Graham Warwick/WASHINGTON DC
What's in a name? Everything - for the commercial airline flight training industry. A reputable name is the first requirement for any company that wants to set up business training pilots for the world's airlines. This is demonstrated by the teaming of two of the biggest names in commercial aviation, FlightSafety and Boeing; expansion of the powerful General Electric empire into aviation training; and the resurgence of the once-proud Pan Am name.
Several years ago, a marketing study concluded the name Pan Am had almost as much global recognition as Coca-Cola. While efforts to resurrect the airline have met mixed results, the commercial flight training company carrying the Pan Am name has grown to be a major independent player.
Bankrupt Pan American World Airways' Miami, Florida, training centre was acquired by Spanish investors in 1992, becoming Pan Am International Flight Academy (PAIFA). Under the entrepreneurial leadership of Pedro Sors, the company began an aggressive expansion, adding simulators and centres in a bid to compete with giants like FlightSafety International and jointly owned FlightSafety Boeing Training International (FSBTI).
Structural change
After a search for financing to back its expansion plans, PAIFA was acquired in 1998 by Boston, USA-based investment firm J W Childs. Now, having grown from its initial six simulators to its current fleet of 35 machines in just eight years, the company is changing gears. The appointment of Wally David as president and chief executive earlier this year, succeeding Sors, signals a slowing of PAIFA's rapid growth as the company puts in place structured management processes to support its much expanded operations.
Those operations now range from ab initio flying training to air traffic control training. David joined PAIFA last year, when his SimCom International general aviation training company was acquired by the Pan Am Academy - one in a long list of acquisitions which includes a number of flying schools and BAE Systems' US regional-airliner simulator operations.
PAIFA's strategy has been to provide customers with a competitive alternative to the established independent training companies. "There is no question, we have reduced the cost of training," says Sors. "We have brought reasonableness to [the pricing of] regional and airline training." David concurs: "The industry was ready, hungry, for a viable alternative. We have emerged as that."
The backing of J W Childs has helped solidify PAIFA's position, but it has also brought the need for more focused management. The company's rapid expansion has been expensive - over $100 million was spent last year, Sors says - and the company must now begin making a return on such substantial investments.
The infrastructure is in place. PAIFA has expanded beyond its Miami hub, establishing training centres close to long-term customers in Cincinnati, Ohio; Dulles, Virginia; Memphis, Tennessee; Indianapolis, Indiana; and St Louis, Missouri. A Minneapolis, Minnesota, centre will be next. In addition, PAIFA has struck a deal to market excess capacity on the large fleet of simulators at Northwest Aerospace Training (NATCO). Signed late last year, the agreement added 60,000h of available simulator time and boosted PAIFA's capacity to 150,000h a year.
Training hubs
Within the PAIFA network, Cincinnati has been established as the company's cargo airline training hub, with DHL as the anchor customer. Dulles serves Atlantic Coast Airlines, with regional jet and turboprop simulators. Memphis serves package carrier FedEx, with a Cessna Caravan simulator scheduled to be joined by another for the Ayres Loadmaster. Miami continues as a major training hub for South American airlines, but the centre is expanding into business jet training.
The Orlando, Florida-based SimCom general aviation training division has also expanded significantly. It has become the factory-authorised training organisation for New Piper Aircraft, providing training on several aircraft types including the new single-turboprop Malibu Meridian. SimCom also provides training for the Air Tractor, Pilatus PC-12 and Socata TBM700. Plans are in place to expand into business aviation training, although the pace is likely to be slowed. "We would like to cover all the gaps and fill in the business jet piece," says David.
On the airline training side, PAIFA can now take a pilot all the way from walking in off the street to flying in the right hand seat of an airliner. "Customers want us to take pilots from zero hours to the right seat of a [Boeing] 737," says David. The company has launched a career pilot training programme. This links PAIFA's growing network of regional flying schools with the general-aviation training programmes run by SimCom and the regional and commercial aircraft simulators at its major centres.
FlightSafety Boeing has recently revised its own growth strategy. Having started out with the aim of establishing major training hubs at key locations around the world, the company is moving towards a distributed network. "We are moving training closer to the airline customer," says vice-president, operations, Pat Gaines, admitting: "Its hard to be an airline's training partner if you are centralised."
The change in strategy is reflected in the UK where, instead of the expected major European training hub, FSBTI has struck deals with existing simulator operators to establish three sites: at London Gatwick, London Luton and East Midlands Airport. "We will continue to follow this pattern, especially in Europe where the hub concept does not work well because of the travel costs," Gaines says. FSBTI's eventual presence in Asia is expected to be a mix of large and small facilities, he says.
Customer driven
"We were very focused on establishing very large hubs. Now we are refocused on a distributed training network," Gaines says. "We are being driven by the customers, for whom travel time is an issue. We have to have devices closer to the crews." Whereas FSBTI previously provided initial pilot training for airlines only at its Seattle hub, "now we can provide it at sites around the world". A Next Generation 737 simulator has been installed at the London Gatwick site specifically for initial training.
FSBTI is also looking at a wider distribution of simulators within the USA, although Gaines says the company's Miami centre continues to be a viable training hub for South America. "In the USA, we will collocate training with the customers," he says.
Gaines believes the trend in airline training is towards independent centres. "If an independent can provide quality, standardisation and reliability, many airlines are open to the model of moving towards and independent," he says. In doing so, airlines avoid the capital outlay of equipping their own simulator centres. "We can ease the burden of moving to a new aircraft, or away from and old one."
