Grabair bust - again !

[znww5]

Dropped in to Cranfield this morning to discover that Cabair has gone bust - yet again. Feeling really sorry for the guys and gals, it must be devastating.

It really is time that training organisations were made to keep student prepayments in protected accounts, that would stop this 'pheonix' company behaviour.

(I realise this is covered elsewhere on pprune, but as it hadn't made the private forums yet . . . )

[peterh337]

If you forced the use of escrow accounts, the company would not be able to use the money to fund its cash flow, which would defeat the point of giving discounts for up front payments...

To all those why are shocked, welcome to aviation ;)

[znww5]

The problem is that these students are ab initio and being new to aviation are 'soft targets'.
Perhaps I've got the wrong end of the stick, but are you saying that because we know the risks of up-front payments, nothing should be done to protect those who don't?

[RTN11]

are you saying that because we know the risks of up-front payments, nothing should be done to protect those who don't?

I would hope that even ab-initio students would put in some proper research before handing over such a large sum of cash. Even 5 mins spent on Pprune would give at least 10 threads with lots of comments in capitals about not paying up front for training.

On the other hand, it is a calculated risk. If I can get x amount of discount, but I risk losing everything, is it worth it? During my PPL I paid in chunks of £1000. At the time, I felt this was a worthwile risk since it meant every 10 hours, I got one free. The company is still going now, and I never lost any money so the risk paid off. Unfortunately for anyone involved with Cabair it has not, and I'm sure the losses will amount to a lot more than £1000 per person.

During my CPL/IR I simply paid as I flew, settling up every day. No discounts were offered for up front payment.

[peterh337]

The problem is that these students are ab initio and being new to aviation are 'soft targets'.
Perhaps I've got the wrong end of the stick, but are you saying that because we know the risks of up-front payments, nothing should be done to protect those who don't?No; I am just saying that nothing (I can think of) can be done.

The school offers discounts because - usually due to poor financing - they need the money paid up front.

If they were banned from using the money, they would not offer discounts, and then only a complete mug would pay up front, but also the FTO business would collapse because most of them would run out of cash.

I agree the ab initio airline pilot wannabees are soft targets. When I started my PPL I knew absolutely zilch too. But 99% of them won't read pprune before they start, and anyway greed always works so a 10% discount will draw the cash in no matter how dodgy the business reportedly is. My sister, who is not particularly dim, lost most of her savings to a ponzi scammer who offered 8% interest per month....

[Jan Olieslagers]

most of them would run out of cash.Speaking from a comfortable distance, and from a place where most PPL training is done by clubs i.e. not for profit, I can't help wondering if the real effect would only be sorting the boys from the men. Not talking pilot-wise ((edit: or rather, instructor-wise)), but entrepreneur-wise.

[maxred]

Well, I reckon even the men would struggle. Problem is - aviation.

Too many, chasing too few, who have too little, who look for ever cheaper options.

Notice GROUPON, have yet to discover aviation training:hmm:

That would end it mind you.:uhoh:

[FlyingLapinou]

Notice GROUPON, have yet to discover aviation training.
That would end it mind you.


Erm... :}

Groupon 50% discount (http://www.groupon.fr/deals/paris/aeropilot/351816)

[Sir George Cayley]

How many more Cabairs are there left:confused:

SGC

[maxred]

Well I stand corrected, Groupon France is in there. Christ......

On offer ATPL, value £67,000.00, greatly discounted for March, offerred at £37.50. Unlimited places.....

Slippery slope if you ask me:(

[rmcb]

Is it actually confirmed they have gone to the wall?

[RTN11]

Notice GROUPON, have yet to discover aviation training.
That would end it mind you. Erm... http://images.ibsrv.net/ibsrv/res/src:www.pprune.org/get/images/smilies/badteeth.gif

Groupon 50% discount (http://www.groupon.fr/deals/paris/aeropilot/351816)

Yikes!

I've seen schools offering their sim at heavily reduced rates, but simply assumed that was a loss maker hoping to make some money on the chance one person might take up a course, or simply the vouchers never being cashed in.

The type of discount offered on that french voucher cannot possibly be sustainable, and if UK schools start doing the same we may well see more go out of business trying to keep up a deal they offered which is simply too lean to be true.

