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Aviation Webinar Series: Episode 3 - Smart Funding of Human Capital & Skills for the Future

Make sure to also watch the other episodes of Aon's Aviation Webinar Series. Watch them here on demand. 

Looking to 2040 in the macro sense, best estimates indicate that over half a million new commercial airline pilots will need to be trained to supply the industry with expected staffing levels. The funding model for pilot training is very much broken. In many cases, over 90% of financial cost falls on private individuals.
We will look at smarter and more agile ways to fund this billion dollar investment for the industry through smart partnerships around talent assessment, education, training, employers, banks and insurers.

Aon’s David Barrett hosts this discussion with Andy O’Shea, chairman of the Aircrew Training Policy Group at EASA, Simon Azar, vice president of strategy and marketing at CAE and Brian Jilley, head of general aviation at Aon’s Commercial Risk Solutions.

Long-term Pilot Shortage is Very Real
The pandemic has shaken the industry to its core. Notwithstanding that, we know that over the last 10 years, there has been profitable growth with 5-6% growth year-on-year in passenger traffic. In 2018, analysis showed that, over the next 20 years, the industry will require over 500,000 300,000 new pilots. The same is true of the demand for technicians and engineers.
While furloughing and early retirement of current pilots may be today’s challenge, the panel members are confident that air travel will bounce back and so will the demand for aviation professionals. Quite simply, the industry needs more people.
However, it is clear that traditional talent pools need to be expanded and new talent attracted.

Pilot Training: the Status Quo
A total of 98% of pilot students are self-funding – this is often through the ‘Bank of Mom and Pop’ or at least as guarantors for the loan. Going forward, the industry will not be able to rely on the very small percentage of people with the ability to self-fund. Such a financial hurdle also impacts the profession’s diversity. Similarly, not enough women are attracted to the role of pilot - only 5% of commercial airline pilots are female.

Rethinking the Training Funding
To move beyond the current self-funding model, the panel discusses new options for training funding.
With high demand for qualified pilots in a growing sector and a high pass rate for training, one would assume that the risk of an unsecured individual loan defaulting would be small, and therefore loans would be readily available. Not so. Very few banks and institutions are willing to lend the substantial $100,000 training fees. The panel suggests that the way forward is to develop and tell the story of pilot demand and training success so that more insurers understand the relatively low risk.
Another new source of funding could be from airlines. In-built payback insurance could be put in place to cover failure to complete training due to illness or the inability to fly once trained.

It Takes More Than Formal Training to be a Good Pilot
Attracting people to the industry and training them to be professionally competent as pilots are two challenges. Another is to be clear on the behaviors, skills and qualifications needed. Assessment early in the decision to apply to train plays a key part in making sure the right people follow the training – again mitigating risk of failure. This will be a key area of expansion in the coming years.

There Will be a Move Towards Aligning Pilot Training with Academic Qualifications
In some geographies, work is underway to develop groundbreaking university qualifications to equate the pilot training with degree status.

Looking Forward
The panel members are optimistic about the future and the opportunities to attract and fund new pilots. They also discuss the lessons that can be learnt from previous crises that have hit the sector and warn that these should not become forgotten.

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