Just like African Dude, I haven't seen it either, but if I do I will be the first to say so.
All commercial businesses have to make money. All of them! It doesn't matter if you are an airline, a flight training school or run the corner shop. The one simple reason that businesses go bust is that they run out of cash. That may be prevented by borrowing, drawing on reserves, selling assets or new investment in the short term. Ultimately though it is only prevented by making a profit, and that profit only occurs when the income exceeds the costs on a sustainable basis.
CTC is an establishment that has a double edged customer base. On the one hand it sells its training product to individuals. Over the years that product portfolio has increased and broadened. Undoubtably expansion into modular products has been as a result of the difficult trading environment, but nevertheless it will only be successful if it can entice enough customers to buy that product. Similarly with the cadet and to some extent the integrated course schemes, there are cheaper ways of licence aquisition. It will only attract candidates to these schemes if the two driving forces remain in place, they being quality of training and the prospect of airline placement at the conclusion. In the case of the latter, this has always been one of CTC's "ace cards." This is also the second edge of this companies customer base. It sells the finished product to the various airlines as those same airlines inexperienced cadet base. This product must remain attractive to those airline customers if it is to succeed at any level. Obviously CTC know this and it is difficult to imagine they would jeopardise that business by allowing or promoting an inferior product.
As far as financing is concerned, it is not their fault that unsecured commercial borrowing is no longer an option for their selected candidates. That is just a reality of the banking environment at this juncture in time. Lending all around the world has been significantly tightened up, and the financial instruments that might have been available a couple of years ago are now simply history. Given that either the training bond or the cost of the course still have to be paid (business not a charity,) only those candidates that can afford the respective courses will be able to participate.
At borrowing requirements in excess of £25,000 this will normally require secured borrowing. Even so, there are few lenders who will entertain lending for this purpose as there is no tangible (realisable) asset being aquired with the loan advanced. For that reason a property is normally required to secure the loan against. Unless the candidates themselves are particularly wealthy, it will also often require a guarantor to provide that security.
In the case of the guarantor, it is usual for the security to be encumbered (mortgaged) to no more than 60% of its total worth including the funds to be advanced for this purpose. In addition the guarantor must provide evidence that in the event of the borrowers default, they themselves have sufficient income and affordability to assume the repayment schedule. In other words it is not a case of "loosing" (sic) their house, it is a case of the repayment schedule becoming a liability on the guarantor. Only in the event of the guarantors default would the security be invoked.
This is no different to any other secured loan where a guarantor provides the surity. It cannot be done without the guarantors agreement. The guarantor must show evidence of affordability as if they were applying for the loan in their own right.
Undoubtably the funding criteria has reduced the number of potential (realistic) applicants to this and similar programmes. Undoubtably there would also be a modification in the selection criteria where funding becomes a more significant issue. However if the quality of the end product were to be reduced, the airline customers would quickly turn their backs on it, and the provider cannot afford for that to happen. In essence the training standard must be maintained and likely improved. In this situation, changes and streamlining to reduce costs and waste would be inevitable. Adaptability and innovation would be key ingredients of any companies survival in difficult trading markets. That might be perceived as a lowering of standards, but in reality is often a case of maintaining or improving them.
Parents are putting up their houses. They will do anything to give their children a chance at achieving their dreams. You shouldn't under rate their willingness to risk their house for their children. Cadets have become bankrupt.
Speaking as a parent, I have to take issue with the word "
anything." Parents have a 20+ year appenticeship of sacrificing for their offspring. The last 7 or so involving an individual who has often demonstrated their focused contempt and loathing for said parent as a result of hormonal imbalance. Whilst it is certainly true that they would be raptured at the thought of their offspring achieving something positive and leaving home, that same home has been expensively aquired, and not likely to be sacrificed purely on the demonstrated wit, wisdom and enthusiasm of the
fruit of their loins. Believe me!
Cadets may in a few cases have become bankrupt, but that is an entirely seperate issue to their guarantors. Bankruptcy affects many individuals, and will be more prevalent amongst people who have large individual borrowings and little or no income. That isn't being glib, since few people are more than a couple of pay checks away from being in very difficult circumstances. Of course this is why lenders now require guarantors and security. The same holds true in many aspects of financial commitment, not simply flight training candidates.
In summary, busineses 10 years ago, now, and in 10 years time will still need to make a profit in order to survive. Adaptability, change and innovation will be the key to that survival. Quality and the perception of quality will need to be ensured if the customers are to keep coming back.
If you are selling an expensive product, be it a Ferrari, a luxury cruise, or a course of flight training, it is a limited market place. Any business in this marketplace knows its survival will depend on the quality, cachet, and desirability of the product being maintained.
Oh yes, and parents are not usually as stupid as their offspring have grown up believing, something they in turn will eventually discover for themselves.