Funding Training

[Wee Weasley Welshman]

http://tinyurl.com/yup2cj

The link above provides a neat summary of the problems facing people looking for credit to funs, say, a course of flying training.

Homeloans have fallen by 40% in the last few months. Credit card lending is getting much much tighter and unsecured loans are being clamped down on.

And this is the current situation resulting from conditions prevalent months ago. Things have got much much worse since.

I doubt many of you are aware that on Friday Barclays Bank (3rd largest in UK = MASSIVE) shares were suspended from the stock exchange after a 9% fall in 3 minutes based on a rumour of their losses.

It may all be nonsense and they may well be doing very well. Nevertheless $90 BILLION was wiped off their value in 3 minutes. These are big numbers and they spell big trouble. Big trouble for Joe Wannabe who wants £60k, £30k or even £15k to spend on learning to fly.

Be under no illusion. Nobody is going to want to give credit to some 22yr old with no history, no assets and not too much hope of getting a good job at the end of a £70k spendfest. Self funded non sponsored training looks unappealing at this point.

WWW

[v6g]

Interesting. I wonder why those 40% are being rejected and why, I presume, that 40% was being approved a year ago.

[portsharbourflyer]

It is a double edged sword really, on one side reducing the ability to borrow will reduce the number of trainee pilots coming into the market; downside is this does imply early signs of a recession / housing flop, hence the holiday charter market will be the first thing to suffer.

[Sean Dillon]

In essence, what he writes with regards to the financial world is correct.
With regards to it's effect on the aviation industry, nothing much will change!

Low cost in India and Asia is just booming...

The middle east is screaming for pilots and will continue to do so, albeit with experience required, but this is where the movement in the "food chain" will come from...

There is a 2 year waiting list for Biz Jets at this present time, Cessna, for one, can not make them fast enough, a cancelled order is your only hope!

As for the UK market, well the airline I work for has a Boeing aircraft order of over 40 new frames, they will be replacing present units of course, with a focus on ultra long haul, leaving the RYR and EZE's to the "bucket and spade" routes, this is gonna "eat" crew!!!! Other UK airlines have the same commercial plan...

Then there's EZE themselves, they are filling there hold pool now for a start date in winter 2008, I heard 450 pilots required in 2009, not sure how true that is? WWW could maybe confirm that...

Retirements: I know many many guys who are not working to 65, so throw in the retirements of all those post WW2 kiddies, that should commence in 2008 onwards...

Pilots will be needed for some time to come yet, this will create financial options. The options of UK quality companies to work for is diminishing somewhat I admit but then thats down to personal choice. The financial risk in flying training will always be there, but just get on with it - it's worked for every single "Average Joe" PPL I know who took the Commercial risk, not one failed in there dream, they haven't looked back and are enjoying successful careers across UK airlines...work hard and you will succeed...the options in this job are huge and still growing and changing rapidly...it's an awesome industry to be involved in!!!!

[portsharbourflyer]

What alot of you seem to forget/may not know is the amount of modular pilots that were dependent on the HSBC professional development loan to fund training. Also in the past 2 to 3 years it was very easy to obtain credit. Hence all current qualified pilots had an easy time obtaining credit. HSBC now no longer loan offer the PDL for modular training.
The wannabe's coming through the system now will find that these credit facilties are no longer easy to obtain, hence many will now have to work and save, hence rather than training at 22 many will find that they will have to wait until the are in their late twenties / early thirties to commence training.
I didn't use HSBC to fund my training but when I was training I wouldn't hesistate to say two out of three trainees at the time were using the HSBC PDL.

[AlphaMale]

Are we talking about professional development loans here or career development loans? :confused:

[portsharbourflyer]

Alphamale,

I am referring to the Professional Development loan that HSBC offer, it is different to the career deveopment loan. Although they now no longer offer this for modular training.

For most pilots a CDL was too low a value to be any use (8000), although that said I did meet individuals whom had taken out both the 25000 PDL and the 8000 CDL to fund the training.

