ISTAT Jetrader - Summer 2024 - 34

committee member and independent
investor, before Adam Pilarski, Ph.D.,
senior vice president of consulting at
AVITAS, took the stage. Pilarski outlined
several key trends and forecasts
regarding the aviation industry in Asia
and globally.
He discussed the impact of
deglobalization, noting it as inflationary
due to reduced outsourcing, which also
boosts union power and leads to higher
wages. Highlighting historical growth,
Pilarski pointed out that, in 1975, India
had four times the air passengers as
China with a similar GDP. However, the
roles have reversed, with China now
surpassing India in both GDP and air
traffic. Despite this, India's current
air traffic growth is competitive and
possibly faster than China's, with
projections suggesting it could overtake
China by the 2030s-2040s if trends
continue and China's growth slows.
The shift in travel dynamics was
another focus, with the blurring lines
between business and leisure travel,
partly due to the rise of hybrid work
models, which allow for extended
leisure time.
On the industry side, Pilarski noted
that OEM issues are reducing aircraft
supply, inadvertently driving up aircraft
prices. He warned of a potential
third bubble in aircraft orders, citing
examples of recent heavy ordering by
airlines and lessors in regions like the
Gulf, Turkey, India and Saudi Arabia,
which might lead to future reallocations
of planes between customers.
Pilarski concluded with predictions
of rising ticket prices driven by inflation
and continuous demand growth amid a
tight supply scenario.
Fireside Chat With
Donal Boylan
In a Fireside Chat moderated by Simon
Hanson, chairman of the Asia Pacific
and Middle East regions at Avolon,
Donal Boylan from the VietJet Air Board
of Directors shared his deep insights
into the aircraft leasing industry
3 4 * THE OF F I C I AL PUBL I CAT I ON OF ISTAT
and VietJet's strategic responses to
industry challenges.
Boylan reminisced about his early
career in 1989, when aircraft leasing
was still nascent, emphasizing the
value of experiencing diverse roles
within the industry. He highlighted
Asia's, and particularly China's,
significant role in aircraft leasing, which
constitutes a third of the industry, and
noted China's aggressive expansion
into manufacturing sectors like EVs
and batteries.
Discussing his preference for the
dynamic airline sector, Boylan detailed
how VietJet navigated the COVID-19
crisis, including a severe grounding
of its fleet and substantial capital
losses. In response, VietJet is now
capitalizing on Vietnam's shifting bond
market dynamics, which have opened
up following a real estate downturn,
and is planning to explore cross-border
financing options.
Boylan also addressed the leasing
industry's perceptions, criticizing the
unfair risk assessment of VietJet, which
unlike some of its peers, managed to
avoid restructuring. He proudly noted
VietJet's strategic shift from reliance
on China to expanding into markets like
India and Australia, quickly establishing
a robust presence.
Airline C-Suite
Financing Panel
During this panel, moderated by Valerie
Tay, managing director for Asia at
Sky Aviation Leasing, Mark Cezar,
chief financial officer at Cebu Pacific;
Tian Chao, deputy chief financial
officer at Spring Airlines; and Riyaz
Peermohamed, chief aircraft acquisition
and financing officer at IndiGo, shared
insights on their strategic financial
maneuvers during and post-pandemic.
Cezar expressed regret that Cebu
didn't capitalize on ordering planes
during the pandemic like IndiGo.
He highlighted Cebu's use of sale
and leaseback transactions for its
A330s with an uncommon 459-seat
configuration, diverging from typical
finance lease strategies for widebodies.
Chao discussed Spring Airlines'
transfer of US$280 million from Hong
Kong to Shanghai, which boosted
company confidence despite extensive
groundings. He mentioned the
operational challenges of maintaining
a single aircraft type due to engine
issues, indicating a shift toward greater
reliability even at a cost. Spring, mostly
engaged in finance leases, is open
to purchasing aircraft from lessors
reducing their exposure in China and is
fully financed in increasingly favorable
RMB rates.
Peermohamed noted IndiGo's
evolution to consider multiple aircraft
types due to its scale, and the growing
interest from Indian banks in aircraft
financing. IndiGo is exploring finance
leases and opportunities via its
subsidiary in GIFT City.
The panelists also discussed their
hedging strategies: Cebu uses fuel
collars and is cautious about entering
carbon hedging due to market volatility;
Spring aligns its financing with China's
green initiatives; and IndiGo maintains
fixed rates for operating leases and
floating rates for the few finance leases.
Technologically, both Cebu and
IndiGo have adopted chatbots to
enhance customer service and reduce
costs, with IndiGo's bot supporting
10 local languages. Spring has set up
a data analysis center to scrutinize
costs more closely and plans to
acquire A320/1neo aircraft in 2026,
indicating a proactive approach to fleet
management and financial planning.
Cargo Panel
During the Cargo Panel moderated by
Lewis Sutherland, chief commercial
officer at Deucalion Aviation, experts
from the freight industry shared
insights on the current state and future
of cargo aviation. The panel included
Eamonn Forbes, chief commercial
officer at Titan Aviation Leasing; Matt
Hoesley, chief commercial officer at
ISTAT Jetrader - Summer 2024

Table of Contents for the Digital Edition of ISTAT Jetrader - Summer 2024
