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Cautious optimism in the aviation industry

8 November 2019

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For the third year in a row, we’re proud to sponsor and participate in the Airline Economics Growth Frontiers 2019 which was held between 4-6 November in Hong Kong. More than 1,100 global airlines, lessors and financiers got together to discuss the current trends, market development and sector outlook in the aviation finance space.

Our team of experts representing the UK, Ireland, Hong Kong, China, Singapore and Japan attended and spoke with peers to explore how the industry will evolve and drive growth. Below are some key takeaways we hear on the ground.

1. Why GATS matters?

Global Aircraft Trading System (GATS) is needed to bring the aircraft leasing business into the 21st century. The introduction of a GATS Trustee will do away with the current costly and time consuming novation process.  On average, an aircraft is traded 5 times in its lifetime. For both airlines and lessors the GATS Trustee will help free up their internal resources and allow them to concentrate on their core business. At Intertrust, we are advanced in the process to become an approved GATS Trustee.

2. Aviation funds

With the introduction of The Anti-Tax Avoidance Directive (ATAD) and further regulation inevitable, will the market for larger aviation platforms look to use more regulated structures in future? After conversations with our peers over the last year it is clear to see that fund structures are becoming more apparent. Fortunately, our teams at Intertrust are well positioned to administer both a non-regulated SPV structure and an aviation fund platform. We were interested to see that there is an ever increasing interest in fund structures for the aviation market and expect that this will not only help our clients with regulation changes but will also serve to increase the investor base for aviation finance.

3. A slowing cycle?

After a decade of strong growth in the aviation sector, signs are now pointing to a softer outlook fueled by slowing global GDP and subdued tourism and trade. However, against this backdrop, Asia-Pacific and China still look like the bright spots for the Aviation sector due to higher levels of economic growth, rising middle class growth and increasing propensity to travel.

4. Flight to stability

Macroeconomic conditions are increasingly pushing investors towards less volatile asset classes. Aircraft leasing provides fixed incomes over long periods, offering predictable and consistent earnings. Coupled with prolonged periods of low interest rates, aviation continues to attract investors seeking stable, if not excessive, returns.

How we can help

We’re a global leader in providing tech-enabled corporate and fund solutions to clients operating and investing in the international business environment. We understand the complex nature of the aviation finance and leasing industry. Our expert team spans all the main financial hubs, combining local knowledge with international best practices to help meet your goals.

For more information, please contact our team.