Providing flexibility for airlines, opportunities for pilots
By
Ken Cubbin
Despite
economic hardships the aviation industry has suffered over the last few years,
Boeing predicts that the future will likely be brighter for airlines. In the next
twenty years, if Boeing’s projections prove correct, the global commercial
airline and freighter fleet will more than double to 37,500 airplanes. By some
estimations this growth will require an additional 416,000 new pilots with a
resultant annual investment in pilot training of approximately $3.5 billion.
Obviously this should provide tremendous opportunities for training
organizations
Also, in the cyclical environment of the airline
industry, many airlines have come to realize that outsourcing services, such as
maintenance and training, can provide the flexibility they need to control
costs and dampen highs and lows. Some carriers, particularly in Asia, have
extended their economic flexibility to include outsourcing aircrew.
IASCO, a leading organization that provides ab
initio pilot training and aircrew leasing services, may be perfectly poised to
reap the benefits of industry trends.
IASCO’s
beginning
Following
World-War-Two there was a huge demand for freight and emigrant movement between
Europe and the Americas. Transocean Airways was founded in 1949 to fill this
need. The fledgling airline operated war-surplus DC-4s with mostly American
crews. Among the pilot ranks were two irascible, but highly professional
pilots: Captains Jack and Smith were to become the principal founders of IASCO.
Around the same time, Japan Airlines (JAL) was in
its embryonic stage of development. Originally JAL operated DC-3s and Martin
404s on Japanese domestic and regional routes, but as the airline entered the 1950s,
it expanded into international operations with DC-6s and DC-7s. But, because of
the war, Japan had a limited pool of Japanese pilots on which to draw. It had,
therefore, been necessary for JAL to hire foreigners virtually from the
beginning of its operation, but as the jet age approached, it was clear that
many more foreign air crew would be needed to facilitate the airline’s
expansion plans. Jack and Smith got wind of JAL’s need and offered to help
recruit and manage as many crewmembers as JAL needed. In 1959, Jack, Smith and
a few other investors formed IASCO[1].
JAL began operation with DC-3s, DC-4s, Martin 404s, DC-6s
and DC-7s. In the 60s, JAL began a rapid international expansion strategy that
brought them into the jet age with the DC-8s.
As JAL
expanded its operation into DC-8s in the 1960s, IASCO was awarded exclusive
contracts to provide foreign aircrews. Even though Jack and Smith had no
blueprint to follow for establishing a flight crew leasing company, they simply
applied good sense and made the rules up as they went along.
So begun a symbiotic relationship between JAL and
IASCO, built on mutual benefit, trust, and respect that has lasted more than
forty years. The blueprint that IASCO developed for leasing aircrews to
airlines was so successful that it has basically become the industry norm
today.
Since its inception, IASCO has evolved into a
sophisticated company that now offers global crew leasing and management,
customized ab initio flight training,
airline management services, and full flight services at its base in
Napa, California. At its peak, IASCO had more than 350 flight crewmembers on
lease to JAL, but, for reasons that will be explained later, this number is
somewhat fewer today.
Filling a need
In 1970,
JAL, now in rapid-expansion mode, was having trouble finding suitable ab initio
pilot training for its Japanese recruits. The islands of Japan lacked both
suitable airspace and facilities for training. Jack and Smith, never ones to
let obstacles deter them, convinced JAL that IASCO could also satisfy its
training needs. Once given the nod, some hurried acquisitions and building of
suitable premises began. In 1971, IASCO’s ab initio training facilities at Napa
were born.
IASCO’s Napa Valley Training facility is unique in the industry because of its
English-as-a-Second-Language program.
The airport at Napa was chosen for its ideal
weather, professional ATC, open airspace, and access to instrument-equipped
airports, such as San Francisco, Oakland, San Jose, Sacramento and Lake Tahoe.
The location was also close to IASCO’s head office in San Francisco. (While the
surrounding wine district never affected the selection process, I am sure that
off-duty students and instructors appreciate its proximity.)