Eyebrows were raised earlier this year when aerospace giant Lockheed Martin revealed it was entering the commercial aviation flight training market. The company has constructed a six-bay simulator centre adjacent to Orlando International Airport in Florida. Equipped initially with two used Level C machines, for the Airbus A320 and 737-300, Lockheed Martin's Commercial Flight Training Center is set to open for business in the second quarter.
There is logic in the move into a market outwardly unrelated to the company's core defence business, argues Lockheed Martin. Its primary justification for the substantial investment is that experience operating a commercial simulator centre will be essential to winning future military contracts that will involve contractor-owned and -operated training facilities. But the Orlando centre will be a standalone business and will have to be competitive in the commercial marketplace.
"We will be very competitive on price," says Ed Slomka, commercial training manager at Orlando-based Lockheed Martin Information Systems. "Potential customers have welcomed the opportunity for competition. They are actively looking for alternatives." The centre will specialise in training for single-aisle airliners. "No-one expected the single-aisle fleet to grow as fast as it has," he says.
Regional users
Customers for the Orlando centre are likely to be regional "in size and geography", Slomka says. "We expect North, Central and South American customers." Typical users, he believes, will be smaller operators which have been "bumped" by major airlines from simulator slots at other training centres. Assuming the venture is successful, Lockheed Martin will look at establishing other sites, Slomka says.
If eyebrows were raised when Lockheed Martin revealed its plans, they shot skywards when CAE announced its intent to "become a significant player in global pilot training". The Canadian company has long maintained that its business is manufacturing, and not operating, flight simulators. Now it is building a commercial flight training centre in Sïo Paulo, Brazil, and examining other opportunities.
The move into owning and operating training centres is part of a new business strategy unveiled in February. To increase shareholder value, CAE management has committed to doubling earnings over the three years. To help achieve that aggressive goal, the company is making "a major, disciplined move into the full-service pilot training market," CAE president Derek Burney has told analysts.
CAE's move surprised many in the industry, given the company's past reluctance to enter the pilot training business; the decision by rival manufacturer Thomson Training & Simulation (TTS) to leave simulator centre operations; and CAE's substantial business selling simulators to existing independents - around a third of its sales last year were to training centres.
The reason is straightforward, Burney says. "The equipment or simulation market - the one we are in today - is roughly $500 million [a year]. The total market potential in pilot training is over $8 billion." Burney says CAE is exploring three avenues to expand its market: simulator maintenance support; independent training centres in which CAE is a major equity player; and pilot training partnerships between the company and a major airline.
The Sao Paulo-based Brazil Flight Training Academy is the company's first venture down the second of those avenues. The four-bay centre is set to open for business early next year. While CAE has yet to reveal its expected equity partner in the venture, it has announced its first customer - Brazilian airline TAM, which will use an A320 and a Fokker 100 simulator to be installed in the centre.
CAE says it has signed long-term contracts with three major South American carriers, "which will guarantee revenue generation for the business well into the new century". Pointing out that there are no existing independent flight training centres in the region, the company says: "Sao Paulo, South America's largest hub, is the logical site."
The Canadian simulator manufacturer is "in discussions about similar training centres in other locations, including China", says Burney, adding: "An even bolder initiative on pilot training would involve a partnership between CAE and a major airline, and we are exploring opportunities for this."
Even established independent training centres are catching the expansion bug. GE Capital Aviation Training (GECAT) may not yet be a household name, but its constituent parts are: the London Gatwick training centre owned originally by British Caledonian, then Rediffusion and latterly Raytheon; and the TTS-owned Orbit training centres in the UK. GECAT is owned by aircraft lessor GE Capital Aviation Services, which also owns SimuFlite Training International at Dallas/Forth Worth Airport in Texas.
GECAT expanded substantially at the end of last year, when it took over operation of the Orbit centres under a joint venture agreement with TTS' parent company Thomson-CSF. The deal added new eight-bay London Heathrow and existing four-bay East Midlands Airport training centres and six simulators to GECAT's UK operations. It also provided a springboard for the company's plans to establish commercial training facilities at selected hub airports worldwide.
The first step in that direction also came late last year, when GECAT agreed to market excess capacity on simulators at Cathay Pacific Airways' new Hong Kong training centre. Under the deal, the training company is installing four more simulators in the centre, which is located at the new Hong Kong international airport. Last week, GECAT struck a deal with Crossair of Switzerland to create a joint venture regional airline training centre in Basle.
Dallas/Fort Worth hub
SimuFlite, meanwhile, has embarked on its own expansion. The company is adding four new CAE-built business jet simulators to its fleet of 17 machines, which are being upgraded with new CAE MaxVue visual systems. The company's QuickTurn general aviation training division is expanding, with Frasca-built flight training devices for a number of types being added this year. SimuFlite's Dallas/Fort Worth base will also host a new Bombardier-owned training centre, which will be equipped with four CAE-built Learjet simulators.
Dallas/Fort Worth is rapidly becoming a major training hub. FlightSafety International is building a new training centre there as part of a major drive to expand its business and regional aircraft training network. The company, which builds its own simulators, is adding more than 30 machines to its fleet.
Schreiner Aviation Training - formerly Friendship Simulation of the Netherlands, also has a base at Dallas/Fort Worth, equipped with Fairchild 328 and 328JET simulators. Schreiner also has two centres in the Netherlands and one in Belgium.
Source: Flight International
