It is most fundamentally not ethical, in my personal opinion, but sadly it is a fact of the industry, and more precisely a fact of the cyclical nature of the industry. As such, paying for one's own rating is a function of the economic model that governs at the moment one is in the market for a job.
I mean, I haven't been too long at the job really, having started my PPL in late 1987 but I've seen it come and go even in that time. I do remember the tales around the flying club of people literally walking into jobs at that time, the airlines were gagging for them.... indeed, the instructor who signed me off for my first solo walked onto the 748 in British Airways... (as an aside, I handed an Airbus 320 over to him downroute about 4 months back, and it was a very sweet moment.) But by the time I'd been fortunate enough to do the sponsorship route and come out the other end there were almost zero jobs to be had, and I paid for Perf C and was about to do whatever rating it took to get a night mail job I'd been offered by one of the instructors at Prestwick who was setting up an operation out of Carlisle, and had asked a few of the then unemployed cadets to fly for him.
My self-sponsored contemporaries were in a dire place. Two of them paid for ratings with Midland on the 737, with the promise of an interview and a potential job offer. No such offer appeared, and no other people were willing to take on low-time 737 rated people with no relevant line experience. Both are still very well paid ATCO's in Scottish to this day.. had they done 320 ratings back then they would have been snapped up, as for a while there were no unemplyed 320 rated guys in the UK at that time. One could argue their research and preparation was flawed. Two very good friends paid for shed ratings at that time.. early to mid-90's post Gulf War.. one is base captiain for a major IT operator on the 757, and the other an RJ Captain now. Other airlines, such as Royal Brunei demanded a type rating before you would be considered for a job, so several paid BA and did the 757 rating at Cranebank. I believe all have moved on since, many to Emirates.
Airlines at the top of the food-chain will as has been said elsewhere generally type-rate their own people as they hold their own TRTO approval, and have a tried and trusted training department (I refer to the Emirates, BA's, Cathay Pacifics, Virgins of this World.) Other airlines that have to contract-out type-training will pay the bill or not based simply upon the basic economics of the day.. at the moment, the best people on the market will be available to them having had to pay for their rating; in rich years, those same people will be snapped up by the major players. Do the sums, it is simple economics. As I said, I neither like it, nor agree with it, but there it is... if you were running an airline, given the margins you know apply in the industry ( you do know the margins, don't you, that is basic homework for ANY job) then what would you do?
My advice to wannabe Airline pilots stands, as I give out whenever I do one of the PPRuNE talks; just because YOU have the money, and believe YOU are Airline pilot material, you very well may not be in the eyes of the Airlines. Therefore it is in your own financial and professional interests to ensure you have been through as many of the potential flaming hoops you will be set, and passed them before parting with your money. Whether you do that independently via GAPAN or any other organisation, or choose a TRTO who will interview you before taking your cheque (because believe it or not it is not in their interests to have unacceptable students who are either unable to pass the course, or not of the personality to work in an airline environment) is up to you, but just because you want it and have the cash doesn't mean you will be suitable.
Airlines will always recruit the best people who front-up in front of them on the day, and they recruit future Captains, not career First-Officers. Given the economics that apply at the time, it is up to you to make sure you first of all simply CAN fit that bill, and then make sure you DO fit that bill. If it includes paying for a type rating on the type you want to fly, and you can't afford it yet still want to do it, then put that job on hold and go for one you CAN get. Complaining about the economics of the day will get you nowhere.
A bit harsh, but true, and as I said before I wish it were not so. But it is. Times WILL change again, but your crystal ball is as good as mine on when. After all, a little bit of white powder on the Tube, and it will just keep going for another few years....... your call.
Squid