[peterh337]

The cost of a sim is directly related to the national CAA approval charge.

In the UK this is very high, but elsewhere it might be peanuts.

The UK FTO scene stays in business largely because they work in English, so a lot of foreign pilots come here (same reason UK universities stay in business) and most UK pilots won't go to "foreign" countries :)

[stevelup]

The type of discount offered on that french voucher cannot possibly be sustainable, and if UK schools start doing the same we may well see more go out of business trying to keep up a deal they offered which is simply too lean to be true.

If you read the small print, there's only 10 hours of flying time included so €1758 is hardly unsustainable - rather the opposite - I'd say it was quite lucrative.

I've seen UK based Groupons for 'trial lessons' and they are never competitive. They quote some stupid price like £199 and say that you're getting 66% off. You end up paying £90 for a half hour flight which is no better (if not worse) than you'd get if you turned up at a club.

[mad_jock]

With sim work there is the cost of the sim and the cost of the person driving it.

If your doing none approved sessions the costs are reduced because anyone can run the sim.

And as most of the sim cost is fixed costs with approvals and maint any thing which increases your cash flow outside when approved courses are run is money in the pocket. If its sitting there doing nothing you get nothing if its running with a bloke getting payed 20 quid an hour and you only have to pay for the leccy its a pretty good profit margin.

[peterh337]

Yet most sims are heavily under-used...

[Dan the weegie]

It may surprise you to hear that not all flying schools are going bust but that many other businesses in other sectors go bust too. It's just that the nature of flying school cashflow is that going bust is much more likely because you can run on your cashflow and be bust without realising it for months and months.

It may also surprise you to hear that customers "expect" and frequently ask for a discount for payment up front, you have to give your customers what they want and if it's a discount they expect for an up front payment and they get annoyed if you don't offer the facility you'd be a total idiot not to take them up. The most that a flying school is trying to do is to get you locked in to a course of training if it's being badly run, then there are other markers but anyone who pays up front for ANYTHIING on a debit card or by cheque is the one taking the risk.

Most well run schools have quite a busy sim. They are expensive to run, yearly inspection, Quarterly Tests, independent quality manager, other post holders to be an FTO, sim engineer, bulbs (up to 500 quid a go) quite a lot of electricity not to mention the £150k plus to buy the thing and the cost of a guy to run it.

You can tell a she it school quite early on but you don't know how to recognise one until you compare it to a good school :)

[peterh337]

I'd love to know what procedures the CAA has for dealing with this kind of thing.

Take a purely hypothetical example.

A student has completed the IR course, done the syllabus, but the FTO goes bust just before the 170A.

Somehow I don't see the student being forced to move to another FTO and spend some considerable time and ££££££ there re-doing the very tail end of his stuff, because no FTO is going to just accept somebody to do one flight. It would be outrageous to force a student to go through that.

Presumably the training record is what really matters.

Silvaire - one can get big variations across the EU too. The problem is that the UK has a near-monopoly on (a) English language FTOs and (b) FTOs with a good reputation. OK, one can argue to hell about these, especially (b) (there are some pretty dodgy revenue raising practices on the UK FTO scene) but if somebody with a business acumen set up an FTO at say Zadar in Croatia, they could undercut the UK system substantially. And they would have a huge airport almost all to themselves. The locals would love the business. But they would still struggle with the perception of dodgy training in the "south".

[mad_jock]

I wouldn't be anything to do with the CAA they would claim.

If the FTO wanted to do a flight then a 170A thats what the student would have to do. You would also have problems that if there were any syllabus differences, they would have to be covered as well.

And if it was a new type of twin there would also have to be differences training.

I agree with you though it would be twisting the knife after it had been stuck in.

[Genghis the Engineer]

Silvaire - one can get big variations across the EU too. The problem is that the UK has a near-monopoly on (a) English language FTOs and (b) FTOs with a good reputation. OK, one can argue to hell about these, especially (b) (there are some pretty dodgy revenue raising practices on the UK FTO scene) but if somebody with a business acumen set up an FTO at say Zadar in Croatia, they could undercut the UK system substantially. And they would have a huge airport almost all to themselves. The locals would love the business. But they would still struggle with the perception of dodgy training in the "south".

I don't know about Croatia, but...

