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The Logjune/july 2010

Why cadets are getting an unfair deal with their training costs

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How much do you love being a pilot? In these hard times you may have mixed feelings about your

response but, chances are, despite the current economic climate and changes to the profession, you still love to fly. But do you love it enough to pay in excess of £65,000 for the privilege? Ask yourself, honestly, if you had to fork out that kind of money for your training – and with no guarantee of a job at the end of it – would you still be a pilot?

This is the question that any young man or woman wanting to become a pilot today needs to ask themselves. As while you probably came into commercial aviation via the military or a sponsored scheme, the majority of young pilots will have paid for the privilege of sitting in the right-hand seat, via an integrated course with an

academy. Cheaper modular courses are still available, which can be done alongside another job, but as the majority of cadets are straight from school, or college, this isn’t always an option. Plus, it’s the integrated courses that the various academies really push.

The cost of a dream“I went through the long-defunct BA selection scheme at the College of Air Training in Hamble,” says one captain with Monarch. “All I paid for were accommodation and subsistence costs, so there was no question of having to take out loans. It was a gruelling two-

Taxing timesyear intensive course, culminating in a ‘frozen ATPL’, so if I’d had to pay I would probably have given up.”

However, according to Will Swinburn, who qualified in 2006, the high cost of training doesn’t put many cadets off, as they’re “not thinking about the immediate financial gain, but just want to do the job of their dreams.” To pay for his training Will’s father took out a £25,000 loan to be used as deposit for a further £50,000, which his father guaranteed against the equity in his home. At the end of his training, Will needed to find another £25,000 to fund his type-rating, so he estimates his total costs in the region of £100,000. Will is currently paying off his colossal loan at the rate of £1,500 a month over the next 11 years.

Surprisingly, it’s not the debt that really bothers Will, but the lack of useful

information available to those wanting to become a pilot. “If you tell a careers advisor that you want to be a pilot, they just laugh – it’s like saying you want to be a pop star,” he says. “You can’t get advice from anywhere, so you have these uninformed 18-year-olds visiting training schools, and the first people they speak to are sales people selling £60K courses, with no independent advice, which really wound me up.”

In his frustration he set up FL500 (www.fl500.com), with the aim of promoting piloting and making more people aware of the route to joining the profession. As such, for a fee of £10

a month, students are provided with a mentor, in the guise of an operational first officer, who will offer advice on training, finances and the job itself. They also receive a membership card, similar to a student card, which entitles them to discounts, as trainee pilots currently don’t have any student status.

Information gapSomeone else frustrated by the current system and lack of information, is Jane Desforges, whose son, Ollie, was offered a place on a part-sponsored scheme with Flybe. This meant that Jane and her husband would have to pay for Ollie’s

“You have these uninformed 18-year-olds visiting training schools, and the first people they speak to are sales people selling £60K courses.Will Swinburn, FL500

With student debt among pilots at an all-time high, isn’t it time the Government stepped in to ease the

strain? Charlotte Ricca-Smith investigates.

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training crisis

training at Flight Training Europe (FTE) but, on completion, Flybe would keep him on and pay for his jet orientation course, plus upset training. Jane had just six weeks to find around £65,000 and it was only then she discovered that without student recognition, cadets aren’t eligible for any financial support from the Government – indeed, they can’t even open a student account with a bank.

The bank of mum and dad“At the time, in my naivety, I just assumed that student status was given to pilots,” says Jane. “We had six weeks

to find the money for Ollie’s training, so I started looking at Government websites but nobody would tell me directly that we would get no help. I only found out when I called BALPA.”

In order to fund her son’s dream, Jane and her husband took out a second mortgage; however, during Ollie’s training the recession hit and the euro went up against the pound, which meant she was £15,000 short for the remainder of the course. Rather than pull Ollie out, her retired parents “dipped into their pension fund”. The economic crisis affected Jane’s family in more ways than one, as she runs an estate agency

and, as sales dramatically slowed, her husband had to work a seven-day week to fund the extra mortgage.

