In recent years, the aviation sector has undergone significant change driven by economic cycles and the restructuring of the government’s management of Canada’s transportation system. As a consequence, the role of Civilian Aviation Inspectors (CAIs) who inspect air operators, the air navigation system, flying schools, and airports for conformity to government standards and regulations has changed. These changes have also put some significant pressures on the ability of Transport Canada (TC) to manage recruitment and retention of its CAI population and strengthens the perception among the CAI population that there is a significant compensation gap between the Department and the aviation industry.
PricewaterhouseCoopers LLP (PwC) has thus been commissioned to conduct a review of TC’s recruitment, retention, and compensation practices in contrast to those practices of private operators in the aviation sector that employ licensed aviation personnel who possess similar certifications and qualifications required by TC of its CAI population.
As part of this review PwC has conducted a secondary source analysis of industry literature and databases and has undertaken numerous interviews with senior management from private aviation operators and the Department in the Civil Aviation Program. Additionally, PwC has administered an industry compensation survey to delineate the differences between TC and private sector operators in regards to compensation practices. Finally, PwC has suggested a directional approach to assist the Department in addressing the challenges that PricewaterhouseCooper’s review identified in regards to the issues of recruitment, retention, and compensation.
1.1 The Current Situation in Civil Aviation
The difficulty of TC to manage recruitment and retention of CAIs has to be examined within the perspective of the evolution of the business environment of civil aviation. From our review, it should be noted that both employment and salaries for licensed aviation personnel in the civil aviation industry has increased rapidly. Between 1995 and 1996 the number of pilots and co-pilots increased by 6.0% compared to an overall increase of 2.4% for all airline employees. During the same time period the salaries and wages for pilots and co-pilots increased 10.3% compared to an overall increase of 7.7% of all airline employees.
The higher growth in both employment and salaries for pilots in comparison to all airline employees may be a reflection of the increasing demand for licensed aviation personnel and the recent stagnation in the number of ‘in force’ aviation licenses in the aviation sector. These developments can be attributed to a number of trends occurring in the aviation industry. These trends include:
An increase in the number of passengers carried.
An increase in the number of revenue passenger miles.
A greater variety of aircraft types in the fleet in air carriers.
An increase in the number of aircraft operators.
An increase in the number of aircraft registered.
A decline in the number of private pilot licenses.
The changing demographics of aviation license holders.
An increase in the enrolment in flight schools but there are emerging restrictions, which may affect future enrolment.
The decline in the number of military aviators.
1.2 The Current Situation in the Civil Aviation Program
PricewaterhouseCooper’s review of the current situation in the Civil Aviation Program at TC does support the management’s concerns in regards to recruitment and retention of CAIs. According to Aircraft Operator (AO)1 distribution rates (Allocation/Strength), derived from TC TIPS data, the total allocation of staffed AO’s positions for the TC Civil Aviation Program should be at 403 inspectors while total current strength lies at 356.5 inspectors, or at 88.5% of operational levels.2 However, the TIPS data examined and our interviews with staff and management indicate that the level of staffing vacancies is not comparable across all regions and service lines.
For instance, the CBA branch is at 89.5% of operational allocation nationally but when the specific programs within the branch are examined it was discovered that there is significant staffing shortages in the large air carrier program (7th Region) which is only at 78.4% of operational allocation. Correspondingly, when certain regions were cross tabulated with the CBA branch, it was found that the Ontario Region, at 81.8% of allocation, and the National Capital Region (NCR) region, at 80.7% of allocation, were also suffering from significant staffing shortages. In comparison, other service lines, such as aircraft maintenance and manufacturing and regulatory services, both at 100% of allocation, and general aviation, at 94% of allocation, seem to be more successful at retaining their staffing levels at or close to allocation.3 The allocation of staffed CAI positions is characterised by the following trends4:
The Department is compensating for staffing vacancies partially through the use of overtime.
