SNIGS: regarding "The question is should it be allowed?"
There is'nt an organisation or a union to police it.
In fact whilst there is a "free market" there can never be a union.
The situation is that as an FTO you are free to choose from the available source of instructors. As an FTO you will want to minimise your costs and therefore minimise the fees that you have to pay to the instructors you use. Nobody is able to force
you to do otherwise.
In fact, just try charging a fee as a PPL Examiner in some FTOs and see how many times they call you to do an exam.
Historically, the majority of instructors were really "transient workers" on their way to the airlines. The fact was that they needed the hours and the FTOs loved (still do) the idea of "free flying time" in return for a no-fee instructor.
Once that instructor moved on, there would be dozens more waiting to take their place.
I can see to some extent that when airline pilots return to instruction during the down-turn cycle of the industry, they generate bad feeling amongst those who have been instructing all along. Suddenly these people find that they are not called in so often because the FTO has found an eager and completely free source of instructors.
The shame of it all is that the customer still gets charged a "dual rate".
In conclusion, it is still the same story at your local "porta-kabin flying club". They now have a ready pool of fATPLs who turn to instructing to build their hours while they have nothing else to do.
These people will move on when they have a transport flying job and the next batch will be right behind them.
There is only one way that the whole thing could be changed and that is for the airlines to pay for the IR and type ratings after the ATPL theory exams and take FOs as "apprentice" pilots until they
get the magic 1500 hrs <ooops, I just saw a pig fly past....>
