If you are getting £35/hr then what is happening with the rest of the cash? By my reckoning the going rate per hour for a PPL is £125ish based on 45 hours at £5,500 for a package. So Mr Flying School has £90/hr to pay an instructor (say £10-20/hr) and pocket the rest towards his costs such as overheads/marketing etc. Looks like he is making a fair wedge out of this deal, and you need to get his rate up in order to make your numbers stack up and give you some comfort over engines funds etc as mentioned above.