Flight school Flying Academy - professional flight training (http://www.euro-pilot.com/)

Prices seem to be about in Euros what you'd pay in stirling in the UK.

There are also, I think, JAA FIC schools out in that neck of the woods.

G

[peterh337]

Czech - got to be good :)

There are JAA FTOs all over JAA-land. I did some research (http://www.peter2000.co.uk/aviation/jaa-ir/) on it. But most won't handle foreign students.

To get the "volume" business you have to set it up properly, with English speaking instructors, etc. This was done in Spain, and to a lesser extent at Egnatia in Greece.

[Sir George Cayley]

So if Cabair in all its guises and bases has gone for good, what proportion of the UK's training provision does that represent?

And leaving aside the poor souls who have lost money, what does that do to the balance of supply and demand.

Could it be a meat & poison moment?

SGC

[chrisbl]

The main issue for the CAA is that there is one less organisation to charge their exhorbitent fees.
They were quite happy to see a phoenix Cabair, because they got money for the approvals. No doubt they will be happy to approve the next phoenix for money.

[captain_flynn]

I guess this is why I haven't seen any of the cabair diamond stars and twin stars flying over my house lately.
Sad news for the students losing so much money!

[BillieBob]

what proportion of the UK's training provision does that represent?Less than 1%, and that will be replaced in a few weeks. Whilst it is unspeakably awful for the 20 or so individuals whose lives have been devastated, the fact is that the effect of the demise of Cabair on the UK flight training industry is negligible.

As for the responsibility of the CAA, the Authority is required by law to approve any organisation that meets the published requirements. The only requirement related to finance is that, at the time of the approval, "A FTO shall satisfy the Authority that sufficient funding is available to conduct training to the approved standards" (Appendix 1a to JAR-FCL 1.055). Since the 'new and improved' Cabair was approved to conduct training, one must assume that this requirement was met at the time the approval was granted. Any subsequent issues related to the marketing and financing of training courses is a matter for Trading Standards and not for the CAA.

Nothing that has happened has any implications for the safety of flight training and, therefore, is not and should not be the responsibility of the CAA's Safety Regulation Group.

[peterh337]

If it is just 1%, who are the other 99%?

If 1% is 20, then the other 99% is 2000. Were there really just 20 ATP cadets in the entire Cabair sausage machine, and are there really 2000 of them in the UK pipeline?

[mad_jock]

http://www.caa.co.uk/docs/175/Flight%20Crew%20Licensing%20Transactions%20April%202009%20to %20March%202010.pdf

There were 1287 cpls issued last year and 20 of that is 1.5% which sounds not alot.

But when you look at that type of training

Oxford can likely manage about 25-30 a month. Call it 300 a year

FTE 20-25 a month Call it 250 a year.

CTC 20-25 another 250

Cabair wanted 100 this year to survive but could have taken 200


Which is 20% of the capacity for that type of zero to hero training.

There is obviously a new start coming along which has forcast that they can make a go of it in the current market.

The fact is Oxford arn't running anywhere near capacity and neither are FTE or CTC even when cabair were taking next to nothing off them. I doudt very much if any of them are over 60% capacity.

There really isn't enough customers for that particular product type. The modualr trainers are in a similar situation but don't suffer the same large overheads that the big boys do.

[Genghis the Engineer]

Also most modular trainers also have revenue streams from trial flights, PPL training, IMC courses, tailwheel conversions, and aircraft rental - which the integrated providers don't by and large.

G

[mad_jock]

And don't forget the infamous trial flight revenue.

But to be honest most FTO's doing CPL/IR's and the like don't tend to deal with that side of GA training.

[BillieBob]

Which is 20% of the capacity for that type of zero to hero training.Correct, but that was not the question. "The UK's training provision" is not the same thing as "The UK's zero to hero training provision". If you want a specific answer, you need to ask a specific question.

[mad_jock]

And to answer peters question there are more than likely over 4000 pilots currently going through the system to come out at the other as CPL/IR MCC. Not all of them will complete.

How many out there with sub 1000 hours and no type rating your guess is as good as mine.


Currently there are in my estimation less than 400 jobs per year being created in the UK and the Irish market. As soon as the loco's fleet purchases have stopped that will drop.

