Pilots leaving the industry

[robottxt]

On 2018-03-24 at 6:15 AM, Heliian said:

If you don’t like your career then get a new one.  I’m tired of hearing about how a plumber or an electrician gets paid more than you.  If you are good at pulling wire or augering out ****** pipes then go for it.  Doctors get paid more too, policeman, firefighter as well.

You have chosen to fly as a career, if you keep working then you’ll find more pay and stability.

Also, stop comparing your entry level salary to a tradesman who has been no doubt busting his *** for the last 20 years.  

Want to get rich quick with no training or education then become an online crypto trader.

 

Its like all these government workers complaining about not getting paid, all talk and no walk.  

Some of use aren't willing to wave the white flag of surrender.  If your ok accepting your situation and bearing it with little complaint,  Great,  i applaud you for owning it. But don't be that crab pulling others down.  Some of use still a have fight in us.

[MEOB]

On 3/23/2018 at 2:20 PM, robottxt said:

There's a much easier solution.  To work on a union job site the pilots needs to be in a union too.    Happens in Hollywood.   Gotta be in the union to get the work. But pilots constantly under value themselves.   

Not entirely true. Ive worked on union jobs without being in the union.

[sirlandsalot]

Pretty hard to get better wages with all these companie low balling from the tarrifs that have not changed in 20 years.....  Wallmart buisness plan......

 I ran an excavator last winter for $650 a day!    it was boring as **** and the shifts where long.....

[Harmonic_Vibe]

I feel like I have to point out that the vast majority of the flying we do is for clients of the private type. Fires are great and since we all pay taxes it's good to get some of that back. However, on an average annual basis the industry, as a whole, spends 65% of its time flying for oil and gas or mineral exploration clients. All the other stuff we do is captured in that approximately 35% slice.

The reason I bring this up is because when I read the posts it sometimes sounds like operators are a bunch of idiots with no idea how to run their business - and this is often true! But lots of operators know what they're doing and when the clients enter a downturn like we've seen in mining and oil and gas over the last 4-5 years, we do the best we can to keep the lights on, pay the staff and support those clients so they remember us when things get better, as they always do.

It is so easy to say an operator "low balls" but what does that mean? An Astar only costs about $300 an hour (USD) to operate, not including fuel. The fixed costs are what drive the rates, and that's where tariffs come from. We calculate what all the costs we incur annually are, whether we fly or not (and the pilots and engineers are a massive part of that), target some reasonable hourly target like 400 hrs, factor in the direct operating costs to fly those hours (component reserve, flight pay, running maintenance, etc) and then divide by those 400 hours to get our tariff. For example, after calculating all our costs, a 407 tariff might be $2200/hr. So that tells you the company needs over $800K on an annual basis to break even and hit their profit goal. This is why talking about hourly rates is meaningless if you don't know how many hours, what time of year, etc.

When I am asked how much an hour costs, I like to say, "if you only have one hour it's $750,000... if you have 2 hours it's $375,000... and so on". It's for laughs yes, but it's essentially true. If your 407 is not going to get $2200 an hour, which is likely barring BC bursting into flames again, then you need to adjust your hourly targets up as your rates go down. This is mathematical at this point but the key to the whole thing is the client! If I had a dollar for every time an accountant said we need to charge more and fly more I could retire. This is what we strive for always!!! Pretty hard to do when clients are going bankrupt at the rate of several per month as mining juniors were a couple of years ago. The 20+ seismic companies that had 40+ crews working every winter are now single digits with 4-5 crews. One tenth of what it was, but somehow the operators are not running their businesses properly! I'd say by how few operators have gone belly up that most know exactly what they're doing.

It's too bad that everyone can't get more guaranteed salary, and that the downturn has caused pilots to leave the industry, but much of what has happened the last few years (since 2008 to be precise) were solidly in the realm of macroeconomic forces. The good news is, those same macroeconomic forces seem to indicate we're entering a definite upturn, with predictions of a 5-year bull market in the mineral exploration side of things. Maybe everyone can get those raises and better schedules soon. Hopefully we don't go out and buy a couple hundred helicopters to dilute the market again, but it'll probably happen, at least on a small scale. If you need to expand your business, buy existing aircraft that are underutilized, please don't import a whole bunch!

