I think some ATOs are just treating flight training as an instrument to generate money and could care less about the training itself.
IMHO that is certainly correct. Business demands a continuous inflow of cash. Undoubtably the managers of these ATOs thought that they could match the training throughput to the level of recruitment but discovered, even before coronavirus, that they could not and so significant backlogs built up. One, L3 Harris, tried to deal with the backlogs by laying off their IR training to their competitors. This is to their credit as far as the customers are concerned but it does not strike me as a brilliant idea commercially as it allowed new competitors who would otherwise have had a difficult time building a position in the market to establish both their businesses and reputations at L3's expense. Now big ATOs with a training backlog will be relying to a large extent on stage payments from their existing students to keep them going. That is, unless they took all the money up front. Current market feedback is that the PPL and FI schools are extremely busy, that integrated and MPL recruitment has fallen off the edge of a cliff, but modular is still continuing. When you talk to the managers of the large integrated ATOs they will tell you that business is booming, but you can see the fear in their eyes.