[AlphaMale]

Not sure I was aware of the PDL :bored: ... I am planning on taking out the full £8k CDL for my IR or FI.

You had me worried there for a moment. But what you are saying is there is no chance of getting say £15k as a PDL from HSBC? or even the £8k CDL + £7k PDL?

[portsharbourflyer]

The line was that HSBC would no longer offer the PDL for modular pilot training, however they will still lend to those on integrated courses.
The CDL is still quite striaght forward to obtain. There are still some personal loans out there that offer a three month deferrement on the payments (this is what I used to fund my IR originally), as it is a personal loan then the banks aren't concerned what you are using the money for, as long as your credit rating and work history demonstrates you can support the loan. So for the amounts you are talking about Alphmale if you have the credit rating you would be able to get 8 to 15000 as a standard personal loan anyway. However the best way to check is to go and ask HSBC.
The reason people opted for a PDL was simply the fact their credit rating wouldn't qualify for a personal loan of the same amount.
HSBC for the PDL use to lend to people on the grounds of a "business plan" drawn up by the individual; it is probably the case as a result they ended up with several low houred CPL holders owing 25000 and only a job in a burger bar to support the loan.
The other factor for the last few years was of course individuals in a position to remortgage to fund the training, if you bought a 70,000 flat back in 2000, then by 2004 it was worth 120,000 to 140,000 as a result there was plenty equity to "remortgage". Buying a flat now for 120,000/ 140,000 and hoping its value will increase in order to remortgage would be very optimistic, repossesions are on the up, hence property prices are at least now stagnating or only showing a 1 or 2 % increase each year. Hence now in four years you are not likley to gain the equity to remortgage to fund training; so yes WWW is correct there are not so many options now for funding training.

[AlphaMale]

Thanks for clearing that up portsharbourflyer.

I'm not looking to get into big debts, but the CDL should be adequate, along with selling everything I own I'll get there in time. Best way to do it really :rolleyes:

Unfortunatly I just jumped on the property ladder 4 months ago but looking to let it out in the new year for a couple of years while I'm studying and flying.

[Wee Weasley Welshman]

I'm not saying anyone should give up on their dreams.

It will be perfectly possible to borrow maybe £20k in unsecured loans. Use maybe £10k of personal savings and then earn as you learn the last £15k that you would need to pay for a Modular course.

The days of £65k at a large FTO followed by a £20k SSTR all backed by loans, credit cards and the Bank of Mum & Dad's mortgage equity release product is very probably over though.

Which may be no bad thing because when you meet a 22yr old with £80k of debt you is working for Ryanair on a basic of £23k then it kind of makes you shudder. And he's doing relatively well.

Rex - no I've never been burnt by a loan. I have though had self sponsored students of mine withdraw from training at a late stage because they ran out of money. I have also seen ex-students of mine with lapsed IR's working as Despatchers and paying half their wages through an IVA back to the banks to clear the debts from their training 5 years ago.

I've seen people throw good money after bad and seriously risk the roof over their parents heads as they burn through money on flying training. It is not unusual to be spending £4,000 a week during large parts of your training. All for a piece of paper.

Also, if you look at the CAA SRG figures for pilots by age you will note that there is no retirement bulge for decades to come. A recession in the USA which is predicted by many would unleash a veritable Army of pilots willing to fly for food anywhere in the Middle or Far East. Nearly all LCC expansion will now occur on the Continent. If its a choice between a 200hr Italian pilot who want to live in Milan against a 200hr British pilot who want to live in Scunthorpe you can easily see the way the recruitment process is going to go.

The last 3 years have been hell for leather in Wannabe land as jobs have been a plenty.

Now is a time for extreme caution.

But that's only my opinion. I could be wrong. I have been in the past. I've also been immersed in this topic for a good decade and seen it from several angles.

