Show Them the Money

The pilot and maintenance tech shortages come down mostly to money – pay, bonuses, benefits, and especially the cost of initial training. Group Editor Marty Kauchak highlights some expanding financial mechanisms for future right-seaters.

One of the “lighting rod” topics in commercial aviation remains the financing of training aspiring pilots – and with good reasons. We continually hear first-hand and anecdotal accounts of how the high cost of gaining a degree, license and other professional credentials has deterred interested, capable individuals from pursuing flying careers, acerbating the shortage of well-qualified aircrew. For those who do get through the pipeline, newly minted first officers and even more senior pilots often cite the burden of dealing with debilitating student loan debt.

The challenges of improving the financing of pilot accession programs are finally gaining significant enough resonance that airlines, training organizations, financial partners and other aviation stakeholders are unveiling innovative funding mechanisms at a quickening pace to be more responsive to students’ financial needs. At the same time, there are incremental, early efforts by the US Congress to have a more active government role in addressing this challenge.

Repay What You Can

Flex Air is using Income Share Agreements (ISAs), which Paul Wynns, the company’s CEO and President, offered “are a powerful tool that will close the air transport pilot gap.” Wynns pointed out ISAs are a proven and highly successful alternative to traditional student loans, already in use throughout higher education and at many vocational schools. “The power of an ISA is that it aligns great student outcomes with good financial outcomes for the school. If the student succeeds, the school succeeds.”

Wynns explained that Flex Air asks for a US$5,000 deposit to start training under its Via Careers program, where students are financed by ISAs. “That deposit is waived for students already possessing a private pilot license (PPL) and is fully creditable to training costs. The $5,000 deposit is the only up-front cost under the program. There are no credit score or co-signer requirements for Via Careers, a competitive program with an airline-style screening, interview, and selection process.” Wynns added, “We’re preparing to screen our first round of applicants,” and when CAT spoke with him Flex Air was taking applications for future class dates in 2020. Interested candidates are encouraged to contact the training organization at www.goflexair.com/Via.

With Flex Air’s Via Careers program, ISA payments are capped at a specified ceiling. Monthly payments scale up only if the pilot’s income increases and are waived if the pilot’s income fails to cross a minimum threshold amount. “The ISA contract has a fixed duration, after which it expires, regardless of the amount repaid. These features more equitably balance risk between the student and the school,” Wynns said. He added, “We see ISAs as an investment in our pilots at a time of unprecedented job opportunity. At Flex Air, we believe that pilots are the most important resource in the air.”

Since Flex Air’s announcement in October regarding its use of ISAs, the company has “received a steady inflow of approximately three to five calls or online inquiries per day,” according to Wynns.

Also in October, the Flight School Association of North America (FSANA) unveiled the Skybound Program by FMS Bank of Colorado. The program is specifically designed to work directly with qualified flight training providers to offer training financing for their customers. “A program that is not focused just on a traditional collateral loan to an individual, this program offers business lead loans that are secured by a percentage down payment and non-collateral based loans directly usable for flight training,” the association noted. Skybound “offers longer repayment terms to help these pilots become successful in meeting their payment obligations in the early years of their career.”

Winning Your Wings

Scholarships and like-assistance remain tried-and-true, and highly sought-after, student aid vehicles.

ACS Aviation is offering two scholarships in 2020. Craig McDonald, Director of the Perth Airport, Scotland-based training entity, noted that as of October, an attention-getting 110 candidates had applied for the scholarships. “The scholarships are supported by Bose Aviation. The expected savings will be over £3,200 [US$4,149] per student,” he explained.

Further, the training organization offers structured, interest-free payment plans to its Fast Track ATPL cadets. McDonald remarked, “This is a significant advantage over competitor schools as our customers avoid paying the full training costs upfront and additionally, do not require finance from the bank to commence their flight training.”

