Flying Schools: Liquidation

Baroness Vere of Norbiton Excerpts

Monday 13th November 2023 Lords Chamber

[Lord Balfe]

To ask His Majesty’s Government whether they will convene a working party consisting of the Civil Aviation Authority, Financial Conduct Authority, the Department for Transport and any other relevant body, to examine the case for strengthening consumer protections for customers of flying schools who lose money when such schools go into liquidation.

[The Parliamentary Under-Secretary of State, Department for Transport (Baroness Vere of Norbiton) (Con)]

My Lords, we fully sympathise with those affected and recognise the substantial impact on those individuals. It is important to note that these recent closures represent around 1% of the training school market. We are actively considering options to support current and potential future trainee pilots, including improving guidance from the Civil Aviation Authority.

[Lord Balfe (Con)]

I thank the Minister for her Answer, but three flying schools have gone into liquidation this year. Individual customers are owed up to £80,000 each, and a debt of over £4 million is very unlikely to be paid by the liquidators overseeing this. Surely it is the job of government to protect individuals who are put in this invidious position, where they have to pay up front for a service that is just not being delivered. Certainly, in one case, a flying school was collecting money almost up to the day that it collapsed. We need the Minister to do something. My Question suggested a framework for moving forward. Will she agree to investigate that framework and see whether she can make it work?

[Baroness Vere of Norbiton (Con)]

My noble friend is, I believe, honorary president of BALPA. I am sure he will be reassured to know that I met BALPA, the airline pilots’ union, on 19 September alongside the CAA to discuss this issue. A number of ideas were taken forward but it is clear that we need to improve the guidance and information available to trainee pilots such that the amounts of money handed over are not excessive, because they do not need to be. There is a significant amount of competition in the flying school market. If a candidate is asked to hand over too much money, frankly, he or she should potentially look elsewhere.

[Lord Kirkhope of Harrogate (Con)]

My Lords, as one of those who benefited from learning to fly at a municipal flying school, I am concerned that a number of flying schools are ceasing to trade. I wonder therefore whether my noble friend can do more to encourage our UK-registered airlines; in particular, to make sure that they train their future pilots at UK flying schools rather than at flying schools in other parts of the world.

[Baroness Vere of Norbiton (Con)]

As my noble friend is aware, the aviation sector and the flying school sector are private sectors. I reassure him that we have had a number of conversations with airlines around the need for skills, including new pilots. The airlines do not currently see a pressing pilot shortage; however, I am very pleased that both British Airways and TUI now have cadetship programmes in place. That is great for supporting new trainees, but also really good for increasing diversity.

[Lord Sikka (Lab)]

My Lords, the issues raised by the noble Lord, Lord Balfe, are experienced by millions of people who pay for goods and services in advance, but then do not receive them because the supplying entity has gone into liquidation. A good way to protect innocent customers is to ring-fence all credit balances. If the Minister disagrees with that suggestion, what else would she propose?

[Baroness Vere of Norbiton (Con)]

I think the noble Lord is trying to tempt me into the wider economy, when I am focused on flying schools. But when trainee pilots pay money over to the flying schools, they should ask themselves whether it is reasonable. BALPA is considering a finance fairness charter, which I am sure the noble Lord would also support, which would ensure that flying schools that sign up do not accept excessive advance payments, and that they commit to transparency regarding costs and charges.

[Baroness Randerson (LD)]

My Lords, the Minister seeks to downplay the significance of these problems, and the demise of these three companies. She seeks to downplay the amount of money that is owed to individuals—£80,000 is a significant amount to most people. Is she not concerned that the situation will undermine the reputation of the UK aviation industry, and the skills for aviation that we really need to build up as a nation, rather than undermining them with the failure of companies?

[Baroness Vere of Norbiton (Con)]

Three flying schools have closed. One of those was a planned closure, and the trainees were not impacted. Two were unplanned closures, and trainees were impacted. There remain around 270 flying schools. As I said, it is a small amount. The noble Baroness mentioned £80,000; I cannot corroborate that figure. That seems quite high to me; it would mean that somebody is paying for their entire training up front. Again, this is the point I am trying to make; it is up to the trainees. Working with BALPA and the CAA—wherever trainees get their information—it is about getting the information to them to say: “You do not need to pay vast amounts of money up front, and if a flying school is asking for that, it is entirely reasonable to go elsewhere”. As I say, there are 270 flying schools in the UK.

[Lord Tunnicliffe (Lab)]

My Lords, this issue is essentially a financial one. It is a matter of the chaotic planning of pilot training. Ever since the Second World War, there have only been periods of it being properly done. I was trained in the 1960s, paid for by the national airlines. That yielded a group of pilots which has created four decades of ever-increasing safety. Mistakes were made in demand; I was also responsible for those, having got the number of pilots catastrophically wrong—we had too many. It has gone on like that. In the recent past, we have had this magic formula of leaving it to the private sector. Now, things have happened to the private sector that have put these relatively small businesses under stress. The Minister’s department needs to study the whole thing and see where we are.

I think there must be a real crisis because, as the Minister will know, British Airways has launched the Speedbird Pilot Academy for 60 candidates—wholly paid for, including board and lodging. The problem that has emerged is twofold. First, becoming an airline pilot is probably the profession that needs the right parents more than others as £120,000 is the sort of figure you need. Secondly, there is instability among the flying schools. Will the Minister look into this problem and see whether she can bring some stability to the situation?

[Baroness Vere of Norbiton (Con)]

I am grateful to the noble Lord. The Government have already looked at this and we continue to look at this in some detail. In May this year we published an independent research report commissioned by the Department for Transport which looked into the cost of airline pilot training and the numbers that we are likely to need. It forecast a shortage in about 20 years. However, that prediction was highly uncertain, so I would very much like the airlines to work with the training schools and BALPA to come forward with proposals, which I will happily look at.

[Lord Trefgarne (Con)]

My Lords, is it not the case that many flying schools are having increasing difficulties with the environmental constraints being imposed upon their operations by local authorities, meaning that they can fly for fewer hours during the day than previously, which is beginning to cause something of a problem?

[Baroness Vere of Norbiton (Con)]

I was not aware of the issue that my noble friend has raised. It is right that local authorities are able to impose restrictions on aerodromes in certain circumstances. However, they must do that balancing the advantages of having an aerodrome in a certain location, not only in terms of getting people learning to fly, but all the ancillary services and other businesses that are often on aerodromes and are hugely beneficial.

[Lord Berkeley (Lab)]

Does the Minister agree that one of the reasons for these flying schools getting into difficulty is the lack of air navigation aids, which were cancelled when we Brexited? Will she look into reinstating EGNOS or possibly Inmarsat so that not only can more people can learn to fly but so that we can fly to the Hebrides or the Scillies more easily in fog?

[Baroness Vere of Norbiton (Con)]

The noble Lord is pushing the boundaries of this Question and indeed my patience.

[Noble Lords]

Oh!

[Baroness Vere of Norbiton (Con)]

No, no, no. The noble Lord knows that the two are not particularly related. He makes representations to me about EGNOS, and I am always grateful to receive them.