Best of luck,


WWW

[diggafile]

Loans granted by banks have to meet certain criteria before they are sanctioned. The purpose of the loan is taken into account but if the bank can see it is going to get its money back with interest then it will make the monies available. The Professional Development/Training/Study Loans are products which are designed to not only make money for the bank during the term of the loan but also to capture potential high earners for the future.

The secret is to plan your dreamthen revisit the plan having looked very carefully at the financial implications and then make a sensible rational decision.

I have the greatest respect for Pilots who have trained on a shoe string and have made the grade. I have read most of The Wee Weasley Welshmans 3000 plus posts and watched him go through the various phases of his career. He is a good example of how to do it. Another good way of doing it is to get on an intergrated course if you can afford it or can borrow the money. HOWEVER, are YOU a good investment vehicle for the money.

It is sad that WWW knows despatchers with IVAs (individual volountary arrangements) but none of the students I have seen go through training who have borrowed all or some of the money are in that position.

I am afraid that the bad decisions are not made by the banks in these cases but the individuals themselves. Think carefully before borrowing the money, and you can still borrow even today, and the dream will not turn into a nightmare.

[Wee Weasley Welshman]

Well, you think oil at $100 a barrel, a North American recession and 1.47 Euro to the Dollar isn't going to have a negative impact on the European airline industry, and I think it will.

We shall just have to wait and see.

I can see that HSBC will let your parents remortgage on their 10yr fixed rate of 6.5% and that this will be about £562 a month to repay. Thats a repayment of £67,400 that I presume you'll have to pay them.

A lot of people have done this over the past few years. With house price falls now accelerating I think this source of funding will rapidly dry up. Potentially this is good news for some Wannabes as competition may reduce.

Good luck,

WWW

[rick0]

what's the reason for the instability in the financial sectors then? Is it th american housing thing?

[Wee Weasley Welshman]

Yeah and the positive spin that the Vested Interests put on everything is sickening at times. Its either boom time in the airlines, about to be boom time or its never been a better time to train in preparation for the boom (during the bust).

Pass rates are always excellent, exam results amongst the best and contacts with airlines superb..

The fact is that I could name a half a dozen people who lost their shirts on flying training post Sept 11th. Do you remember Swiss and Sabena going bust? Do you remember the layoffs from Virgin and MyTravel and others? Do you recall how all airline hiring was frozen, how people already on type rating courses or working their notices were told that the job offer was being pulled? Do you remember all the cadets on courses who were told to go home or continue paying their own courses or who were as far as line training but still got chopped before Final Line Check? Do you remember airlines like Aer Lingus being on life support and selling the painting from the boardroom walls?

Well that, my friend, was 2002. Not long ago.

I won't bore you about the recession of 1990 and its effects on airline hiring as you'd consider it ancient history. And as for the 1970's oil crisis and Dan Air and Caledonian and Air Europe and Freddy Laker - you'd think I was some crusty old historian. Yet all these things have happened in many pilots current careers.

Just because it was sunny yesterday and sunny today does not mean you should put your umbrella on eBay...

One of the unique aspects of PPRuNe is the lack of marketing varnish. You're a big boy, you make your decisions any which was you want,

Good luck,

WWW

[Wee Weasley Welshman]

Thats just it, house prices aren't really falling and growth in tourism and aviation is forecast to accelerate even now (especially with Open Skies). I'm just basically hyper sensitive & worried as someone who is about to commit myself to an Integrated fATPL course.


Rex - the above you've posted on R&N (its neither so it will be moved) worries me.

House prices are falling. See todays Finacial Times:

http://www.ft.com/cms/s/0/20d093be-915c-11dc-9590-0000779fd2ac.html

"The property market is set for a more severe slowdown than in 2005, according to the most authoritative survey of estate agents, which shows they believe house prices are already falling in almost all areas of the UK and even the rampant London market has recently hit the buffers."


It will get a lot worse from here on in - its VERY difficult to persuade people to buy in a falling market.