The challenge was to take Japanese university
graduates and train them to meet FAA and JCAB standards. Not an easy task
considering that language, cultural, immigration, and procedural barriers would
have to be bridged. But, once again, IASCO learned and adapted as it went
along; a successful training program was soon established.
In 1986, JAL purchased the assets at Napa from
IASCO, but retained IASCO to provide all the services and staffing. IASCO
trains students on advanced simulators, Bonanza A-36s, and King Air C-90s,
while JAL provides several Japanese captains to help students with any
cross-cultural problems they may encounter. The flight instructors for IASCO
are career instructor-pilots with an average of 15 years tenure. As a
consequence, the stability and professionalism of IASCO’s training are second
to none. In fact, over the course of over 450, 000 flight training hours, there
has never been a major incident or accident at IASCO’s Napa facility. Apart
from the 2,000 JAL pilots IASCO has trained at Napa, IASCO has also trained
pilots for over 50 international air carriers, as well as major U.S.
corporations, such as the FAA and U.S. Forest Service.
IASCO stands apart from other ab initio training
organizations inasmuch as it has years of experience with training
English-as-a-second-language (ESL) students. This niche market is also catered
to by IASCO’s ability to train to international regulatory authority standards
and also to provide students with culturally adapted housing and food. There is
recognition that live-in Asian students are a long way from home, and that if
they feel more comfortable they will learn faster. This customized flight training and support are unique in the
industry.
According to Jerry Huss, Senior Director for Flight
Services, IASCO is well aware of the projected number of new pilots that will
need to be trained in the next twenty years. As a result, Huss says that IASCO
hopes to capture a share of the ab initio pilot training market, focusing on
Asian, European, and Middle Eastern carriers.
Crews for hire
Over its
years of operation, IASCO has provided aircrews and/or instructors to 50
international companies. Motivation for airlines to hire contract pilots may
evolve from any of the following reasons: outsourcing, testing new routes,
fulfilling seasonal requirements, integrating new aircraft types, start-up
operations, rapid response to shifting market demands, ferry flights, and
replacing crew members during training or transition. Whether the need is for
short-term, or long-term, IASCO has top quality crews ready to fill the need.
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Currently, IASCO has a pool of over 5,000 pilots and
flight engineers in its database. The company thoroughly screens applicants
before offering candidates to clients in a process that includes several
interviews, background check, and proficiency testing. The client will usually
dictate what type of simulator will be used for assessing proficiency. Final
interview, physical examinations, and acceptance are determined by clients. If
a crewmember is offered a contract he or she will sometimes undergo rigorous
training in the client’s home base. For example, crewmembers who accept
contracts for JAL or JALways are trained in Tokyo, Japan. Although training can
take up to six months, for these contracts, crew members are housed in a
luxurious hotel, receive generous per diem allowances, and are allocated one or
two round-trip tickets to their home of record during breaks in training.
IASCO offers its clients full-service management of
its leased aircrews. This makes it easier for both airline clients and contract
crewmembers. By IASCO taking responsibility for crewmember relocation, payroll,
benefits, travel, human relations, and other administrative issues, cultural
problems that might otherwise arise are all but eliminated. Airline clients are
then able to concentrate on operational issues, such as schedule.
IASCO has been supplying crews to JAL for over 40 years. However, since the mid-90s IASCO’s once exclusive supplier status has been diluted as JAL engaged new crew leasing companies. Still, IASCO has the most crews leased to JAL and JALways.
Customers
IASCO has provided aircrews for companies in Europe,
including Italy, Germany, the Netherlands, and Sweden. In Asia, clients have
included carriers from Japan, Taiwan, the Philippines, Indonesia and Korea.
Other regional clients from Central and South America, the Middle East, the
Caribbean and North Africa have also had crews supplied by IASCO.
