India's cockpit crisis

(Fortune Magazine) -- India's fast-growing airline industry is plagued by decaying infrastructure, frequent delays, and financial losses. Now add one more problem: a pilot shortage.

The industry's dozen or so carriers, many less than five years old, are scouring the globe in search of qualified captains and are struggling to train Indian pilots. "Ever since the hiring boom here, students are running wherever they can to get qualified," says John Ekl, chief pilot of SpiceJet, a two-year-old carrier patterned after Southwest Airlines (Charts, Fortune 500), the U.S. no-frills company where Ekl used to work.

SpiceJet has 15 jets and 50 more on order, and Ekl has turned to recruiting foreign pilots to fill their cockpits. He has hired 42 already, 30 of them American, and expects to add 30 more this year.

Going abroad to find pilots is a relatively new phenomenon. When the scramble began two years ago, airlines would just poach each other's staff. Pilots would land their planes, taxi to the gate, and walk down the tarmac to begin a new job at a better-paying airline, leaving passengers stranded and airline managers in a panic. The practice continued until the beginning of this year, when major Indian carriers agreed to a no-poaching pact.

Experienced captains can make between $120,000 and $156,000 a year with overtime, five times what they took home ten years ago, when Indian pilots were among the worst paid in the world. And the demand isn't expected to slow anytime soon. Indian carriers have 425 aircraft on order and by 2020 will need an estimated 10,000 pilots, says Kapil Kaul, a consultant in New Delhi with the Centre for Asia Pacific Aviation. There are now about 3,000 pilots in India, 600 of them foreigners.

The pilot shortage isn't unique to India. Japan, the U.S., and the Middle East are all facing similar challenges. But in India the shortage is symptomatic of a broader problem threatening to undermine its flourishing economy: a weak talent pool. As attrition rates double and triple and salaries balloon, many companies are forced to import talent.

Kanu Gohain, director general of the government's civil aviation regulatory agency, blames the airlines for the shortage, saying they have "not made a serious effort to induct and train [pilots]." Foreign pilots are allowed to fly in India for only one year, usually extended at Gohain's discretion to three. "They have to justify it to me," he says, based on their efforts to train Indian pilots. He expects the influx of foreign pilots to last "maximum another two years." But airline executives and analysts are skeptical of that projection.

"Finding pilots is the biggest challenge for airlines in India," says Rubi Arya, head of human resources at Kingfisher Airlines. She's lobbying to increase the time foreign pilots can stay in India to six years and to reduce the time it takes for an Indian national to convert a foreign license to an Indian one, which can be more than six months.

Several Indian airlines are sending promising cadets to training courses in the U.S. One of them, Kingfisher, has linked with flight schools in California and Arizona to offer a nine-month training course for $45,000. Those who graduate and pass the medical and written tests will be hired by Kingfisher and refunded about $12,400. The first batch of 70 will graduate in February.

Other carriers have similar programs. But most experts say another four or five years will pass before the large percentage of foreign pilots can be trimmed and Indian captains are able to take over. In the meantime, SpiceJet's Ekl tells his fellow expat pilots, "Enjoy it while it lasts."