You see Open Skies as being some kind of boost. I'm afraid as far as UK airline jobs are concerned its probably more of a threat. The lucrative London New York golden goose is now being targeted by more airlines than ever before.

You cite tourism accelerating. Well, our most important single market for tourism is North America. The dollar currently buys less than 48p. Which makes our already expensive hotels and restaurants look totally ridiculous to the hard pressed Amercian holidaymaker.

I'm really really not trying to rain on your parade for fun. Its just you might benefit from hearing to contrarian view. I certainly think hearing both sides of the argument leaves me with a better point of view.

Cheers

WWW

[Wee Weasley Welshman]

No. House prices have fallen three months in a row. Last month was 0.5%. They tend to report house price growth as an annual figure. Because prices were rising last year and early this year the Year Average house price change is still positive. However. House prices fell every month for the last 3.

Even the BBC is now going Bearish! See:

http://www.bbc.co.uk/blogs/thereporters/robertpeston/2007/11/the_debt_weight.html


Big problems are just around the corner.

WWW

[dartagnan]

that's a good new, students will stop to gamble their parents' house or file bankrupt.

This will affect probably the aviation training ,TRTO, flight schools,..

is it the end of the intergrated training at 60-80'000 pound(Oxford)?

[Adios]

It won't be the end of Oxford, Cabair, FTE, etc. but there could be a slow down. Read back up the thread and you'll see it is Modular loans that have been stopped by HSBC. The property boom of the last ten or more years means there are a large number of people who can suffer a 10-20% drop in market value and still have more than enough equity to secure a £50K loan. We are not anywhere near a 10% drop yet. Only a default rate will stop the banks from doing flight training loans and I'm willing to bet most parents who are willing to offer security will also assist with repayments if jobs are not to be had. If you think about what their other option is, then of course they'll assist with the payments.

Slag them all you want, but it is their money and their decision and there are plenty of parents willing to do it. Despite what Dartagnan says, it is the parents gambling their house, not the students. Nobody holds a gun to their head and makes them sign the security and guarantee papers.

[Wee Weasley Welshman]

A slightly more nuanced analysis would reveal that personal bankruptcy and IVA's are increasing at a marked rate. As are home repossesions.

It has been discussed many times here on Wannabes about the option of planning to train on credit and then go bankrupt.

Parents with large equity pools and solid incomes may gift their children the means to go on any flying training course they wish. But this is only a fraction of the people who self sponsor their training every year.

Many remortgage their own modest properties. Sometimes to 125% of their market value (see Northern Rock's Together mortgage for an example). Many rely on a PDL, CDL, the Any Purpose loan topped off with a consolodation loan (hello - is that OceanFinance/PictureLoans etc) and a few credit cards on 0% interest.

It is the latter group - not the ones with wealthy parents - that are in most immediate trouble when credit dries up and house prices fall even slightly.

This will probably effect Modular just as much as Integrated. Though at a time when airline hiring is shuddering to a marked slowdown you might be considered a bit mad for going Integrated.

Remember, the house price falls and credit crunch are only just beginning. There is a long way to go yet. And at every stage there will be a Flying Training Industry telling you that there has never been a better time to train.

Its what they do.

Good luck,

WWW

[Adios]

WWW,

I was not trying to offer a nuanced analysis of the whole picture, rather, I was indicating why I don't think the big three are in danger of a precipitous drop in enrolment.

Banks will tighten credit, as they should, but so long as the borrowers are repaying, the banks could care less whether they acheive their dream job or not. Are the borrowers gambling? Yes they are. Are some doing it foolishly? Yes they are. Will they stop because someone posts a dire warning? I doubt it, but that doesn't mean they should not be warned.

Turning to the related topic, the slowdown in hiring will eventually impact by reducing the number of gamblers. This is simple market economics, supply and demand balancing themselves naturally.