Labor union opposition to the augmentation of
aircrew by companies, such as IASCO, has grown over the years, particularly in
the U.S. and Europe. This remains a big barrier for airlines wanting to
outsource or augment their pilot ranks, and, of course, is a hindrance to
companies like IASCO. However, in countries where more autocratic governments
preside – Asia, Africa, Central and South America, and the Middle East for
example – airlines have more economic freedom to take whatever actions they
need in order to enhance their competitiveness. Huss says IASCO is constantly
campaigning for new clients and is well equipped to handle small or large
contracts when they come along.
Other services
IASCO
has used its expertise in managing airlines and crews to help startup
operations. For example, in 1979, IASCO helped Emery Air Freight become established.
As the freight industry grew IASCO also helped Consolidated Air Freight get
into the business. The company is able to provide airlines assistance with
every facet of business needs, including flight operations, maintenance, record
keeping, cost reduction, and so forth.
In the middle of 2001, IASCO leveraged its
facilities at Napa and formed IASCO Flight Services to serve the general flying
public. Services include charter, aviation fuel, maintenance, weather
information, pilot lounge and Internet access. While this facet of IASCO’s
operation is relatively new, Huss says that he expects business to grow
substantially in the future.
Fragility of
East-West relations
All
successful companies exhibit similar qualities: service quality, product
excellence, stability, and customer satisfaction. Companies that not only
concentrate on fulfilling their clients’ needs, but also make sure their
employees are happy, are the most successful over the long term. But, when dealing with Asian cultures,
successful business dealings often depend on deep-rooted relationships between
top management. For example, it is not uncommon in Japan for companies to do
business with each without a written contract. Historically, mutual respect,
honor, tradition, and protocol meant that written contracts were superfluous,
in some respects an insult to the participants’ integrity.
While there were
written contracts for the foreign crews IASCO provided JAL, Jack and Smith had
special relationships with certain senior managers at JAL that enabled IASCO to
maintain exclusive rights to supply foreign crew to the airline. However,
following JAL’s privatization in 1987, the managers with whom these
relationships were based began to retire. The years following privatization
were somewhat difficult for JAL as it adapted to a truly competitive
environment. As younger, more market-savvy, managers rose to power severe cost
reduction campaigns were initiated. IASCO’s exclusive right to provide crews
was coming to an end
Because of restrictions in Japanese airports at
Narita and Osaka, JAL considered it viable to establish a subsidiary, charter
airline that would use regional Japanese airports to serve the lucrative
Oceanic vacation market. As a result, in 1990, Japan Air Charter (JAZ) was
formed. To contain costs, JAZ would be operated by all foreign aircrew based in
Honolulu, Hawaii. JAL also reorganized and formed JAL Group. As the date of
approval for JAZ to begin operations approached, there was a large, almost
urgent need for foreign crewmembers.
Whether JAL considered it too great a task for one
company to provide such a large number of crewmembers, or whether new-age
managers were seeking to expand their resource suppliers, is debatable.
However, the decision was announced that JAZ would split the contracts for new
crewmembers between Hawaiian Aviation Contract Services (HACS) – a newly
established company – and IASCO. Unfortunately, this was only the first
indication of how radical the management change at JAL had become.
Because it would take time to train new crewmembers,
JAL really needed to transfer some existing contract crewmembers from other
bases. However, instead of asking for volunteers to transfer, JAL advised IASCO
that the Anchorage base was over-manned and would be cut by half. While IASCO
managers anticipated JAL would be offering new contracts in Honolulu, this
option was not part of JAL’s initial
announcement. Anchorage-based crewmembers, many of whom had just moved their
families to the base, literally reeled at the news that half of them would soon
have their contracts terminated.
Several resigned on the spot while others weighed
their options. Within several weeks, JAL did offer IASCO new contracts for the
newly established Honolulu base, but
for lower remuneration. IASCO went in
to bat for their crews. To IASCO’s credit, they were eventually able to
negotiate with JAL to increase the remuneration package and offer relocation
assistance. As a result of IASCO’s efforts, enough crews voluntarily relocated
to Honolulu to fulfill JAL’s immediate needs. Unbelievably, JAL repeated the
above procedure a year later for the Los Angeles base. In 1997, JAZ was renamed
JALways.