[frontlefthamster]

BillieBob,

After your eloquent post, I'm tempted to ask you:

Which organisation is the economic regulator of civil aviation in the UK?

What is the purpose of such economic regulation?

(I'm also tempted to ask how much good economic regulation turned out to be in other areas of business, but this isn't Jet Blast).

[rmcb]

Billiebob - I agree with you that the SRG should not be responsible for the trading standards remit, but I feel the CAA (writ large, don't care which department) has a responsibility somewhere within it.

They prescribe where to train for a CPL/IR, there is no competition. I feel there is a moral imperative if nothing else.

[peterh337]

Yes, with the CAA having strapped down the training options so tight nobody can move, they cannot really say with a straight face that they are not responsible for a hypothetical FTO being run by a bunch of shysters.

OTOH I can't see what they can do that would be useful. You cannot regulate business practices. The institution of a Ltd Co is now centuries old and despite it being a hugely popular vehicle for incompetent / dodgy business practices of every kind (as I well know having been in business since 1978) nobody has done anything about it. Only in the most blatent cases can Directors be disqualified, and then you just get your wife / brother / cousin / son / etc to run the next incarnation.

What I can see happening, one day, is a student suing the CAA for the money he lost. This is because the CAA is sailing very close to the wind with its FTO approval and charging regime, while not regulating FTO financial viability. The fact that the latter is, as I say above, impractical, is not relevant.

A related example of liability is the UK AOPA mentoring scheme, whereby (it appears) AOPA had to get insurance to protect itself because it is so obviously acting as an "introduction agency" and a "vetting agency" for the mentors - by requiring them to be AOPA members.

[LysanderV8]

With the CAA's experience of the ATOL (Air Travel Organisers Licensing) scheme, which protects monies paid in advance by holidaymakers, I would have thought it easy to apply similar principles to Air Training Organisers.

Students' money would then be protected via a bond, ususally an insurance policy, and the training organisation would still have use of the cash.

Training organisations would have to submit audited accounts and demonstrate financial stability on an annual basis before a licence were issued.

Lysander (one time ATOL holder)

[Genghis the Engineer]

There is an economic regulation group in CAA, separate to the better known safety regulation group. I believe it's currently branded "consumer protection".

It is mandated to protect fare paying passengers, which is fair enough. That needs doing.

It isn't resourced or mandated to take any role in protecting student pilots (or to be fair student aircraft engineers, student dispatchers or anybody else in the community). I think that there's an unwritten philosophy that as prospective, embryo, or actual aviation professionals we're supposed to be able to look after ourselves.


The only thing that is going to change that view by the CAA is government action. That is potentially possible, if enough people write to their MPs and start making stuff happen. If you go back a few decades, this is exactly the sort of thing that got microlights regulated in early 1980s, which originally CAA just chose to ignore.



Now before we all start doing that, here's a question - would this really be a good idea. Is CAA likely to be the most effective regulator? And what will this cost - compared to other options?

And what are those other options?

- Nothing? Which in effect means leave communities like PPrune to gather and publish information about schools. This works after a fashion, but clearly not well enough, as evidenced by the number of people who have just lost out bigtime in Cabair II.

- Self regulation by the community. So, for example AOPA or BALPA setting up a voluntary scheme where schools provide evidence of their competence, minimum facilities, and financial viability, and provide facilities such as escrow or maximum holdings of student cash and a few other things from a list that could be cooked up quite quickly by a set of aviation grown-ups.



Personally I would not favour this coming from the CAA. It'll take years to get them to do anything, they'll not be particularly efficient, will only be accountable to parliament - not the flying community, and they'll be hellishly expensive - as they are in everything else they do.


If the aviation community get together and enable an organisation such as BALPA or UK-AOPA (better still, both together) to set up a "voluntary" scheme (that we can then all shout very loudly should be regarded as essential before undertaking any flying training) this would almost certainly be quicker to establish, cheaper to administer (and any scheme, sooner or later, will end up being paid for by the flying community), and more effective than anything CAA would, or could, do. It would also be directly accountable to the members of the administering organisations.

G

[Sir George Cayley]

Not sure where this fits into the discussion, but as the CAA take fees and charges both from the ATOs and students does this create some type of responsibility?

And will this years increase be in line with inflation?