Airways Aviation in September launched a new scholarship program at its Airline Pilot Careers Day, London Oxford Airport, UK, as part of the company’s drive to encourage more students to consider a career as a pilot. Romy Hawatt, Founder and Owner of Airways Aviation, told CAT, three Airways Aviation “European Pilot Training Scholarships will be available towards the EASA fATPL [full time] Integrated course only (regular tuition fees: £89,980).” The value of the three scholarships is £15,000, £10,000 and £5000, respectively, representing an investment of £30,000 by the training organization.

The last day for scholarship applications for this program is 1 February, with assessment taking place before 8 February. Hawatt added, “The scholarship is valid until January 2021.”

More Assertive Government Role?

Beyond these private sector efforts, governments are incrementally expanding their interest or role in student financing programs.

Samuel Graves Jr., US House of Representatives Ranking Member, House Committee on Transportation and Infrastructure, pointed out air carriers and other organizations are at the forefront of meeting the demand for pilots. “It’s so important that US airlines attract and retain qualified and well-trained pilots – these folks help form the backbone of our aviation system. Airlines understand this growing need and already offer incentives to attract new pilots, including signing and retention bonuses, tuition assistance or reimbursement, student loan programs, and programs that allow those still pursuing their ATP to become airline employees and receive benefits like health insurance, retirement, and profit-sharing programs.”

Further, the Congressman reminded CAT there are also training partnership programs with colleges and flight schools that offer direct paths to flying for legacy carriers, and flow-through agreements that offer a path from regional carriers to legacy carriers.

Beyond these, is there an opportunity for a more assertive government role in offsetting the expense of training aspiring aviators? Representative Graves responded, “The federal government provides some assistance to students and veterans, but there are certain limits to the availability of this assistance for pilot education and training. In general, I do support greater access to federal assistance for aspiring pilots.”

To help make greater access to federal assistance a reality, the congressional leader noted the House Committee on Transportation and Infrastructure was responsible for developing and passing last year’s FAA Reauthorization Act of 2018, and pointed out “that law includes a workforce grant program I pushed for to provide grants for eligible projects to support the education of future pilots and the development of the pilot workforce. I am closely monitoring the Department of Transportation’s implementation of this bipartisan program now that it’s in law.”

Further, the FAA Reauthorization Act of 2018 includes provisions that direct the entire aviation stakeholder community – government, schools, industry, and labor – to look at future aerospace workforce needs and make recommendations to address those needs. “The information and recommendations that will be developed will then help guide congressional action in the future. I am eager to work with stakeholders to address any issues identified and find solutions to this growing problem,” Graves explained.

More significant, beyond the current FAA law, “I believe there is further interest in addressing the pilot shortage and other aerospace worker shortages, and I will work with anyone in Congress to do that. At the same time, I believe aerospace stakeholders shouldn’t wait for Congressional action – they should also continue to pursue their own recruitment and retention efforts.”

Graves then provided a holistic message on the community’s workforce: while the pilot shortage often takes top billing, “we’re also facing a looming shortfall of other qualified professionals across the aerospace industry, especially maintenance technicians.” The veteran congressman from Missouri further emphasized, “In fact, the demand for new technicians is nearly as high as the demand for new pilots – in the United States and around the world. With more than 2.58 million passengers traveling through US airports every day, it’s absolutely vital that the necessary skilled workforce is in place to get passengers to their destinations safely.” To point, he concluded by noting technician jobs pay just as well, and they’re distributed at smaller airports in many US communities. “Not everyone who is interested in aviation necessarily wants to become a pilot, so we need to make sure they know they have other options that are just as important to the health of American aviation. Our goal should be to attract young people and others to the aviation and aerospace industries, in general, and grow the workforce as a whole. That’s something that all stakeholders – industry or labor – will benefit from.”

Similarly, in the UK, ACS Aviation’s McDonald noted his colleagues “would like to see increased recognition and financial commitment awareness from the government regarding commercial flight training in the UK.” Almost on cue, a parliamentary action group has been setup to promote industry changes and improve communications. The goal of the General Aviation All-Party Parliamentary Group is to inspire “current and future generations to take up science, technology, engineering and mathematics, thereby creating high-tech jobs and growth in all nations and regions of our economy.”

Published in CAT issue 6/2019