An unequal playing field“We aren’t a wealthy family but I have no regrets about what we did, it was entirely my choice and I am not complaining about that,” Jane states. “However, it made me realise that we were lucky to have enough equity in our property to do that – what about other student pilots from less fortunate families or even families that don’t own property? They’re being eliminated from the profession on money alone.”

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For these potential pilots there are few options available. According to Roger Davies, Director of BALPA Financial Solutions, it was possible in the past to get a career development loan from the likes of HSBC and Santander, but with the credit crunch things have got much tighter. “For unsecured loans it’s just a case of having to shop around with the banks to find what’s best,” he says.

Many training schools have arrangements in place with banks to secure loans for their students, such as Oxford Aviation Academy (OAA) which can offer a loan scheme with BBVA – one of the largest banking and financial services providers in the world. However, the very first stipulation on its list of requirements is ‘guarantee required’. “This presupposes that the individual has a property, or parents that can afford to help and are benevolent enough to want to help,” says Charles Henry, Chairman of Cabair.

It was the “unfairness” of the system that led Jane to set up Fairplane (www.fairplane.org.uk), a campaign that aims to ensure access for everyone to loans or funding that will enable them to follow their chosen path. Furthermore, she wants to highlight the inequalities for student pilots – particularly the fact that on top of their inordinate training costs, they are charged VAT. To help her tackle these issues Jane has formed a committee comprised of Carolyn Evans (BALPA), Jeremy Diack (Flight Training News), David Laws MP, Lembit Opik (former MP), Charles Henry (Cabair), Paul Cooper (Oxford Aviation), Will Bruton (who works for Lembit Opik) and Will Swindon (FL500).

Together they are targeting Westminster and to date have gained the attention, and support, of many people. It’s because of Fairplane that the airline industry now has a representative from The Guild of Air Pilots and Air Navigators (GAPAN) on the forum for the social mobility movement, as set up by fomer MP Alan Milburn. Bad time for a tax breakWhile David Laws has recently resigned as the new Chief Secretary to the Treasury he continues to work as Jane’s local MP in Yeovil. Prior to his appointment Laws was very supportive of the campaign, but in light of the £6bn cuts still to be made by the Government, now is probably not a good time to ask for tax breaks. However, Jane remains optimistic: “I’ve written to him requesting another meeting and hoping he will still be as keen to help, but we shall have to see when I get his reply.”

According to Charles from Cabair, tax on training all stems from the UK’s interpretation of the European Union VAT system. “If you look across the EU, many countries aren’t charging VAT on professional training.” It is for this reason that so many integrated training schools have moved offshore – as by doing so cadets save in excess of £11,000. FTE where Ollie trained is based in Spain, and if he’d had to find the extra 17.5 per cent, he may never have been able to

complete his course. Similarly Oxford Aviation offers training in Arizona, while Cabair takes its cadets to Florida. So while the Government is making money by charging cadets VAT in the UK, they are losing far more to those academies that move abroad.

This anomaly has been recognised by the Environment, Transport and Regional Affairs Committee, which has written a report, where it states: “We believe that all pilots should be given

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incentives to undergo training and, accordingly, recommend that VAT should not be charged for appropriate training courses.” In response, the Government explains that, “pilot training supplied in the UK is liable to VAT at the standard rate because it is provided by fully commercial, profit-making concerns. This does not provide problems for companies sending their pilots on courses as they can reclaim the tax charged as it relates to their business activity”.

What this fails to recognise, however, is the fact that there are virtually no companies paying for student training, and as very few cadets are VAT registered they can’t claim back the VAT themselves. The report does go on to state that “one or two instances have been brought to Customs and Excise’s attention that involve individuals undertaking pilot training who are not registered for VAT, so they have to bear the tax for the industry”. One or two? Exactly what country – never mind planet – do they live on? What’s even more worrying is that the responses given to the report come from the Government in conjunction with the Civil Aviation Authority (CAA).

