The primary reason why Integrated training costs more than Modular is that the integrated syllabus is from zero to CPL/IR with MCC. Modular only covers the instructed modules required by the JAA. Structured modular (eg CTC) is similar to Integrated except that different training providers may be used in various parts of the course.
The pricing of any of these courses is rarely done on a cost-plus basis. In other words, FTOs don't usually sit and work out what these courses cost them and then add a gross profit margin. They certainly know what their costs are, but the pricing is almost always based on what the FTO believes the market will bear. Perhaps the major factor influencing this is what the FTO perceives its own reputation to be worth. If a school is operating at or near capacity, then the pricing is about right for that school.
Now, a school's reputation may well be based on factors which have little or nothing to do with the quality of its training, and there is no doubt that certain schools use effective marketing to present themselves as being perhaps rather better than they really are. There's nothing wrong with that; as in all purchase decisions, caveat emptor is the watchword. It's up to you how you judge the value for money that you receive from any particular school.At the end of the day, you'll get the same licence whether you go to OAT or to Little Snoring Flying Club - it's the examinations (air-and ground-based) that ensure all fATPL graduates achieve the standards required, and they have nothing to do with the schools.
It is true that some airlines have a preference for graduates of certain schools. There may be historical reasons for this, or an established financial relationship, or whatever, but the fact that airline 'A' gets most of its ab-initio pilots from school 'X' does not imply that that school is any better than any other. It simply reflects a working commercial relationship which satifies the needs of both parties. Statements such as 'And obviously there's that point that integrated get better jobs and BA only takes low hour pilots from Integrated except from CTC.', while being common perceptions, may well be (as in this case) demonstrably false - BA takes several low-hour pilots from a whole variety of FTOs, and through a number of different routes.
Why are there not more integrated schools? The establishment costs of a school that takes people from zero to fATPL are substantial - when BAe started up at Prestwick (and subsequently moved to Jerez) the costs involved were reportedly horrendous! And (IIRC) that was under the old CAP509 system, which may have been less costly than the integrated system would be to start up now. Not only that, but the licencing system has a irregular but frequent pattern of wholesale (and often illogical) changes which add to the expense, and the training industry has been plagued with airline sector downturns which have seen many, many schools go bust. It's no wonder that investors aren't queuing up to start new, glossy integrated schools - even if the damand were there, which it isn't. The modular system offers FTOs a far cheaper way into the market, and one which isn't out of the reach of a group of enthusiastic FIs to start up - and those enthusiastic FIs may well offer better value for money to the impecunious student than any major school!
Scroggs