[T]he competitiveness is among the Instructors/Staff not the Clientele.
No, Clare said both.
An instructor who's willing to pretend to be an independent contractor at e.g. $10 per hour is overwhelmingly competitive with a candidate who says s/he would insist, at least, on casual employee entitlements.
The operator who has numerous 'independent contractor' instructors at $10 per hour is able to offer flying training at lower rates than a competitor who pays instructors their entitlements, because the former has a lower cost-base than the latter.
You're obviously a good person who cannot conceive of this kind of behaviour. Sadly, it's widespread.