JALways 747-200 with the word Reso’cho emblazoned on its side.
This word, roughly translated,
refers to the feeling that the passenger’s vacation begins as soon as they step
on the airplane.
After these two events, JAL lost the trust of many
foreign crewmembers, and some resigned and went to major U.S. carriers in the
boom of the late 90s. However, throughout the whole ordeal, IASCO proved itself
an ardent defender of its crews’ interests. As a consequence of the proven
impermanence of basing, many crewmembers now commute to Honolulu from the
mainland. While getting back and forth can be difficult in peak travel seasons,
JALway’s schedulers will build commuting schedules that usually require just
one pattern per month, albeit a long one. Currently, JALways operates scheduled
services between Japan, Honolulu, Bangkok and Guam. In the future, more Oceanic
and South East Asian routes will be added.
While IASCO still enjoys strong ties with JAL, its
one-time exclusive supplier status has eroded substantially. Currently
contracts for foreign crews are split between IASCO, HACS, Parc Aviation, Air
Lease Asia, and more recently, World Aviation Systems, Inc. (WASinc). But,
because of its competence, experience, and reliability, IASCO still maintains
exclusive contracts for ab initio training of JAL’s recruits.
In the highly competitive airline industry, Huss
says that IASCO intends to increase its client base for both aircrew leasing
and ab initio training by aggressively marketing its services.
What the
future holds
JAL Group now includes Japan Airlines System,
JALways, Japan Asia Airways, Japan Transocean Air, Jal Express, J-Air, along
with numerous airline industry support businesses, and hotels. However, with
the loss of exclusivity with JAL has come IASCO’s realization that it needs to
expand its list of customers and fields of expertise. The company markets
itself via a web site (www.iasco.com), advertising in aviation magazines,
brochures, virtual-tour CD’s, and PowerPoint presentations. Marketing
representatives regularly attend seminars and other major industry events.
Global passenger growth is predicted to average 5%
per year from 2000 to 2019, with the Asia-Pacific, Middle East and Latin
American regions outpacing growth in Africa, Europe and North America.
In particular, China is seen as a high growth
market. As IASCO has provided crews for China-based airlines in the past, it
hopes to be able to leverage this experience to attract more regional clients.
However, the Middle East might also provide new opportunities. While Huss did
not remark on any market specifically, I would be surprised if IASCO is not
intending to take advantage of the tremendous growth in the Middle East.
For example, Qatar Airways recently reported its
intention to purchase 32 Airbus aircraft. At the 2003 Paris Air show, Emirates
also announced an additional $19 billion order for Airbus aircraft. Emirates,
which has ordered a staggering forty-five A380s, expects to be carrying 29
million people and 1.5 million tons of cargo per year by 2010. So, evidently from
this region alone, there will be a high demand for new pilots and/or contract
aircrew. Obviously after 9/11 it has become difficult for people of Middle
Eastern descent to obtain visas for pilot training, however, if any
organization can overcome immigration hurdles, IASCO will.
IASCO is also aware of other industries where
outsourcing of professional labor is a growing trend. For example, there is
rapid expansion of fields where the need for fast relocation of personnel has
evolved. Information technology, medical practitioners, engineering,
telecommunications, and financial services, to name a few. Huss says that IASCO
is carefully considering just how it might leverage its core competencies into
one or more of these fields.
If you are interested in contacting IASCO you can do
so via its web site or by calling (650) 593 8100. I can personally recommend
the company, as I have been a contract crewmember with IASCO for the last 14
years. IASCO is still a family-owned entity and is small enough for managers to
care about each and every employee. The next twenty years will be an exciting
time in the industry, full of change and opportunities. As many recently
furloughed pilots have discovered, having a job at one of the majors can no
longer be considered a lifelong career. Luckily there are always contract jobs
available in various parts of the world. Perhaps you should consider broadening
your horizons.
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