Before we start, nothing in this article should be considered as legal counsel. Rather, it is simply an invitation to consider stronger due diligence and ask whether a non-disclosure agreement is appropriate for the relationship between a student pilot and an Approved Training Organisation (ATO).
Let’s first consider what a non-disclosure agreement (NDA) is. A non-disclosure agreement is a legally binding and enforceable agreement between two parties regarding what may and may not be disclosed to a third party; a breach of which may result in court-awarded compensation. NDAs are commonly agreed upon by the employer and employee in industries that rely heavily on intellectual property and trade secrets. This intellectual property has commercial value and naturally requires protection.
The relationship between the student and the ATO is not the same, so the question arises: why do some ATOs consider it important that their customers enter into an NDA before training commences?
Perhaps because their training material contains intellectual property with commercial value that needs protection. Given that flight training is heavily regulated and standardised to align with learning objectives (LOs) publicly available in Part-FCL, it seems unlikely that there would be any trade secrets in the training material.
One possibility concerns how organisations manage customer feedback. The growth of online review platforms and social media has made it easier for students to share their experiences and has increased the importance of reputation management for training providers. In this context, the use of NDAs may raise questions about how open and transparent the feedback process is intended to be.
Another possibility concerns the significant upfront course fees, which creates a situation where student pilots are committing substantial funds at an early stage, with limited flexibility should circumstances change, whether due to dissatisfaction with the service provided, or, in more serious cases, if an ATO were to cease trading.
What part should the national aviation authority play in the financial oversight of Approved Training Organisations (ATOs).
Both UK and Commission Regulations (EU) lay down administrative procedures related to civil aviation aircrew, specifically Annex VI (Part-ARA) charges the national aviation authority with providing oversight to organisations offering practical and theoretical flight training. Traditionally, this oversight has been interpreted as focusing on safety, but does the national authority have an obligation to ensure that ATOs are financially secure?
If we take the UK example, although the same wording appears in both UK and EU implementing regulations, Subpart ATO to Annex VI (Part-ARA) of the UK Aircrew Regulation (UK Regulation (EU) No. 1178/2011) defines the UK CAA’s oversight requirements for Approved Training Organisations. Specifically, AMC1 ARA.ATO.105 Oversight programme states that an ATO audit inspection should also focus on “evidence of sufficient funding’.
Bearing in mind that adhering to AMCs, being an Acceptable Means of Compliance, enjoys a presumption of conformity to the hard law implementing regulation (IR), it should be a safe assumption that national aviation authorities, being defined as the competent authority, would adhere to AMCs, or at the very least publish an Alternative Means of Compliance (AltMoC). Taken at face value, this means that UK CAA, is not complying with the Implementing regulation ARA.ATO.105 Oversight Programme – the UK’s national aviation legislation.
It begs the question: does the UK CAA not have the capacity, competence, or appetite to provide the robust financial oversight required to stop bad actors in their tracks by offering consumers similar protection that the Financial Conduct Authority (FCA) does?
As it currently stands, prospective students and often their families may find themselves making large upfront payments while also entering into legally binding agreements that limit what can be shared externally. This highlights the importance of carefully considering not just the training itself, but also the terms under which it is provided.
Furthermore, the party providing financial support should have sight of all documentation relating to the flight training. Recent anecdotal evidence suggests that adult student pilots are being asked to sign NDAs in isolation from the person footing the bill. This may lead to an untenable position in which a dispute exists between the funding party and the ATO, yet the student is prohibited from discussing any details to reach a resolution.
In the absence of any change to the completely absent ATO financial oversight provided by UK CAA, the sage advice remains to carefully consider matters, perhaps selecting another training provider if asked to sign an NDA and make sure that sufficient due diligence is completed before parting with large sums of money in advance – you wouldn’t buy a house without searches and surveys, so why spend the same sums of money up front with ATOs without doing some digging?
