This is one of my favorite topics. I'm a US CFI (please don't flog me!) Most US pilots fly HUGE circuits. I taught at a field where noise abatement dictated close in circuits. I found that when properly trained from the beginning all students are capable of flying a tight circuit. There is another skill I haven't seen mentioned: the ability to plan and keep a tight circuit even when following a c152 flying a 747 circuit. Teach them to slow down (not VMC) this gives them real world reasons for all that speed changing training we give them initially. If the one you are following goes really far out, suggest to the tower that you could turn base now and procede direct to the runway to "tighten up the pattern." This serves 3 purposes: 1) you get to land first 2) your student gets another lesson in flexibility 3) controlling the aircraft rafther than following a rote pattern of power reductions, flap settings etc.is good training. I'd also like to mention that I have 10 years as ATC also and I always appreciated pilots who volunteered to help out in this manner.
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eX-Chief CFI, X-ATC,AVN map maker,F