As the economy continues to founder, the financial ripples are reaching all aspects of the aviation industry, including flight schools. Helicopter flight schools, in particular, are beginning to feel the pinch as many have noted a drop in enrollment levels amid the double burden of a tight credit market combined with suspicion about students’ abilities to pay off loans in the wake of the Silver State Helicopters collapse.
After the training school giant–which operated around 200 helicopters at 33 locations in 14 states–shut its doors last February 3 and declared bankruptcy a day later, more than 2,400 students were left in debt with their professional pilot training incomplete. In many cases, student accounts were emptied by Silver State’s management just before the announcement, and lawsuits are still raging.
A year later, the effects are still being felt throughout the training industry as students find themselves scrambling for educational funding. “Student enrollment is down,” said John Stonecipher, president of Guidance Helicopters. “We’ve got a waiting list of 25 students trying to find financial aid. It’s a combination of things, but I would say Silver State played a role in this. The long and short of it is I think lenders are very apprehensive to lend money to students in the helicopter industry, and as a result we’re having less success with respect to getting students the financial aid they need to complete the program.”
Many of the Silver State students who found themselves victims of the collapse simply had no option but to abandon their flight training plans. “They walked away with a very bad taste in their mouths for helicopter aviation. In fact we are trying to dispel all of the rumors that all the pilot schools are of the same character as Silver State. It really put us in a bad light,” said Stonecipher, whose Prescott, Ariz.-based school was one of several that picked up a handful of Silver State orphans.
Of those who persevered, the hill they face in earning a professional pilot’s certificate grew much steeper. “I found that most of the Silver State students no longer had any financial resources to complete the training. What should have been an $80,000 program has now cost them $150,000, so they’ve got significantly more debt and all the challenges associated with trying to repay that debt,” said Stonecipher.
“I can’t tell you how many people we had come here who just could not secure any type of financing because they had neglected to pay their loans or refused to pay the loan because of pending court actions,” said John Boulette, owner of Northeast Helicopters, based in Ellington, Conn. “They were essentially hung out to dry, so to speak.”
That scarcity of credit has affected not just the Silver State victims, but first-time loan candidates as well. “What we’re finding as well is that students are just looking for other sources, whether it’s equity lines or mom and dad or something like that. They are just being a little more creative than they’ve had to be in the past in terms of funding their flight training,” said Boulette.
The tightening of credit has resulted in a range of responses in terms of enrollment. Bristow Academy–which operates more than 60 helicopters at locations in Florida, Louisiana and California and generally has a one- to two-year waiting list for course slots–has maintained its student intake for the present, according to Nick Mayhew, general manager of the school’s flagship facility in Titusville, Fla. “The enrollment hasn’t dropped but there are people who were booked on courses who pulled out a couple of months beforehand because they couldn’t get financing. We filled those slots with people who were booked a year down the line.” Bristow, like some other major schools, offers both FAA and JAA approved curricula and attracts foreign students, which Mayhew said has helped soften any impact from declining enrollment.
“On the average, for the year 2008, it’s not too bad,” said Chin Tu, the CEO of Civic Helicopters, based in Carlsbad, Calif. “It’s actually more than what we did in 2006, close to 2007. We still had this big rush from 2007 that built up in to 2008, and the momentum did not dissipate until somewhere after May. The second half of the year, after June, was devastating. The credit line apparently disappeared and the economy is bad, so people suddenly a pause to see what is happening.”
For others, it may be a case of waiting for what’s next. “We had our busiest year ever last year,” said Ryan McCartney, flight school director for Oregon-based Hillsboro Aviation. “I would say that we anticipate a decline but we haven’t really seen it yet.”