Gary Crichlow, Senior Aviation Analyst

"EU ETS. Implications for the aviation industry"

• Overview EU ETS
• Credit risk. Cost of compliance vs. non- compliance
• Asset risk. EU ETS effect on residual values  

To download the presentation, please click here

Click here to view the survey findings

Are you expecting an increase in corporate travel with your company?

March 1st 2010 – London, New York, Hong Kong

Business travellers are expecting to fly more often over the coming year, and predict increases in their travel budgets, according to the third annual Corporate Travel Survey by Ascend (www.ascendworldwide.com), the aerospace specialists.

Peter Morris, Ascend’s Chief Economist, says the poll represents the first genuine sign of a mild recovery in the aviation market.
According to Morris: “The Ascend Corporate Travel Survey suggests a recovery – if only a weak one– is in the air, as both budgets and the number of business flights look set to increase over the next 12 months.
“Not surprisingly, the sentiment in North America is more positive overall than in Europe, reflecting trends in the wider economies of those regions.”
The figures do not necessarily mean that companies are loosening their purse strings by much, “It’s noteworthy that the number of corporate travellers who expect to fly more this year outstripped those whose budget for flights would increase,” explains Morris.
Asked about customer satisfaction, survey respondents showed a marked dissatisfaction with on-board service levels. Morris says, “Business passengers still have plenty to grumble about, especially increased security queues and declining on-board service levels, but they now feel they have more choice and cheaper fares.”
More than 250 corporate travellers from around the world were polled. The majority – 151 respondents – were typically business class travellers on long haul flights.

The survey found:
More business flights planned
 An expected 7.7% increase in the number of business flights planned over the next year
 35% expect to fly more for business, compared to only 10% in the 2009 survey
 Only 13% expect a decrease in flights, compared to 45% last year
Increasing air travel budgets for business
 An expected 7.6% rise in air travel business budgets this year
 28% expect an increase in air travel budgets, compared to only 9% in 2009
 Only 20% expect a decrease in budgets, compared to 54% last year
 16% from Europe and 9% from North America expect number of flights to decrease
More optimism in North America than Europe
 27% from Europe and 15% from North America expect a decrease in air travel budgets
More use of travel agencies
 An increase in numbers using travel agencies to find better deals: 36% from 29% last year
 A decrease in numbers using the internet to find cheaper fares: 40% from 48% last year
 Fewer companies planning to reduce number of staff travelling to conferences: 37% from 55% last year
Please click here for a full presentation of the figures, with graphs:

For more information please contact Nancy Prendergast nancy@tannissanmae.com or Lise Colyer lise@tannissanmae.com at Tannissan Mae Communications on +44 (0) 20 7243 4440.

About Ascend
Ascend (www.ascendworldwide.com) is the world’s leading provider of specialist information and consultancy services to the global air transport industry. For over four decades it has supplied the most reliable, trusted and up-to-date aviation industry information and insight available anywhere.

Offerings include:
• Aviation data
• Aircraft and engine valuations and appraisals
• Consultancy solutions

From aircraft manufacturers to operators, financiers, lessors and suppliers, the aviation industry relies on Ascend to help make informed decisions and capture new opportunities.

Ascend is based in London with offices in New York and Hong Kong.

Gary Crichlow, Senior Analyst, will be on the panel of industry experts.

With preparation for the EU ETS well under way and increasing transparency on the mechanics and regulations in the United Kingdom governing the regime, the event will review the implications for aircraft owners and operators of compliance with the ETS.  This will entail a discussion of legal, economic and commercial considerations.

George Dimitroff, Senior Aviation Analyst and Christine Jie Yan, Regional Senior Analyst for Ascend Asia will both be speaking at the event.

For more information on the event Click Here
 

For more information on the event Click Here.

The Dublin Air Finance Conference always serves as a good barometer of where we are in the cycle and this year was no exception. The more upbeat were trumpeting the record attendances, the banks with money to lend and the number of start up lessors there to explain their business plans. The less optimistic in the crowd were quick to point out that there was no sign of a bottoming out of airline losses, that banks still didn’t have enough money to go around and that most the new lessors still hadn’t done a deal. An even divergence of opinion like that probably means that things probably aren’t getting any worse but we shouldn’t be ordering the cases of champagne just yet.

There were a number of attendees deservedly taking a bow for their efforts in avoiding a serious liquidity crisis in 2009. First among these were of course the export credit agencies. Next in line were the manufacturers although they tended to demur on taking a bow, preferring just to say that they were never worried about a funding gap in the first place. Everybody else was breathing a sigh of relief that they had survived the year in one piece.

The predominant themes of the conference were fairly predictable: the 2010 funding gap; airline profitability; and how lessors are faring during the downturn. There was some good news on the funding gap – banks do have higher budgets for 2010 compared with 2009 even though they are still nowhere near the highs of the past few years. Export credit agencies are still doing all they can to keep the planes in the air. Finally ExIm backed bonds, without a doubt the best innovation of 2009, have the potential to change the way in which aircraft are financed. These bonds, coupled with the successful tapping of the EETC markets in late 2009 mean that the capital markets should go a long way to mitigating the risk of a funding gap for new aircraft.

However, there is no sign that banks have much appetite to finance PDPs or older aircraft. Also, most bankers are still having to compete heavily with other departments in their banks for capital and it won’t take too many bad headlines before their prized budget allocations get cut. It seems that every deal has to be close to perfect to be approved and that conversations with risk management are getting longer and more complex.

On airline profitability the general feeling was that there is still a long way to go before we see profits returning. Somewhat curiously, the airlines that presented at the conference tended to avoid using the words ‘profit’ and ‘loss’ preferring to discuss their reductions in capacity and costs and their access to financing.

Among the gloom there was one way of finding an optimistic view – seek out a startup lessor. There were several startups at the conference to explain their business plans and talk up the opportunities that exist at the bottom of the cycle. There is still no sign that existing lessors are willing to sell aircraft at below their book values however and so it may take all of this year for the buy/sell spread to narrow enough for deals to happen. Most of the startups are Dublin based (with the RBS alumnus group now reaching a critical mass) with Chinese lessors expected to grow their activities in 2010 but not to become a global force for up to five years.

Overall the conference had an odd mood. Dublin has always been a brash conference and this year was no different. However people were being bullish about to a year in which they will do a level of business that would have been considered serious underperformance two or three years ago. It just shows how much re-building work needs to be done for a full recovery.