I think it's about time there was some clarity on this situation, as from what I've been told in the past HMRC has largely ignored it. I think it's quite common to find self employed instructors contracted to just the one school.
Unfortunately, forcing instructors into employed status means money for NI payments etc will either drive down the salary of the FI or drive up the cost of rental, neither of which is a welcome idea right now. Margins at some flying schools are tight enough so I can't imagine they find it easy to absorb these new costs if PAYE is new to them. Some might well be in trouble.