The likely closure of a pilot training school in Hamilton could signal the end for others in the industry, which generates $226 million a year.
L3 Airline Academy is described as one of the world's leading pilot-training organisations and is likely to close in February next year because students can't come into the country.
Aviation NZ Chief Executive John Nicholson said the importance of international pilot training to the New Zealand economy and the challenges faced have been pointed out to the Government since May.
''L3 Academy may not be lost to New Zealand today, but urgent government intervention is required if [it] and the remainder of the international pilot training industry is to be retained,'' he said. L3, which earlier this year claimed $836,000 in wage subsidies, has set up its own isolation facilities.
The Government today gave no indication of when possible border exceptions could be made, but they would be reviewed ''as and when it is safe to do so".
This year, the international pilot training industry is expected to generate around $51m in foreign exchange earnings with economic activity exceeding $226m, mostly in regional New Zealand. The industry employs more than 380 staff and has 225 flight instructors, with an asset value of about $100m.
Nicholson said that without visa approvals, the industry has stalled.
New Zealand's success with Covid, the quality of training provided and our great environment for training make us attractive to international airlines, he said. In September, 394 international students had signed up to train in New Zealand, a number had visas but none were able to enter the country.
An initial allocation of 440 visas, to be used over the next six months, would save the industry, Nicholson said.
That was the same number approved for Russian fishermen to ensure the survival of the deep-sea fishing industry.
The average international student pilot pays annual tuition fees of $80,000, spends up to 18 months in New Zealand and goes home on the completion of training to employment in airlines.
Pilot training fits the government strategy for international education and fits existing criteria for skilled worker border exemptions, apart from the student classification, said Nicholson.
Interest in training in New Zealand has increased since September. Given the country's success with Covid and the top-quality training provided, several airlines are looking to come here, to move away from their traditional training partners. But they would not wait forever, he said.
"New Zealand has a unique and strategic advantage right now: airlines knocking on our door and our having the ability to train so many future airline leaders, has not existed before this year," he said.
Training schools were reporting strong interest from New Zealand students to start training next year.
''Unfortunately, the economics of training New Zealand students are compromised if 70 per cent of [schools'] students, international students, cannot train here,'' he said.
"Urgent action is needed by the Government to try to retain L3 Airline Academy, to allow international cadets into the country and to ensure the continuation of the pilot-training industry.''
Covid Recovery Minister Chris Hipkins said the health and safety of people in New Zealand remained the Government's top priority.
''Tight border restrictions remain critical to protecting New Zealanders against Covid-19 and ensuring that Kiwis can return home. However, we recognise these decisions can be particularly difficult in some sectors – including aviation.''
He said the Government had been working to support the sector, including providers such as L3, to maintain a strategic footprint of key international education providers.
The Government understood some sectors wanted to manage their own isolation accommodation and it would facilitate this when it could.
"The reality is there is finite capacity within the managed Isolation and quarantine system. A key constraint on adding new facilities is the essential workforce who care for returnees. We need nurses, defence personnel and police to run these facilities, and this a limited workforce.''
Nicholson said that when the L3 training facility was opened by then Prime Minister Helen Clark in 2005 as CTC Aviation, it put New Zealand firmly on the international training map.
New Zealand Air Line Pilots Association president Andrew Ridling said L3 had established its own border quarantine facilities.
''The announcement, effectively ending high-value pilot training arrangements with some of the world's biggest airlines was devastating for its members, the regional economy, and New Zealand's aviation industry.''
With a challenging topography and quickly-changing weather patterns, New Zealand provides some of the most demanding and high-level pilot training available, making it an attractive destination for international pilot cadets, particularly for airlines operating in the Northern Hemisphere," said Ridling, a Dreamliner captain.
His association was working with Miami-based L3 Academy, other industry leaders and continuing to talk with ministers and officials on a possible solution to keep the doors open.
The academy already has MIQ-standard quarantine facilities for offshore students both beginning and resuming their high-level training.
Despite this, and evidence presented on the training industry's major financial worth and benefits to the local economy, Ridling said Hipkins would not allow any pilot cadets in for the remainder of the year, and was likely to enable only ''small cohorts'' of international students generally to enter New Zealand next year.
"The sad irony is that while the Covid 19 pandemic has delivered an unprecedented blow to the global industry, international travel and aviation will eventually recover, pilot cadets and their multi-national airline employers already want them to be New Zealand-trained.''
This meant there was likely to once again be a global shortage of trained pilots and aviation instructors in the medium term.
"With L3's decision to close, we know other training providers will follow.''
Hipkins said support the Government has provided to the international education sector included $51m funding for a recovery plan, removal of levies and the ability of all non-active private tertiary establishments to hibernate without incurring costs.
The Government has established a new category that will allow up to 250 international PhD and postgraduate students to enter New Zealand and continue their studies.
''Allowing these students to travel to New Zealand is a step in the right direction for the international education sector." Hipkins said. "The Government will review other possible border exceptions, as and when it is safe to do so.''