China buys flight schools amid pilot shortage
Exclusive
Andrew Burrell
The Australian
December 23-24 2017, page 1
Chinese companies are swooping
on Australian flight training
schools increasingly stricken by
skyrocketing costs and crippling
red tape, amid predictions that
the nation will be forced to import
scores of commercial pilots from
Asia and Africa in coming years.
The Weekend Australian has
spoken to several of the country’s
350 aviation training businesses
that say they are unprofitable and
are considering selling to the
Chinese. Scores of local firms
have folded in recent years and
several of the larger schools are
now foreign-owned.
China will need and estimated
110,000 new pilots by 2035 but
is relying on other countries for
most of its training because of its
heavy smog, military-controlled
airspace and lack of qualified
teachers who speak English
A federal government report this
week confirmed the local industry’s
drastic decline, showing the number
of general aviation flying hours fell
by 40 per cent -- from 500,000
hours a year to 300,000 hours a
year between 2010 and 2015.
The increasing foreign ownership
in the flight training industry --
particularly the concentration of
Chinese acquisitions-- is raising
concerns among senior security
experts.
Peter Jennings, the executive
director of the Australian Strategic
Policy Institute, said the
“aggregation effect” could be
of the same concern in flight
training as it had been to Scott
Morrison in other sectors.
“It may be acceptable to own
one or two flight training schools
” Mr Jennings said, but if the
Chinese acquired flight training
schools to the point where there
was a dependence on it “the
aggregation effect of that
could be negative from a
government perspective”.
Flying training is seen as vital
to allow Australia to keep up
with the increasing demand
for pilots, with predictions of
a major shortage in coming years.
The landmark study by the
Bureau of Infrastructure,
Transport and Regional Economics
also raised industry fears about
he cost of pilot and maintenance
training, soaring airport charges
and recent regulatory changes
that were “not supported by
adequate justification.”
Aircraft Owners and Pilots
Association chief executive
Ben Morgan said he believed
more than 50 per cent of all
flight training in Australian was
now being carried out by foreign
companies and most of them
were Chinese.
He said it was “realistic” to
predict the industry could be
entirely foreign owned in
the next 10 years. “The
Chinese are cleaning up,”
he said. “Australia is selling
out its flight training industry
to foreign interest.”
Chinese airlines have been
investing heavily in Australian
flight training in recent years.
In 2015, a China Eastern
Airlines subsidiary brought a 50
per cent stake in CAE’s Melbourne
aining school. Its rival, China
Southern Airlines, owns 50 per
cent of a West Australian academy.
One of the biggest regional schools,
Australian International Aviation
College in Port Macquarie is now
owned by Hainan Airlines after
the local operator ran into financial
trouble in 2014.
The Chinese sale was facilitated
by the federal government’s
Austrade agency. The business is
now planning an $18 million training
facility at Kempsey airport to train
Chinese students.
Dick Smith, a former chairman of
the Civil Aviation Safety Authority
, blamed the destruction of the
industry on the former Howard
government’s directive to CASA to
ignore costs in relation to air safety,
which he said had led to the adoption
of the world’s most expensive regulations.
“Australian companies are going
broke because of paperwork
and red tape,” he said. “Now
we have a shortage of pilots.
Does it matter that in five
years...we will have pilots
from developing countries--
from India, Indonesia and
China flying our airlines?”
Mr Smith said he was also
concerned that Australian
flight training companies were
unable to get approval from
China to train Chinese students
in the same way Chinese-run schools
do in Australia.
Mr Morgan, of AOPA, welcomed
the appointment this week of
Barnaby Joyce as Transport
Minister and called on him to urgently
address how the local flight training
industry could deliver crews for
Australian airlines rather than
relying on Asian and African pilots.
He said CASA should allow independent
flight instructors to be used by smaller
businesses, noting that 70 per cent of
training in the US was conducted
by independent instructors.
“If you are not an organisation
with a bucket of cash, there’s
no way you can get involved in flight
training” he said.
“We used to be a leader in flight
training but we have created an
expensive and cumbersome system.”
A CASA spokesman said the
concept of independent flight
instructors was raised during
consultations but was not widely
supported at this time.
“If the aviation community
believes the concept of independent
instructors needs to be looked at
again, CASA is willing to listen to
constructive suggestions,” he said.
Industry veteran John Douglas,
the former head of the Royal
Aero Club of WA, said conditions
were the worst he had seen in 50 years.
He said the number of training
hours at the club had fallen from
36,000 hours a year to 16,000
over the past two decades.
Mr Douglas slammed new CASA
requirements for schools to
spend money to gain new
certification for training.
“The cost of compliance is killing
the industry,” he said.
Bill Whitworth, the owner of
Whitworth Aviation at Bansktown
Airport, recently agreed to sell
his troubled business to a
Chinese company. “They want
to get a foothold here at
Bankstown Airport,” he said.
“They want to bring students
down and train them, starting
with 30 students.”
Another long-term operator at
Bankstown, Aminta Hennessy,
said businesses were also being
hurt by rising airport fees and charges.
She said she had been recently
approached by foreign companies
to sell.
The chief executive of Melbourne
Flight Training, Glen Buckley,
said he had received five offers
from Chinese companies to buy up
to 20 per cent of his business,
but he had so far resisted the temptation to sell.
ADDITIONAL REPORTING: SID MAHER