SGC

[Genghis the Engineer]

They are taking fees to fulfil the current responsibilities - which are for SAFETY regulation. Not economic regulation.

Add more responsibilities, they'll take more money. This is inevitable.

G

[mad_jock]

If they saw someone external starting up such a scheme they would take it in house as quickly as possible.

If you are running such a scheme you would have complete power over the commercial pilot production in the UK. The airlines would hate it and so would the CAA not having a hand in it.

Also as well that would be a serious amount of cash to be in charge of. It would have a through put of say 40k*1500 a year which would be minimum 60million and very well be over 80million. With a VAT content of over 12million.

And that is just the commercial pilot students not including the PPL's and engineers etc.


Which is why the schools need to continue running their pyramid training schemes getting the money upfriont. If they don't have it they will have to get money at the market rate and will fold.

You would also have something that nobody wants you to have be it airlines, CAA or schools.

You would have the true statistics about the flight training in the UK. How many people start, how far they get how much it costs. The CAA have for years been stopping that info coming out.

[rmcb]

Not sure where this fits into the discussion, but as the CAA take fees and charges both from the ATOs and students does this create some type of responsibility?

I believe it does.

They are taking fees to fulfil the current responsibilities - which are for SAFETY regulation. Not economic regulation.

Agreed. However, they approve a FTO using financial viability as one of the criteria. It is not unreasonable for a punter to assume this is a stamp of approval, however misguided.

I believe this is part of 'safety'. Cost is an important factor in decision making - if you can get into an airfield without having to do that extra circuit, might you cut corners? another six minutes... 0.1 of an hour... £30 maybe... 10 flights of the same... next one's 'free'...

Large transport about to push back, might you rush your post start checks in order to get past this monster to avoid the 10 minutes waiting behind at the threshold?

[Genghis the Engineer]

Sorry Jock, I disagree.

The money can, and should, be handled by banks. A regulatory scheme should simply ensure that it's being done properly. Plenty of systems exist already to regulate banks.

CAA have never tried to stop information being readily available about flying training, they've just never seen it as their job to provide it.

And surely AOPA/BALPA/whoever have no incentive to do anything but be open with their members about the data they hold. There will be limitations of-course, but only at the level of not revealing commercially sensitive information about individuals or individual companies. Summary information about the whole industry is another thing.

CAA were quite happy for years allowing gliders to self regulate until forced by EASA to do otherwise, they are happy to let microlights and homebuilts self regulate via BMAA and LAA, save for periodic audits of practices and procedures.

I can see absolutely no reason why CAA would want to take this over, although I'm sure they'd like to know it's happening and ask for some sight that it's being done well.

G

[rmcb]

mad_jock - that's music to my ears... I thought I was alone in that thought process.

I tried once to get these stats. from the CAA. The only response was 'commercial sensitivity and data protection precludes our divulging blather drone, drawl, blah, blah, blah'.

Understandable, but a little imagination could release this information in a benign fashion. If a FTO doesn't want the stats. released because they're a bad reflection, well, smarten up your act, boys!

Yawn.

[mad_jock]

The CAA will not give any usefull information on flight training end of story. They will duck and dive and come up with excuses so they won't give it out. The whole industry doesn't want the data out there. They need the money put into the sector to keep it going even though only less than 30% of the gradutes will get jobs.

http://www.caa.co.uk/docs/175/Flight%20Crew%20Licensing%20Transactions%20April%202009%20to %20March%202010.pdf

You will notice that the give numbers but have cleverly done it so there is nothing useful to be had out of them. Even if you took the cpl issued and type ratings issued you can't do anything with it because it includes all type ratings issued not the first one. And even the first one doesn't tell you that much because it will include p2f. Nobody wants you to know how many people qualify each year and how many actually get employed.

To be honest I would expect all the big schools to go immediately pay as you go on the day if the data did have to go outside the CAA. If they wern't going to get access to the money there is no point getting involved in any scheme which I presume they wouldn't if it was pay as you go.

There are actually quite a few schools out there that do do pay as you go but they are all modular.

Don't kid yourself about Balpa they are as political as the rest. It suits BA and a few others to have the option of large commercial schools to use. But they don't want to pay for it . The schools will be protected by BALPA "for the good of the industry" apart from which they all know each other from squadron days or flying the line with BA.

