

Features Procedures Safety & Training
Win a Battle, Lose a War

The pilot/engineer shortage facing the industry results from cut-rate charter quotes that leave little revenue for pay increases. When I left the military in 1972 with the rank of captain, on flight pay level three, my annual salary was $12,650...


July 9, 2007
By Ken Armstrong

Topics

Helicopter companies continuously wage a relentless financial war
against each other that ravages profits and creates a host of
collateral damage. Minimal revenues result in old helicopters battling
on with their increasingly high maintenance costs because operators
can’t afford new, efficient machines. Eroding profit margins have a
tendency to lead to less maintenance accomplished, ‘fudged’ flying
hours and really hightime components proving not overly reliable. You
only have to pay the deductible once on a subsequent accident to
realize the ‘false economy’ associated with faulty maintenance
practices.

The
pilot/engineer shortage facing the industry results from cut-rate
charter quotes that leave little revenue for pay increases. When I left
the military in 1972 with the rank of captain, on flight pay level
three, my annual salary was $12,650 – good money in those days. My
first civilian year with Canwest Aviation in Calgary totalled $16,100
based on 600 revenue hours, monthly salary and a winter retainer. Nice
raise! In the early 70s my remuneration with companies like Canwest,
Alpine and Liftair exceeded any of the other employees in the camp
environments that hosted me. After all, the skill requirements to fly a
helicopter and the risks essentially justified this rewarding pay
scale. By the mid-nineties virtually all of the blue-collar workers in
camp boasted larger cheques – this in the midst of a growing pilot
shortage that should have justified increasing pay to attract aviators.
However, operators will tell you the money just isn’t there to pay
pilots and engineers an adequate wage to keep them in the industry.
Since the purchasing power of our deflating dollar requires at least
seven times as much money to buy commodities now, compared to the start
of the 70s, one would expect a salary of $112,700. That’s not happening!

Historically,
helicopter rates for a Bell 206 in the early seventies were in the $250
range compared to today’s tariffs of $1,000 hourly. This represents a
four-fold increase in income during a period when most costs have
climbed at least seven-fold! If charter fees had kept pace with
inflation, a 206B would rent for $1,750. Higher remuneration would not
only attract new aviators but also retain many of the highly
experienced drivers and maintainers. Incidentally, my equivalent
military pay would now be $84,780 (March 2005 rates) – an increase of
almost seven-fold since 1972.

More income from higher tariffs
would provide operators the ability to provide additional flight
training, maintenance funding and cash flow to stock more spare parts.
These actions yield numerous benefits such as reduced accident rates
and in time would knock down our high insurance premiums. Spare parts
and improved maintenance usually reduce down time, thereby increasing
revenues. Moreover, better maintained helicopters contribute to lower
accident rates. These are increasingly more important considerations
because Transport Canada embarked on a new safety program whereby the
Director General of Civil Aviation warned us (actually threatened) at
the Ottawa HAC convention that we reduce our accident rate or face new
regulations. (TC hasn’t learned that you can’t push a rope uphill, or
that it can’t effectively wage war on an industry it is mandated to
support; and its program doesn’t seem to have yielded positive
results.) After all, none of us wants to see our mates or machines
smeared on the terra firma. Most of us are doing the best we can to
ensure the skids or wheels are the first part of the helicopter to
touch down, but, quite frankly, unless more revenue becomes available
to sort out the aforementioned problems, we are likely doomed to repeat
the annual statistics. Reducing accidents through more skilled pilots
and better maintenance would naturally reduce accident rates and reduce
insurance premiums.

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What can be done? Actually, the solution is
rather elementary. Operators have got to agree to a truce of sorts on
the tariff front. Stop taking pot shots at each other with predatory
rates and undermining your adversary’s rates. After all, your rates
should be predicated on the value of your service, not how much less
you can charge compared to local “flaky” companies with questionable
pilots and mediocre maintenance. I am aware of charter operators with
higher than standard rates and they are not begging for business.
Essentially, their clients appreciate the value of fair pricing for
quality service.

What do you think? Is it time to cease
hostilities and bump up the rates 5% or so during this excellent
economy or would your rather continue to be a warrior taking and
receiving “shots” from your competition? Let’s raise the rate as an
industry and allow ourselves the ability to provide the level of
service that creates respect from our clients and regulator.


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