While the past two years has been a period of intense turbulence for the aviation sector, according to White & Case’s latest aviation survey, 85 percent of respondents expect Asia-Pacific to see the fastest growth and expansion in the aviation sector in 2022, the highest globally.
Download the survey findings here.
The survey, developed in partnership with Mergermarket, interviewed 100 senior-level executives at entities that have either financed or invested in the aviation industry in the past three years. Key Asia highlights include:
- The Asia region’s fundamentals are sound, with a burgeoning middle class and strong regional travel markets.
- In APAC, 90 percent of respondents expect aviation restructurings and insolvencies to increase in 2022, reflecting the fact that APAC airlines generally have not benefited from the same level of government support as airlines in Europe and North America.
- Notably, no respondents in APAC expect aircraft financing to decrease in the year ahead.
Overall, Aviation sector executives expect to maintain or increase investment in 2022, despite continuing headwinds caused by COVID-19 and concerns about the global economy. They also see grounds for optimism as airlines and lessors now access a wider range of funding opportunities and opportunities arise with ESG considerations within aviation in 2022.
“Rebuilding balance sheets and restoring passenger confidence is going to take time,” the survey’s authors write. “Uncertainties lie ahead, and (as the rapid spread of COVID-19 variants remind us) there is no room for complacency. Yet as this survey shows, there are also tentative grounds for optimism. First, airlines and lessors now have access to a wider range of funding opportunities than ever before. Innovative financing is the order of the day: In addition to traditional sources, such as banks, capital markets and export credit agencies, the aviation sector is increasingly tapping into funding from alternative capital providers, including private equity and hedge funds. High-net worth individuals and family offices are now part of the mix as well, along with new capital market products, such as green bonds.
“Second — and closely linked to the evolving financing environment — is the rising awareness of environmental, social and governance (ESG) considerations within aviation,” the authors said. “Airlines and lessors — and the investors who back them — are making the first steps towards decarbonising aviation with initiatives that span everything from the development of sustainable aviation fuel (SAF) to the first, albeit short-range, electric aircraft. This matters, because the future of aviation is as much a battle for hearts and minds as it is about technology. COVID has turned many of us into teleworkers, while the rise of the ‘staycation’ has reminded travellers of the good times they can have close to home. Winning back passengers — business travelers in particular — may not be easy. Against this background, travelers of all types are increasingly aware of the environmental impact of their journeys. Seen in this light, even small steps toward boosting the green credentials of airlines could make all the difference. The aviation sector that emerges from the pandemic is likely to look very different from the one that went into it two years ago. But it is also a sector that is likely to be more flexible, leaner, a little greener and — above all — better adapted to whatever the future has in store.”
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