arc Parent learned to fly before he earned a driver’s license. As a teenager in the 1970s, he’d hitchhike 15 miles from his parents’ modest home in the Montreal suburbs to the Saint-Hubert Longueuil airport, where he took lessons in a Piper Cherokee. Before he turned 18, he’d flown a Cessna four-seater 2,800 miles to the Bahamas and back with a friend.
The demand for CAE’s services is likely to keep growing. The International Air Transport Association projects that the annual number of airline passengers willworldwide by 2037, driven in part by rising international living standards that are giving more people money to fly, with 54% of the growth coming from the Asia-Pacific region.
Flying airliners can be boring — the vast majority of flights go without a hitch. Pilots keep themselves ready for the worst through sessions in full flight simulators, 13-ton machines on telescoping legs that buck and roll through six degrees of freedom.
“Having worked with CAE for years, we trusted them with our training,” says Jenkins, so AirAsia decided, “Let’s just focus on the airline business.” By the 1990s, CAE was riding high with a 67% share of the commercial simulator market, but the computer revolution in Silicon Valley was about to end the good times. The increasing power of commercial software and off-the-shelf graphics processors eroded CAE’s technology edge, and a steady rise in the value of the Canadian dollar starting in 2002 made its products more expensive than the competition, tipping the company into crisis.
CAE faces formidable competitors that see the same opportunity in training. Through acquisitions, the defense contractor L3 has cobbled together a civil simulator and training business that has the second-largest market share behind CAE, and Airbus and Boeing have expanded into pilot training as part of their push into higher-margin services. In the lucrative niche of business jet pilot training, CAE is going up against Flight Safety International, owned by Warren Buffett’s Berkshire Hathaway.
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