Posted by - With the exponential growth that the aviation sector has been experiencing over the past years, coupled with the occasional setbacks faced by it, the domain of aviation law has witnessed discussions raising a multitude of concerns: one of the primary concerns being aviation financing. The direct results of the advent of globalisation have been increased global connectivity and a rising need for well-connected network of transportation all over the world. Aircrafts have emerged as a clear winner in this scenario owing to the ease of travel, accessibility and faster commutations. Thus, the financing of the same becomes the logical corollary in terms of an investment option, requiring much deeper deliberation and presenting its own set of concerns.
- The UNIDROIT Convention on the International Interests in Mobile Equipment (Cape Town Convention), along with its protocol on matters of Aircraft equipment, became effective in 2006, indicating significant development for the airline industry. These instruments have led to the creation of an international legal standard for transactions involving aircraft equipment, substantially contributing to increased global connection through the model known as “one flight away.”
- Aviation finance is a form of asset finance, which is quite different from other types of finance as it has certain unique nuances of specialised legal and structural specificities. Aircrafts are considered to maintain their future value relatively well compared to other assets and have a predictable likely market value during the term of any financing and many aircraft models are easily re-marketable. The operating lessors play a key role in the market because the cost of an aircraft means that many airlines do not have the financial status to allow them to purchase aircraft or even finance them.
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