Sorry OEMs but we're not ready for that yet!

HV

[Freewheel]

8 hours ago, Harmonic_Vibe said:

I feel like I have to point out that the vast majority of the flying we do is for clients of the private type. Fires are great and since we all pay taxes it's good to get some of that back. However, on an average annual basis the industry, as a whole, spends 65% of its time flying for oil and gas or mineral exploration clients. All the other stuff we do is captured in that approximately 35% slice.

The reason I bring this up is because when I read the posts it sometimes sounds like operators are a bunch of idiots with no idea how to run their business - and this is often true! But lots of operators know what they're doing and when the clients enter a downturn like we've seen in mining and oil and gas over the last 4-5 years, we do the best we can to keep the lights on, pay the staff and support those clients so they remember us when things get better, as they always do.

It is so easy to say an operator "low balls" but what does that mean? An Astar only costs about $300 an hour (USD) to operate, not including fuel. The fixed costs are what drive the rates, and that's where tariffs come from. We calculate what all the costs we incur annually are, whether we fly or not (and the pilots and engineers are a massive part of that), target some reasonable hourly target like 400 hrs, factor in the direct operating costs to fly those hours (component reserve, flight pay, running maintenance, etc) and then divide by those 400 hours to get our tariff. For example, after calculating all our costs, a 407 tariff might be $2200/hr. So that tells you the company needs over $800K on an annual basis to break even and hit their profit goal. This is why talking about hourly rates is meaningless if you don't know how many hours, what time of year, etc.

When I am asked how much an hour costs, I like to say, "if you only have one hour it's $750,000... if you have 2 hours it's $375,000... and so on". It's for laughs yes, but it's essentially true. If your 407 is not going to get $2200 an hour, which is likely barring BC bursting into flames again, then you need to adjust your hourly targets up as your rates go down. This is mathematical at this point but the key to the whole thing is the client! If I had a dollar for every time an accountant said we need to charge more and fly more I could retire. This is what we strive for always!!! Pretty hard to do when clients are going bankrupt at the rate of several per month as mining juniors were a couple of years ago. The 20+ seismic companies that had 40+ crews working every winter are now single digits with 4-5 crews. One tenth of what it was, but somehow the operators are not running their businesses properly! I'd say by how few operators have gone belly up that most know exactly what they're doing.

It's too bad that everyone can't get more guaranteed salary, and that the downturn has caused pilots to leave the industry, but much of what has happened the last few years (since 2008 to be precise) were solidly in the realm of macroeconomic forces. The good news is, those same macroeconomic forces seem to indicate we're entering a definite upturn, with predictions of a 5-year bull market in the mineral exploration side of things. Maybe everyone can get those raises and better schedules soon. Hopefully we don't go out and buy a couple hundred helicopters to dilute the market again, but it'll probably happen, at least on a small scale. If you need to expand your business, buy existing aircraft that are underutilized, please don't import a whole bunch!

Sorry OEMs but we're not ready for that yet!

HV

Well said HV.

Im thinking your numbers are off the top of your head, but your not far off.

According to Conklin and Dedecker a corporate AS350 B2 requires 

$1968.00 USDper hour when factoring in book depreciation. 

$1828.00 USD per hour when factoring in market depreciation

$1386.00 USD per hour when no depreciation is factored 

thats at 395 hours of usage annually

utility equipped aircraft usd in Canadian market would likely  be higher

some operators have been selling these aircraft recently at less than $750.00 per hour

 

[Harmonic_Vibe]

Good morning, I see you were up early checking your stocks! Now not wanting to argue (ok, I actually do), I feel the need to point out some material differences from US Corporate and Canadian Utility.

I have attached "B2 Variable" so you can see the breakdown of variable costs. I have zeroed labour because we, as an industry, employ engineers full time and it's not that useful to assign an hourly labour cost to a single aircraft, without knowing a lot more factors. ConklinDedecker says it's $108 USD per hour flown in maintenance labour and a corporate aircraft, always hangared, using an A&P and flying 295 hrs a year will likely run something like that, but to have an apples to apples comparison I made it zero. I also zeroed fuel cost since that is usually covered by the client, one way or another.