The rising foreclosures are the sign of impending recession, which always leads to less holiday traveling and a downturn in the airlines. Wannabees should be very aware then that the employment opportunities will dwindle and the bank will be there expecting repayment. Meanwhile currency and rating validation will need to be maintained while waiting for the recovery.

If it's nuance you want, you need to attach dates to the recession cycle, as market timing is the art of nuance. I fear more for those about to finish training in the next year than I do for those who want to start training say in 2009. Recessions usually last for two years. Those starting training in the second half of a recession will probably be more current and therefore more employable when the recovery begins than those who finished training just as recession was starting. Anyone starting to train during 2008 with a high risk debt gamble is likely to be in for a big shock, as they will finish training mid-recession, have loan payments come due while needing to maintain currency and renew ratings for 1-2 years while stocking groceries at Tesco, since food suppliers are the only industry not totally hindered by recession.

[Wee Weasley Welshman]

You raise a very important often overlooked point - currency.

Wannabes need to remember that the moment they get their license/IR issued the clock starts ticking on their IR and Multi Rating. You have to do the minimum hours and be able to pass the rating test next year. You will have to pay for those hours and that test at your own expense if you have not found an employer in that first year.

If you are down to Aldi beans and only just being able to pay the bank interest then this is where a lot of people come unstuck. Ratings are allowed to lapse, currency evaporates and you stand a diminishing chance of being called for interview OR of passing a sim assessment.

Intensively learned flying skills on short courses gets you up to a high standard quickly but some feel that you lose that skill just as rapidly.

Professional flying is a lot about weighing worst case scenarios and planning sensible strategies. Professional Wannabeism is no different.

Good luck,

WWW

[Wee Weasley Welshman]

Rex, thats lovely.

Good for you, best of luck. You are right that nearly all the people who did the APP course at OATS have got jobs over the last couple of years. Its no suprise really. The industry has been booming. FR and EZY alone needed 800 pilots last year... and pretty much every other airline was hiring.

My main point other than the danger of debt is that past performance is no gaurantee of future performance. For example EZY only needs 80 pilots in the next year and the hold pool already has around 300 in it (so I am told, not verified). That's a big turnaround in itself. FR are parking aircraft for the winter, forcing the majority of new entrants to be contractors and is actively hiring Hungarian pilots.. Virgin have a recruitment freeze on. Thomson and First Choice will be overcrewed during amalgamation. MYT and Cook are muttering about redundancies as part of their merger. Jet2 nor BMIBaby seem to have any significant growth plans for 2008 and Globespan are trying to lay off pilots over the winter on unpaid leave it is reported. Flybe will be following their business plan with some modest growth but their hold pool is quite full and BA will only require a trickle of highly experienced direct entry pilots for 2008.

Meanwhile in Europe giants like Alitalia are teetering on the brink of collapse and others are highly exposed to any downturn in business travel at a time when America is toying with recession and the Euro heads to 1.50 a Dollar...


Just be careful,

Good luck,

WWW

[Artie Fufkin]

It is said those who ignore the lessons of history are destined to repeat its mistakes. I remember seeing posts on pprune in spring 2001 warning that it wasn't looking like such a great time to train which received a similar reaction. I was ready to start training in 2000, but decided it would be best to put things on hold until the beggining of the start of the next cycle.

We know that the global economy is at the end of its 7 year cycle. The aviation industry is known as a good barometer of the global economy and as the economy slows so will our industry. There is also the Thomas Cook/ Airtours merger slowing things down, and the Thomsonfly/ My Travel merger, the Easy/GB merger, Flybe/ BACON merger, Virgin slowing recruitment, Globespan are in trouble, I could go on. The inevitable bad times are due soon (7 year cycle, last downturn started summer 2001??).

The biggest wisdom I heard on judging whether you will find work at the end of flight training is that there are many variables, such as training results, networking, your FTOs industry links etc, but the one single over-riding factor is the state of the job market at the point when you finish your IR.

