Imagine a scenario.
A couple of years ago I had a major change in my financial situation brought upon me by, lets say a divorce. Failing that lets say I had gambling or loan debts that needed settling. Perhaps I bought a house and could no longer afford the repayments. Perhaps I had built up an unmanagable level of debt that simply needed urgent attention. These are a few of the things that might affect anyone at some time in their lives. As a result of these unfortunate events, I had to liquidate anything of any value. I sell the home I cherish, I have to sell anything that has a cash value such as my personal pension or any stocks and bonds I might be holding on to. I cannot afford to run the car, what with the price of oil (petrol,) but that is only one element of the overall running cost. I warn others not to attempt what I achieved for their own good. Despite these setbacks in my life, I meet someone else, we get engaged and I buy her a ring. Clouds have a tendancy to clear eventually.
If any or all of these had happened to me, I could spin these using exactly the same words as WWW has already used:
You wonder about my credentials on economics? Sold my house in April 07 to rent because I feared a house price crash. Took all my pension and savings out of the Stock Market at FTSE 6200. Called Oil a bubble that would burst by Xmas 08 in March 08. Warned every wannabe, despite ridicule and condemnation, that training was wasted since Sept 07. Bought Gold.
Now I am an expert!
It really depends on your perspective. Economies are extremely complex entities that are massively interactive, and interdependent with a huge amount of randomness built in. In many ways they are similar to casinos. They depend on a large number of punters walking through the door. Everyone plays to set a rules (stacked in favour of the house.) However the punter also plays to a set of their own rules. How much risk they will take, are they playing with cash or credit, entertainment, need, compulsion? Do they play at all? Are they there having invested in the business, or are they simply spectators who have their interests elsewhere? In any economy there always a few people who get very lucky betting against the odds. If you believe one of the fundamentals of Keynesian economic theory that "Profit is payment for risk", it follows that the level of risk required will be very high if the goal is high profit. However the word "risk" needs to be understood.
The rules in this casino are also inconsistent. In some games the house is permitted to improve its odds by cheating. In the real world, if two airlines conspire to fix their ticket prices for passenger seats on a given route, or for cargo rates across a particular ocean, they are subject to punitive government sanctions and those responsible threatened with incarceration. However when those same governments have a commodity (say oil) that they want to fix the price of , they are offered complimentary 5 star accomodation to make their task as comfortable and easy as possible. Of course if the customer can't or won't pay the price, then the seller either has to absorb the loss of revenue or drop the price again. It seems only a few months ago that $150 oil was here to stay, and the volitility of the market with all of the distortionary elements caused many to act on the basis of even higher prices. However the complexities and randomness resulted in economies contracting sharply and the customer base falling away. The frenetic action moved away from that particular table game, as queues started forming outside the cashiers office amid rumours that the house was no longer prepared to make credit card cash advances. On and on it goes!
Without doubt there is currently a sharp and severe economic downtown. Perhaps not for everybody, but certainly for the majority. Even those who are less affected will be impacted by their own exposure to things such as their customer base. Many people will be negatively affected and some disasterously so by events that result from this downturn. Given the realities as they stand, or perhaps more importantly as they are perceived, should everyone stop spending and hide behind the sofa? That is the popular wisdom and it is forgivable that in an uncertain market people are frightened and feel vulnerable.
I cannot help but smile that on an aviation discussion board such as this it seems to be "wicked" to allow any rumour or speculation about an airline on the grounds that it might trigger a self fullfilling prophecy, yet when it comes to the aviation training industry, all comers should be discouraged, addressed with insults (morons? zombies?) or otherwise derided. It really doesn't matter that an individual or any group of individuals want to spend large sums of cash on flight training. It really doesn't matter that there may be little or no chance of subsequent employment at this time. If those individuals and or their parents and or their bank managers feel they want to take the risk or make what they see as the investment, that is entirely up to them and it is entirely up to them to calculate the risk (if there is one) as they see fit. There is an industry that relies on these customers for its own survival, and it is fundamentaly wrong and probably pointless to interfere with the marketplace.
Airlines still need to sell seats to places that people might be equally ill advised to go to. That stag weekend in Prague or Athens is probably poor value with beer at £5 a pint, but if the excitement and adventure can still be sold to the customer, then the airline still sells the product. In other words talking down the market is easy, particularly when the market is heading that way in any case. Nevertheless people (even if far less of them) will still pay for that two weeks in the sun or that week on the ski slopes. They will still have to travel on business and eventually the fear and uncertainty will become tiresome and confidence and inevitably overconfidence will return.
When that will be, I haven't a clue and anyone that says that they do, is either basing it on past experience, a set of models or simply guesswork. It might be 6 months, it might be be 6 years, it might even be 60 years. The important word is
might. Anyone who can accurately foretell the future wouldn't be wasting their talents on any of these forums, they would be looking forward to a future that (even in the best of times) aviation would never afford them. If the pundits guess a few things right (and they will) they will continue to draw attention to their "wisdom and talents", if they get a few things wrong (and they will) they won't remind anybody, other than to highlight the vagaries of the world economy?
For what it may be worth, I wouldn't advise anybody to go out on a limb in this market, for the simple reason that very few people can afford to take that sort of risk. However if you are fortunate enough or indeed foolish enough to do so, then you do so based on your own perceptions and desire. Commercial flight training is an expensive undertaking, but then so are other things, and it is up to you to do your own research and decide on the level of risk (if any) you want to be exposed to. Whatever may prove to be the rotation speed of the current economic cycle, it is not the case that there is ever an overnight shortage of qualified low houred pilots just waiting to pounce on a sudden glut of airline vacancies. When the upturn does eventually come, the vacancies will be mopped up by the likely plethora of qualified and experienced pilots who may not only have been out of work, but may have simply put off career change and advancement whilst also waiting for the improvement. Embarking on a 18 month to 2 year training plan at the recognised signs of a recovery would not realistically put a
wannabee pilot at any material disadvantage in isolation of all the other realities, (there may still be very limited credit, prices may be higher, wages may be lower, regulatory requirements may have changed etc.)
Individuals are very seldom "morons" or "zombies", they are driven by the same set of emotions, rationalities and irrationalitities, desires, aspirations, fears, ego, and instincts, that we all are. Good times or bad that will never change. Even in the depths of recession or depression, people will still need a roof over their head, will still aspire to own that roof whatever the cost, will still desire a better roof. People will still want the best and better for themselves and their children. Just as when times are good, some will go broke in pusuit of those desires and others wont. Those that are lucky and more so those that plan carefully, will probably avoid the worst risks of any recession. For some that do suffer the worst effects things will probably get better. In fact I seem to recall reading on these very forums not too long ago, the advocacy of bankruptcy as a positive way forward? Perhaps this "expert" business is easier than I thought? Anyone got a bigger soapbox for sale?