Surely they understand how aviation academies operate?

Taxing timesAccording to Charles from Cabair, it is “within the gift of government” to reduce – or abolish – VAT on pilot training. Universities are zero-rated, and while this is what Jane ultimately hopes for, Charles says that in the current economic and political climate, he’d be happy with a concession, such as five per

cent. “Right now the Government has so much on its plate, that what it perceives as a minor matter, isn’t top of its list,” he says. “But to us it’s desperately important as a principle and we will continue to push it politically.”

There are a number of universities, such as Kingston, London Metropolitan and Salford, offering combined training, which provides graduates with their ATPL and also a bachelor’s degree. At first glance, these courses look like a real step forward for aviation, as they give cadets student status and also allow them access to loans for tuition fees and living expenses. However, the degree syllabus written by Kingston University costs £3,290, and this is in addition to the fees with the associated flight school.

A better training solution “To get the degree the student still needs to do the same flight training,” explains Jane. “So these students are putting even more money and effort into becoming a pilot because they think the extra qualification will give them the edge in the job market. Besides, a grant for £3,500 is hardly going to make much difference against fees in excess of £60,000, and it certainly won’t

achieve the aim of my campaign which is to enable students from any financial background to become a pilot if they have the aptitude for it.”

It is this elitism that is the real concern, and with the Government constantly talking about social mobility, isn’t it time that ministers put their money where their mouth is? Until they do, many talented, but financially disadvantaged young people will be unable to follow their true vocation. Jane’s son, Ollie, says that his career would never have been possible without the help of his parents – and realises how lucky he is to now have a job with Flybe. “Would I have been able to pay for my training without them? God no!” he exclaims. “It’s indescribable how much I owe to my parents, but not just in terms of money, they’ve given me so much emotional support.”

A lack of students able to pay their way, isn’t just a matter of social inequality, it could become a national concern, as the pool of potential pilots shrinks down to those with money. According to Marsha Bell, Vice President

of Boeing Training and Flight Services, airlines will need more than 17,000 pilots each year for the next 20 years to support fleet growth and retirement, which the current training model cannot provide.

“The world needs a better training solution for those pilots,” she says. David Learmont, Operations and Safety Editor of Flight International, agrees that a skills shortage will soon have to be faced by airlines. “There is a case for saying governments cannot afford to ignore it any more than the carriers can,” he adds.

Investing in the futureFlybe is one of the few airlines aware of this threat and the airline is working with the Office of Qualifications and Examinations Regulation (Ofqual) and GoSkills, the Sector Skills Council (SSC) for passenger transport, as well as a number of colleges and universities to create vocational courses that cover a whole range of occupational skills within commercial aviation. In doing so the airline hopes to attract vocational skills training subsidies, whether via college funding or tax breaks. It has already achieved this with cabin crew training and trainee maintenance engineers, and it now hopes to do the same for pilots. As such, Flybe is setting up its own academy and developing a multi pilot Llicence (MPL) programme, which will allow the airline to integrate all of its training on one site for the first time.

Under this system cadets receive airline-subsidised training, a type-rating for the Bombardier Q400, base training, line training and line acceptance checks. “The combination of a £20, 000 direct investment in the MPL course by the airline, plus direct progression to line flying, makes the airline rare,” says David.

Until more airlines are prepared to invest in the future of their pilots, students – and their families – will be continue to subsidise the industry. And all the time the Government refuses to acknowledge this fact, it is only those willing to put their homes on the line that will be able to pursue a career as a commercial pilot.

“There are virtually no companies paying for student training, and as very few cadets are VAT registered they can’t claim back the VAT themselves.

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You can contact Jane Desforges or sign up your support, via the Fairplane website at: www.fairplane.org.uk.

Jane Desforges and Lembit Opik outside Westminster.