We don't know what is coming, but I think it is fair to say that starting flight training is always a gamble, and the odds are looking a little longer at the moment. How big those odds are and whether its best to wait a few years before you "throw the dice" is a matter of personal judgement, and good judgement is an essential quality of a pilot.

[Wee Weasley Welshman]

Yeah, fair enough.

Remember though Rex, this thread is read by a lot of Wannabes at varying stages, as such my comments are intended for a wide audience.

Good luck with it all. I wouldn't do Integrated in your shoes but its your choice.

WWW

[Megaton]

BA will only require a trickle of highly experienced direct entry pilots for 2008.

Where did this come from? BA will be recruiting somewhere in the region of 150 pilots per year for the next 10 years. They will continue to recruit from the armed forces, schools and DEPs.

[Wee Weasley Welshman]

150 estimate is a trickle given they are by far and away the largest airline in the country with more pilots than the top five UK airlines below them put together. I also believe that it is towards the upper end of the likely figure and you have to admit that only a proportion of them will be 200hr cadets. Thats the view of my mole.

Its not all death and gloom like Sept 12th 2001 was. Not by a long chalk.


WWW

[Megaton]

Crikey. In that case I'll let them know next time I'm at work! They're expecting to recruit up to 200 in some years and less than 150 in others but those are the numbers they're working on at the moment.

[JB007]

And just to confirm...the redundancy level is way down on the original plan at TCX/MYT due to excess flying planned for next year...I think the figure is now only 5 or 6 if that...

And far too early to assess an overcrewed situation in the UK at TOM/FCA...

Right, off to throw myself out of my bedroom window...!!!!:rolleyes:

[Wee Weasley Welshman]

And their recruitment plans are.........



WWW

[Adios]

...to buyout senior crew members that make big salaries with 1-2X voluntary redundancy package and start recruiting as soon as the ink is dry on the merger, I'd say around January.

That's the rumour on the street.

[Put1992]

I am absolutely *&%"£ing myself about when that time comes to planning funding for the ATPL. Im stressed out at the moment as it is, and ive just got that creeping at the back of my mind.

Being a teenager sucks :)

[G SXTY]

I suspect that's about as likely as world peace breaking out.

And even if everyone did suddenly refuse to self-fund their training, what would happen? Airlines would have to bring back full sponsorship schemes for their cadets, and would receive hundreds if not thousands of applications for every available place. Result - lots of disappointed people who still have their heart set on flying commercially, some of whom would be prepared to get their licences by any means, i.e. pay for their own training. I can't see it ever changing.

The bottom line is that flying is seen as a dream career, and there will never be enough jobs to satisfy every aspiring pilot. That creates competition for jobs, which in turn creates an employers' market. Twas ever so.

[ReallyAnnoyed]

If you could control people enough to make everyone stop funding their own education, I would suggest you use that power to make people stop doing crime instead. That would have a HUGE savings potential for all levels of society even though coppers, judges and lawyers would not like it :} Imagine the huge tax cut you could make! So, in other words, there is about as much chance of a snowball remaining on static display in hell as to make all people in the world refuse to fund their own licence :)

[clanger32]

Also begs the question, in my eyes, of WHY? As has been mentioned above, this is considered a "dream" job for many people.....if you want it, go out there (through whatever means) and make it happen for yourself.

Sorry, just gets my goat when people aren't prepared to work for their self styled dream.....can't get or afford to take a loan? How about working for 3/4/5/10 years and saving hard to pay for it before you start?

I have to question how much someone REALLY wants to do this, if they're not prepared to work and save to fund their training or airlines refusing to provide sponsorship programs is considered a dead end to the idea.

After all, if you really really wanted to be a plumber, or an accountant, or a tree surgeon, you may be able to find a company to sponsor you to train, but most accountants etc train themselves and then hope to find a job where additional training needed will be paid for by the co (e.g. Accountancy degree, then Chartered status when you are working someowhere)