Anyway, the cost of engine overhaul, all airframe parts, running maintenance and "major periodic inspections", which includes 12-years and paint, is roughly $290 USD per hour. I like using C&D numbers because they use OEM list pricing. They do not factor in discounts you might get for volume, nor do they consider you might find PMA or used parts for far less than factory list. In other words you should be able to operate more cheaply than C&D says, so if you use their pricing you have built in a buffer, small as it is.

I also attached the C&D fixed cost summary. You will see they have a single pilot at $167,000 a year between salary and benefits - that's $215K Canadian at today's forex. That might be scale for corporate in the US but it's certainly not for utility in Canada. The US insurance rates can be close to twice Canada's (injury and wrongful death differences).They also include "Aircraft Modernization" at $30,600 a year and a bunch of other items we don't really see in utility. The point I'm making is C&D as raw data (what does an average engine overhaul cost for instance) is great, but unless you operate in the US, the totals and summaries need to be studied and understood. It's far better to use the actual costs you know are the same (parts and overhauls) and then use your own costs. What you pay your people. What your hangar costs, etc, etc. Some operators have paid off aircraft and don't factor in depreciation (depreciation is a tricky one for helicopters as some appreciate while the operator is still depreciating them on paper) so don't need to worry about their banker and can go much lower than anyone else. This doesn't mean they're losing money, but they're certainly not helping the overall industry maintain an expectation with the clientele.

The final thing is the more you fly the more the fixed costs are diluted. At some magic number the fixed costs are all covered and then you really start making money. This depends on the clients and how much money they have to spend, because when they fly 800 hrs on an aircraft one year and 300 the next, they expect the same rate and will often go elsewhere if they don't get it. We are in the boat with the clientele and as much as we want to be proactive, our industry is necessarily reactive - we help paddle and sometimes we help man the pumps! 

HV

 

 

[Freewheel]

Some more good points from you HV. 

Checking my stocks. Also funny.

im not looking  to argue. Was actually agreeing with your comments. Thought that was clear.

I made a reference that this was US corporate, not Canadian utility. Just trying to be brief.

also i just did a quick search using the online tool from C&D. The report I referenced had aircrew 129,000.000 and benefits at 38000.000. Agreed: high for Canada

with that being aaid, it’s likely what many feel they should be paid...so I’d suggest rates need to go up if that is to happen. I also agree with you we need to work with our clients to get through lean times.

[Freewheel]

It was just meant to basic raw data from which to start the discussion....I think C&D is good for that. It seems to have worked and it looks like you agree..,

So, what would you say an appropriate Canadian  tariff for an AS350 B2 (at 400 hrs per year)?

[Harmonic_Vibe]

I used "argue" in the sense it used to have, "give reasons or cite evidence in support of an idea, action, or theory, typically with the aim of persuading others to share one's view", rather than what we usually think of today... raised voices, spilled beer, followed by a head butt and yet another ruined shirt from rolling around on the floor!

I have zero doubt, based on many calculations, that a 400 hour year for a B2 requires somewhere from 1800 to 2000 an hour. It varies because of geography, industry sector (pilots get paid more to move diamond drills in the mountains than they do to drop off road engineers in the morning and pick them up at night for instance) and a host of other factors that affect cost. If you're not getting the annual revenue, either because of reduced rates, reduced hours or both, than something has to give. Missed loan payments. Layoffs. No paint or tin bashing. Buying components with almost no hours remaining. Stringing out vendors for months. You name it. That's why prudent operators don't overextend in bull markets. Get those payments down, not up! Someone with no payments can operate at variable operating cost for years... most of us can't and really, nobody should. Even those that can, hurt themselves when things do turn around. 

 

HV

[sirlandsalot]

There sure is a huge spectrum of operators good to bad.   I notice that the good companies that pay well also hold there ground with rates, even though somtimes I wonder how they can do it.   Those numbers are interesting,  maybe thta explains why so few operators have closed doors over the last few years.  

 

However, all those numbers and algorithms aside,  I dont think LOWBALLING, for example, a 212HP at $1850 an hour for fire, or a 407 for $1200 an hour to do utility work,  is doing anybody in this industry any good except for the couple crews that have the work.