I think I can understand why an individual would hesitate; the worry that HMRC might decide that the pilot is liable for a large wedge of unpaid tax? Also, I imagine it is a bit of a symbiotic relationship existing between most contractors and the company - if they say nothing and don't rock the boat they can exit ASAP and never look back, once they get the required number of hours to move to a reputable employer. Mutually beneficial.
On the other hand, why trade unions collectively representing the profession don't bring this to the Revenue...