Aviation’s gender pay gap

The gender pay gap has been an issue of much public discussion in the last year. The latest figures show that the overall national average for the pay gap between male and female full-time employees stands at 9.1%. However, the aviation sector is one which has seen particularly negative results.

With new rules regarding pay gap reporting in place and the April 2018 reporting deadline looming, this issue will not be going away – rather, it is likely to become more prominent as more results are published. For example, EasyJet’s announcement of its figures in late November generated a number of headlines, many of which summarised the results as ‘EasyJet admits 45% pay gap between women and men’.

What are the new regulations on gender pay gap reporting?

The new rules require the following details to be published by companies with more than 250 employees based in the UK:

(i) The gender pay gap percentage – by both mean and median average hourly pay;
(ii) The mean difference between bonuses over the 12 month period;
(iii) The proportion of men and women who received a bonus in the 12 month period;
(iv) The number of men and women in 4 pay bands (4 equal pay bands depending on pay of all employees); and
(v) A written statement signed by a senior individual confirming that the information is accurate.

Explanatory narratives are optional but recommended, and it will be interesting to see if companies decide to provide justifications for their data. These narratives have so far been used variously to set objectives for change, as well as to explain certain facets of individual reports.

The aviation situation

The aviation industry is one which is frequently in the public eye, due to the consumer-facing nature of its services. As air travel becomes ever more routine, observers feel more personally affected by the sector. This means the issue of the gender pay gap, and how it is being addressed, is one which should be of concern to aviation companies, as media attention and reputational damage are real possibilities.

Unlike other sectors, such as shipping, aviation does not have a history of exclusively or predominantly male workforces – indeed, this is part of the problem. Rather, the issue is that both genders are present, but are typically in specific roles that have particular levels of pay.

For example, while there are more than twice as many female cabin crew members than male, just 86 of EasyJet’s 1493 pilots are female, according to the figures provided by the company and the Financial Times. Just under 90% of those in the top pay quartile are male, while just under 70% of those in the lowest pay quartile are female. These differences have a substantial effect on the gaps reported, given that the pilot salary is almost five times that of a cabin crew member.

Changes and opportunities

While it is difficult to extrapolate from one report – as we note that at the time of writing no other airlines had submitted their report to the UK Government Equalities Office – what the situation in aviation generally might be, it is reasonable to suppose that the gender spread across EasyJet’s roles will be reflected to some extent across other airlines.

In recognition of the effect that the difference in salary between the male-heavy pilot bracket and other employees is having on their statistics, EasyJet are moving to close the pay gap with their Amy Johnson Initiative, which aims to recruit increasing numbers of female pilots annually with a goal of 20% of its new pilots being female by 2020. Targeting pilots in this way will be one of the more efficient ways to improve the pay gap statistics, and might be something for others to consider if similar gaps are identified in other companies.

However, given how long it takes to train pilots and the very particular skills required (and that even hitting a 20% target still means that 80% will be male), gains might be made more quickly in other parts of the business in the meantime. For example, just under 62% of management and administrative staff at EasyJet are male, so that might be an area in which a more even gender split could be achieved in a relatively short period of time for them and for other companies reporting similar gaps. Active involvement with programmes like the International Civil Aviation Organisation Air Transport Gender Equality Programme or the ‘Think, Act, Report’ drive might also assist with the culture changes necessary to motivate progress at all levels of employment, as they work to further narrow the gap.

For companies as much in the public eye as airlines, the new gender pay gap reporting requirements might therefore represent a significant opportunity to demonstrate progress and will to change, despite the risk of negative headlines.

Farewell to 2017, and to the 747: An exciting year in review

What a year it has been! At the start of 2017, Reed Smith had no aviation finance team. We have now established teams in London, New York and Abu Dhabi (and we’re not done yet!). Across the board we have structured and closed a diverse range of transactions for lenders, lessors and operators alike (and we still have one or two to go as we all race for the finishing line that is the Holidays).

Throughout, we have been grateful for the support of our clients who have stood by us during our respective moves, and we are excited to close the book on the first phase of our project as we move into 2018. The new year will see the continued development of our practice and will, we hope, give us the opportunity to form deeper partnerships with our existing clients as well as to establish new partnerships to support additional players in the aviation industry.

Establishing a new practice from scratch is inevitably somewhat turbulent for all involved and this got us thinking about the other turbulence and interruptions experienced on a sectoral basis by the industry this year. With this in mind, it seemed like a good moment for us to pause and take stock of 2017. Continue Reading

An eye on the New Year

As we open our Advent Calendars each December, thoughts inevitably turn to Christmas, the New Year, and to what the next year will bring.

But this year we are also looking 12 months ahead to New Year 2019.

Why? Because January 2019 will see International Accounting Standard (IAS) 17 replaced by International Financial Reporting Standard (IFRS) 16.

Now accounting standards may not be the most festive or exciting of topics, and to many of our readers that may sound like an insignificant change. Indeed the legislators themselves have said that it should cause “only minor changes from the current standards”. However, the general consensus is that in the aviation industry, the effects may be more profound. Continue Reading

Aircraft lessor plans “airline-for-hire” service for its fleet of A380s

What to do if you are an aircraft leasing company struggling to lease your aircraft? For one lessor, Dublin-based Amedeo, the answer is to create its own “virtual airline”.

Amedeo has apparently been struggling to attract new lessees for its fleet of Airbus A380s – it currently has 12 under management and a further 20 on order.

They believe the best way to utilise the company’s assets is now no longer to just lease the aircraft to airlines but to operate them directly under what they believe could be a new model for air transport. Continue Reading

Asian lessors disrupt the worldwide aircraft leasing sector

The airline leasing sector has already had an incredibly busy year with major moves towards consolidation in the form of the purchase of lessor AWAS by DAE in April.

Leasing plays a significant role in the aviation sector as a whole – with leased aircraft estimated to account for 40-45% of new aircraft purchases. Consolidation is not the only factor driving change and shaking up the sector. Major players are increasingly noting competition from new Chinese entrants to the market. Many more have benefited from Chinese investment.

Chinese lessors are making real waves in the sale and leaseback market by the terms they can offer for new aircraft purchases. We know that the Chinese lessors we work with have ambitious plans, not least because of China’s huge domestic market (industry estimates put demand at around 6000 new aircraft over the next two decades).

What opportunities and challenges does this influx of new entrants pose for the aviation industry as a whole? Continue Reading

Airline Economics – Hong Kong

The Reed Smith aviation team have returned to their offices in London, New York and Hong Kong but memories of this year’s Airline Economics “Growth Frontiers” Hong Kong conference are still fresh in the memory (or as fresh as they can be with jet lag!).

Hong Kong’s Grand Hyatt was packed to the rafters with all of the leading industry stakeholders. Many of the key players we spoke to touched on recurring themes that seem to be the focus of the industry’s attention. For those of you who missed out (or who enjoyed the conference too much…) here our some of the Reed Smith team’s key take-away points, scribbled down on the long flight home.

Continue Reading