Increased Chinese foreign ownership in flight training industry concerns senior security experts

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 an 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 in Australia 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 concern 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 the 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 Australia 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 interests.”

Chinese airlines have been investing heavily in Australian flight training in recent years. In 2015, a China Eastern Airlines subsidiary bought a 50 per cent stake in CAE’s Melbourne training 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 the 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 a year 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 Bankstown 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.”

Mr Whitworth, who has been teaching flying since 1965, said his decision to sell was driven by soaring costs and changes to the system of government loans for 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.

Source: http://www.theaustralian.com.au/business/aviation/china-swoops-on-flight-schools-to-solve-pilot-shortage/news-story/804d8eeddc1b844874ada8e782b6a185

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