Clearly the instructor shortage is down to the abysmal pay and conditions offered to potential FI's - I was appalled to find that my instructor had to top up their income with an evening cleaning job . . . and we all know how well that is paid.
However, the fact remains that outside of London and the M4 corridor, there simply isn't the disposable income available to support the 'shiny new aircraft' marketing strategy.
I originally started to learn to fly in the late 80's before other things got in the way and one of the most noticeable differences when I came back to it recently was that the demographic profile had lurched upwards from 20/30 to 40/50/60. The reason is simple, with ballistic house prices and mediocre wages, only the better off older people can actually afford to fly.
The upshot of this is that I do agree that instructors are paid insulting wages - but the problem is that students can't, for the most part, afford what it would otherwise cost. Evidence of that is provided by those who either migrate to microlights from Group A licences, or go directly to microlight training in the first place. It would be interesting to hear from microlight instructors to get an idea of how they see things.