Private-equity investors have become hooked on the air transport business. Some fear an airplane investment bubble is forming. Attracted by a global rise in passenger numbers, an explosion of budget airlines and healthy profits, private-equity funds have poured US$207b into financing commercial airliner deliveries since 2009, during which time almost $900b was spent on new jetliners. But with returns dampening, some investors worry the historically cyclical sector is overinflating. “The big question is, are we in a bubble and is it going to explode in the face of investors? My view is that there is a significant risk of a big bursting of the bubble,” said Michel Dembinski, head of aviation at Japanese financial group MUFG. <br/>
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Aircraft lessors are setting up a lobby group to defend the E550m a year industry in Ireland against competition from Singapore and Hong Kong. The Republic’s status as the world’s leading centre for financing aircraft purchases contributes E550m a year to the economy and supports more than 5,000 jobs. Employers’ group Ibec, through its Financial Services Ireland arm, is formally launching the new industry body Aircraft Leasing Ireland (ALI) Tuesday to help consolidate the sector’s position there. The Republic has around 65% of the global leasing market. Airlines will have to spend US$100b to $120b a year on acquiring craft over the next two decades. According to ALI, Singapore and Hong Kong are bidding to lure key industry players from the Republic to their jurisdictions to get a greater slice of this cake. <br/>
Airlines could lose their precious landing and take-off slots at an airport if they do not operate their flights on time, according to a senior govt official. As part of this exercise, Delhi’s Indira Gandhi International Airport and Mumbai’s Chhatrapati Shivaji International Airport will be monitoring the on-time performance of various airlines for the month of July. On the basis of the data collected, airlines could lose their slots when the aviation watchdog prepares the winter schedule. An official added that while airlines were initially hesitant about the proposal, they have now agreed to it. As flight delays are not always an airline’s fault and can often be a result of inclement weather conditions or other unforeseen circumstances, domestic carriers will not be penalised if a particular flight is delayed only 15%-20% of the times. <br/>
China has cooled to a landmark deal to curb emissions from international flights, with the country no longer listed as a participant in the agreement’s first phase, according to the ICAO. China does not appear on a June 29 list of participants in the voluntary phase of the deal brokered by the ICAO in 2016, according to ICAO’s website. Aviation powerhouse China was included in previous lists. It is not clear why China now objects to the deal. The first or pilot phase begins in 2021. Environmentalists say China’s participation is vital for the 2016 Carbon Offsetting and Reduction Scheme for International Aviation deal, which requires airlines to limit their emissions or offset them by buying carbon credits from designated environmental projects around the world. <br/>