Mesa Air's pilot program can 'break the pipeline' clogged by new legislation: CEO

Mesa Air Group Chairman and CEO Jonathan Ornstein joins Yahoo Finance Live to discuss the ongoing pilot shortage and how his airline's pilot program may be able to provide a solution.

Video Transcript

SEANA SMITH: The pilot shortage has taken its toll on the airline industry with carriers canceling thousands of flights because they simply don't have the staff. But regional airline Mesa Air says it has a solution to this problem. We want to bring in Jonathan Ornstein, Mesa Air Group's chairman and CEO. Jonathan, it's great to see you. So you're rolling out a new program that you say could help solve the pilot shortage. Give us the details on it.

JONATHAN ORNSTEIN: Yeah, I mean, basically, this shortage has been created over the last five years with new government regulation requiring pilots to get six times more hours than they needed to prior to the legislation, and also, legislation that's been filed nowhere else in the world, frankly. And we just had to get young aviators the opportunity to get those hours.

And so what we've done is we just made an order for up to 104 smaller, light training aircraft, where we're effectively going to give people the opportunity to fly those aircraft, finance it completely. They don't pay us any money until they come to work. And the basic price, $25 an hour, is about literally 1/6 of what it would cost them to do it on their own. So it's just a terrific opportunity for new aspiring aviators to get into commercial aviation, which has now never been more lucrative.

And I just think that this is a way to break the pipeline that's been just clogged up by this new legislation. There are 25,000 or more folks out there who want to fly in commercial aviation, but just cannot build the time quickly enough.

RACHELLE AKUFFO: And you talked about that buildup. And now it used to be 250. Now it's 1,500 hours of flight time required to get this commercial license. So then, as pilots go sort of through this program then with these loans, how soon after they complete their flight training are they eligible to perhaps start flying for some of these commercial airlines?

JONATHAN ORNSTEIN: Oh, immediately. Once they get to 1,500 hours, there's certainly plenty of jobs out there right now. We would intend to hire all the folks that come through the program. And with starting wages at Mesa being $100 an hour, I mean, these people coming into the industry now make probably close to $100,000 a year in their first year coming to work at Mesa. So we think it's a great opportunity to do a good thing.

Right now, 60% of all departures in America are made on regional aircraft. And I think they [AUDIO OUT] really knowledgeable in the industry who are looking at it and saying, we're talking about the evaporation of regional industry if we don't do something quickly. And I think the impact on the traveling public could be very, very significant if you saw the loss of service into all the small cities and the regional cities that we currently operate in.

DAVE BRIGGS: Jonathan, the FAA rejected the airline's request to lower that requirement from 1,500 hours. What's your opinion of that ruling? And what's your message to the FAA?

JONATHAN ORNSTEIN: Well, you know, I have a lot of respect for the FAA. They've done an incredible job. I mean, the US transportation system, aviation is the safest system in the history of the world in terms of going from point to point. But that being said, I mean, this is an example of, just, I don't think the regulation was thought through. They gave their opinion without any citing any evidence whatsoever. They had no backup for their claims.

And I just think they should be basing their decisions on science and reality, and not on emotion and soundbites. And that's really what's happened here. And I think the ultimate loser, again, is the consumer. I mean, airline prices are up almost 35% year over year. Service in 70% of all cities has declined year over year. And believe me, this is all due to the fact that we just don't have enough people to fly aircraft.

SEANA SMITH: Jonathan, you mentioned this, the increases in pay that have had to be made in order to get pilots on board, pilots just out of school certainly making close to $100,000. Do you see maybe the potential to raise pay even more in the future?

JONATHAN ORNSTEIN: I mean, there's always that potential. I think part of the reason why the pay was raised is not that we couldn't get people to join Mesa Airlines or any of the other regional. It's that we wanted to retain people longer than we had because other carriers were also facing a shortage. A lot of those carriers are some of the national carriers that are flying bigger aircraft, and as a result, can pay more.

So we raise the pay to at least match, and in many cases, exceed that pay with the idea that we would retain people. And we have a very innovative program with United, where our pilots can come to work at Mesa. They work for us for a few years, and then are able to transition to United. And now, with the pay being what it is at Mesa, there is absolutely no reason for them to leave to go to a national carrier as an independent step. So it's as much about retention as it is about attracting and new candidates.

RACHELLE AKUFFO: So, Jonathan, I want to ask you first, what the response has been like from pilots now that you have this program in place, and also expansion plans, the potential, perhaps, for Europe, other regions that are also suffering with pilot shortages.

JONATHAN ORNSTEIN: Well, firstly, the response that we've gotten from the program has been outstanding. I mean, every day, we've seen an increase in the number of people who have applied. Yesterday, it was close to 70 in one day applied to the program. I mean, so we're literally talking about what could be potentially thousands of people a month at this rate.

And as I said, the numbers keep going up because pilots are-- they're good with math and they're smart. And they recognize the value this creates for them. So I think that we're going to get a huge response. And I think we're going to need all hundreds of those aircraft. And I hope, frankly, that other carriers do the same because if we work together in this respect, we could potentially solve the shortage.

I think in other areas, we've actually applied for a ALC, an operating certificate in Malta to fly in Europe. A lot of that is based around our electric future. Europe, I think, will probably happen a little bit faster. Mesa's made a number of investments in electric aircraft. I think that the difference, too, is in Europe, you don't have a shortage because you don't have these same regulations.

I mean, it's kind of incredible that a big wide-body aircraft flown by Air France or Lufthansa or KLM can fly into JFK with a pilot who has 400 hours, and yet, an American pilot is not deemed as capable somehow or is experienced to fly a regional jet into Des Moines. It just seems really astounding that the FAA could draw that kind of conclusion. But that's why we're looking around the world, where there isn't pilot shortages, to expand our business.

RACHELLE AKUFFO: Certainly an interesting move, indeed. We do thank you for joining us this afternoon. Jonathan Ornstein from Mesa Airlines, thank you so much.