TC’s AO population is a maturing workforce as reflected by age and length of service.
There has been a departure of experienced personnel, perhaps due to individuals reaching retirement age, between 1995 and 1998.
The departure of experienced personnel has affected some of the regions to a greater degree than others.
The external recruitment from April 1995 to April 1998 has not kept pace with departure levels, but there has been a recent increase in new hires.
The Regions have been relatively more successful than the NCR (headquarters) in recruiting candidates to fill CAI vacancies.
1.3 Recruitment, Retention, and Compensation Practices
Aviation employers have responded in a variety of ways to the challenges they face in recruiting and retaining licensed aviation personnel depending on the size of their operation, the segment of the industry in which they operate, and if their operation is a unionized. There are a number of significant and industry wide developments which are noteworthy. These include:
A significant increase in pilot salaries. Between 1995 and 1996 salaries for pilots increased 10.3% according to Statistics Canada’s Civil Aviation Report. According to our survey of compensation practices, firms reported, on average, that they expect a base salary increase of 3% in 1999 for the three benchmarked positions. Finally, a 1998 salary survey for business aviation reported a 6% increase in compensation for pilots between 1997 and 1998.
An increase use of pilot retention programs. The DND, a significant Canadian employer of pilots, has launched a retention allowance program which rewards upwards of $75,000 for experienced pilots. Private sector operators have offered profit sharing schemes, better training opportunities, and performance bonuses.
Benefits programs and the working environment have been reviewed and enhanced. Carriers with unionized shops have decreased the number of hours flown by pilots and typically have benefit packages including uniform allowances, per diems, and discounted travel policies. Often these policies set the standard for other airlines that may or may not have a union.
In comparison, TC has experienced a long-term wage freeze that was introduced by the federal government in the early 1990s for all employees. As a result of the federal wage freeze, the salary gap with the industry has continued to widen, even taking into consideration the fact that TC pays overtime for its licensed aviation personnel which is an uncommon practice in the industry. Moreover, despite a changing business environment in the airline industry and an evolution of the role and the service delivery model of the Department, TC has continued to use the same human resource management practices around recruitment, retention, and compensation that it has relied on in the past. Hence, it has become increasingly difficult for TC to respond to the business cycles of the aviation industry and to manage effectively the dynamics of the evolving labour market for licensed aviation personnel.
More importantly, it should be noted that not all aspects of the Civil Aviation Program are experiencing the same level of difficulty in the recruitment and retention of licensed aviation personnel. However, the Department continues to use a homogenous approach to the management of its human resources across the entire Civil Aviation Program. This approach to human resource management is the foremost example of how the Department distinguishes itself from its industry counterparts and, as a result, puts TC at a competitive disadvantage in recruiting and retaining licensed aviation personnel.
From our review it could be suggested that the service lines which are experiencing difficulties in recruiting and retaining licensed aviation personnel, specifically CBA, are a result of the competitive labour forces which are occurring in the corresponding private sector segments that those service lines regulate.
Typically, the private sector compensation model for employers of licensed aviation personnel reflect the competitive labour forces which confront that employer based on its industry segment and the role of the employee in question. While TC recognizes that the level of technical expertise and complexity of the regulatory environment differs between service lines, and hence requires different classification levels, it does not reflect in its compensation practices the differences in the competitive labour market that cross service lines.
As a result, the Department removes its ability to respond to labour market pressures to the same degree that its private sector counterparts for the areas of the industry where the competitiveness for skilled and experienced individuals that possess the certification and the qualifications required by TC is the strongest. Additionally, due to the narrowness of salary bands between classification levels, there is a perception among inspectors in the Department that the compensation practices of TC are linear and applied homogeneously throughout the Civil Aviation Program regardless of the competitive labour forces at work. This makes it difficult for TC to promote or encourage line staff to move across service lines or to transfer between regions restricting the Department’s ability to best manage and develop its workforce.