Personnel Considerations

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Pros and Cons of Pilot Training Contracts

Some operators use training contracts to help retain pilots who they have invested in by providing them with company-paid training. The way such agreements generally work, the pilot promises to stay with the company for a given amount of time after receiving company-paid training.

If the pilot leaves sooner, the pilot must reimburse the company for the cost of his or her training. The arrangement gives operators some assurance of a return on their investment.

Contracts are common for initial training, particularly on larger jets. Gulfstream initial training can cost about $100,000. Even the roughly $10,000 it costs for Falcon 10 initial training can be a major expense for a small operator.

However, there are some potential disadvantages for companies that use training contracts. For example, some pilots who want to avoid having to reimburse their employer might resent having to remain with a company to avoid that cost. Disgruntled employees could negatively impact morale.

There is other potential economic fallout, notes Phil Gibson, president of Crosswind Consulting. “You have to consider how it effects the whole department.”

While contracts allow companies to sue pilots to recover their money, senior management has to consider if the legal fees exceed the training cost, he said.

Pilot supply and demand, along with longevity, are other factors to consider when establishing training contracts, Gibson added. Today’s growing pilot shortage creates more career opportunities.

On the other hand, veteran pilots are less likely to dislike contracts because of their seniority and expected retirement benefits.

Chris Broyhill, transportation director at Exelon Business Services, contends that training contracts are paramount when jobs are plentiful. “It’s the pull of the airlines,” where a predictable schedule with excellent benefits often tempt business aircraft pilots to join a commercial carrier, he said.

Exelon employs 18 pilots and once required 24-month contracts for initial and upgrade training. But enforceability is questionable when a company requires contracts for recurrent training, which would keep a pilot continually indebted.

“It’s like being an indentured servant; it won’t stand up in court,” said Broyhill. Offering reasonable contract conditions can work to a company’s advantage.

They make contracts less burdensome and encourage pilots to stay, according to Charlie Odell, senior consultant at Business Aviation Solutions. He recommends prorated contracts. “Someone may find that perfect job, and it’s only fair for the employee to pay what remains, not the whole contract,” he said.

Such arrangements also show that a company understands career moves. Nullifying the contract if the pilot is terminated, or the company goes out of business, should also be part of the deal.

Daniel Wolfe, general manager of Nationwide’s Aviation Business Center, said his company doesn’t use training contracts, but instead relies on astute hiring to retain pilots.

“We only have 10 pilots. We can take the time and be selective and find the right person,” explained Wolfe. “We interview and hire as a group.”

Wolfe questioned how a pilot would fit into the department’s culture once the contract ended.

“We have a process that works for us,” Wolfe said, noting that just one pilot has left his company in 15 years.

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This article originally appeared in the July/August 2017 issue of Business Aviation Insider. Download the magazine app for iOS and Android tablets and smartphones.