AOPA isn't really anything to do with that level of training and it has enough on its plate looking after the interests of the GA community.

[peterh337]

You will notice that the give numbers but have cleverly done it so there is nothing useful to be had out of them

This is what I have been saying for years and keep getting accused of alleging conspiracy by the same old 1 or 2 suspects :ugh:

The CAA avoids publishing data which would enable an estimate to be made of how many PPL holders (etc) give up flying within X years.

I think this is because doing so would show the flight training industry in very poor light.

Very occassionally someone from the CAA drops a hint in some conference, along the lines of 90% packing it in before the first renewal i.e. within 2 years.

[Genghis the Engineer]

So you don't trust CAA and don't trust BALPA.

So who can do it? Is this a job for UK AOPA?, they seem to like doing stuff like this.

G

[rmcb]

So who can do it?

I really hate these questions; I am keen on light regulation, but where it fails dramatically it needs to be tightened - and you can't cherry pick the causes.

Certainly not the CAA; while these companies behave within the law, the CAA is showing a distinct lack of spine when dealing with these sharks.

This begs another question - is GA training too cheap? Are we deluding ourselves?

[G-STRX]

aaahhh...the sweet sweet sweet sound of ye' olde rumour mill turning........makes me long for lazy daZE in Georgia....wait...hold on...

......that's the not the old mill, that's the hollow sound of kicking a corpse...which I am depressingly familiar with.......

[rmcb]

How far did you get before losing the will to live?

[peterh337]

Well, yes, but this is contrary to the way European regulation works, which is to go for organisational approvals rather than individual approvals.

The European system is all about industry protection.

[rmcb]

As the CAA will tell you ad nauseam they are not a governmental organisation.

What they fail to acknowledge is that they are a monopoly able to set policy hanging off our legislature's framework (the ANO), and set their own fees. Sounds like a quasi governmental organisation.

They have enormous power; I believe with that with monopolistic privilege comes the responsibilty to do the best by all of its contributors. It was failings identified in the ValuJet 592 investigations that caused the FAA to be split up. Maybe the CAA should go the same way. Do the safety regulation bit well - as they do - but let someone else do the approvals and the mundane stuff.

[mad_jock]

your talking as if the CAA/ uk goverment has any choice in the matter these days.

They will in the not so distant future only be the in country agency for a european agency.

What the agency will do in regards to UK training will remain to be seen. Alot of ither countrys do not like and are opposed to the way the UK has it organised with satalite outside country schools etc.

It could very well be that the agency will change matters quite significantly.

The caa won't care to be honest because they can slope shoulders and say nothing to do with us its a EU ruling.

[rmcb]

The whole thing stinks. I'm off to sulk in front of Independence Day.

Goodnight all.

[wigglyamp]

Peter337

The CAA and EASA are certainly not there to protect business. They both load more costs and bureaucracy on us - just see the costs about to be levied on EASA 145 maintenance companies who also hold FAA repair station approvals. Something in excess of £2800 to apply to CAA for oversight of the FAA approval - no choice in the matter as it forms part of last Year's bi-lateral.

[peterh337]

I can see the regulator here is screwing the industry for fees, but at the same time no matter which way you look, they are operating practices which keep the industry in business so that, presumably, it is able to pay those fees.

One little example is the inability to use freelance instructors for the PPL, IR, etc like you can in the USA.

I also don't think the treaty specified the £2800 charge...

The whole business is screwing itself up its own orifice, while trying to make a living out of the end customers who are still out there, willing or able to pay the costs of everything.

[mad_jock]

What do you think the fee's would be like in the US if they weren't payed by a federal source?

[Cobalt]

I would make a strong distinction between fees for infrastructure, and regulatory fees.

A regulator who creates rules exactly what has to be subect to approval, and then charges for these approvals, is problematic. It is also problematic that this regulator is allowed to set these fees at cost-plus-profit, so is guaranteed to be profitable.... up to the point where there is a single ATO that pays for the entire cost of training supervision, and the annual approval fee will be 3.5 milion pounds. And the only pilot who graduates that year will have to pay for the entire CAA PLD to get the licence issued.

An airport which does not cover its cost goes bust. A regulator just increases fees until others go bust.