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Ashleigh Standen

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Julia has recently joined our Transportation team here at Reed Smith, having previously been an attorney and policy advisor at the U.S. Department of Transportation and developing strategy and policy with the U.S. Federal Aviation Administration (‘US Regulator’) – including in relation to emerging transportation and advanced air mobility (‘AAM’).

The regulatory framework being built to facilitate AAM around the world can seem intimidating, and is changing with a speed and agility that those working in more established modes of transport may not expect. Julia shares some helpful thoughts on this, and we will be sharing more detailed insights soon – so watch this space!…

Continue Reading We have questions: Julia Norsetter, Policy and Analysis Lead at Reed Smith

Chris leads the Emerging Technology Unit at Global Aerospace, which provides insurance for aviation and aerospace assets with a particular focus on innovation and keeping pace with new technology.

Insurance is a key piece of the puzzle in asset finance, and will be especially important for an entirely new class of assets and supporting infrastructure with their own unique features and risks for owners, operators, passengers, lessors and financiers to understand and accept. Chris very kindly spent some time discussing these risks with us, and provided his thoughts on a few key questions.…

Continue Reading We have questions: Chris Proudlove, SVP and Underwriting Executive at Global Aerospace

mba Aviation provides a range of specialist aviation support services, from portfolio management software solutions to technical support to investor due diligence to airport revenue enhancement and beyond.

The team is now looking to the future of aviation, and the opportunities and challenges that advanced air mobility (‘AAM’) will generate. mba recently organised the Alternative Lift Exchange: Financing Future Technologies event alongside the Airline Economics conference in New York, providing a specialised forum for those working in and preparing for AAM to gather and share their experience.

We had questions about how and why mba is contributing to the momentum of AAM, and David kindly agreed to answer them.…

Continue Reading We have questions: David Tokoph, President and CEO of mba Aviation

As Executive Editor of eVTOL Insights, Jason has a unique perspective on the state of the advanced air mobility space, and helps to connect industry players by gathering and sharing news and views from across this dynamic and rapidly evolving landscape.  

For the eVTOL Insights podcast, Jason interviews people working in a range of aspects of advanced air mobility, including everyone from founders and CEOs to engineers and software developers, marketers and certification experts, lawyers and battery designers, and beyond. Given his broad knowledge of this detailed and complex industry network, I thought we might turn the tables and interview Jason – and he kindly agreed.…

Continue Reading We have questions: Jason Pritchard, Executive Editor of eVTOLInsights.com

With a background in law, politics, and transport services, Clem Newton-Brown is well placed to facilitate the development of vertiports in Australia and to help connect the various moving pieces of the local advanced air mobility (‘AAM’) puzzle. Through Skyportz, his team is working to assemble the expertise and investment needed to make this happen, to ensure that the landing infrastructure is available when the eVTOL aircraft are certified to fly.…

Continue Reading We have questions: Clem Newton-Brown, founder and CEO of Skyportz Australia

The UK Civil Aviation Authority (‘CAA’) announced last week that it will use the certification standards informing the ‘Special Condition for small-category VTOL aircraft’ (the ‘Special Condition’ or ‘SC-VTOL’), developed by the European Aviation Safety Agency (‘EASA)’, as the basis for the certification of new models of electric vertical take-off and landing (‘eVTOL’) aircraft in the UK.

What is SC-VTOL?

EASA pioneered VTOL certification through the issuance of the Special Condition on 2 July 2019, which sets out the technical specifications and requirements developers must meet to achieve certification for new models of VTOL aircraft intended to carry passengers.

In doing so it recognised that VTOL aircraft are an entirely new category of vehicle for regulators, noting in the preamble to the Special Condition that ‘despite having design characteristics of aeroplanes, rotorcraft or both, in most cases EASA was not able to classify these new vehicles as being either a conventional aeroplane or a rotorcraft as covered by the existing certification specifications.’

The Special Condition applies to small rotorcraft with:

  1. a passenger seating configuration of nine or fewer; and
  2. a maximum certified take-off mass of 3,175 kg.

It is now confirmed that the CAA will use SC-VTOL as a basis for the certification of eVTOL aircraft in the UK.…

Continue Reading SC-VTOL confirmed as basis for eVTOL certification in the UK

“Fly along with me,” sings Dave Grohl, “I can’t quite make it alone.” We can imagine eVTOL developers singing along to this as they work towards autonomous flight, as so many of the vehicle models will have to commence operations – however briefly – with a pilot onboard.

But the ultimate viability of the eVTOL proposition relies in no small part on achieving certification for (and confidence in) autonomous flight as quickly as possible. It will take time for aviation authorities, local councils and the travelling public to get comfortable with this, but the economic reality is that the industry will only be able to operate at a sustainable scale if each vehicle’s full capacity is available for paying passengers or revenue-generating cargo. We need to find a way to facilitate safe pilot-free flight while also managing the technological and operational challenges autonomous flight presents – as Dave sings, hook me up a new revolution.…

Continue Reading Learn to fly: eVTOLs and autonomous flight

Hop to it: Vertiports as an asset class

The sums invested in the development of electric vertical take-off and landing (‘eVTOL’) aircraft have been well publicised. It seems that not a week goes by without a new partnership announcement, a new SPAC combination, or another large investment being reported in the press – such as the additional $450 million being invested by Boeing in Wisk, announced at the end of last month. The Financial Times recently referred to a McKinsey finding that ‘investors have bought into the dream, pumping more than $7bn into such projects, mainly through special purpose acquisition vehicles (Spacs) listed on US stock markets,’[1] The article goes on to note that ‘while all kinds of vehicles are planned, from cargo planes to surveillance drones, almost 75 per cent of the money went to companies developing manned electric vertical take-off and landing (eVTOL) craft.’[2]…

Continue Reading Hop to it: Vertiports as an asset class

In an article a few weeks ago on ‘How tech went big on green energy’, the Financial Times referred to a report released in February by Lancaster University and Small World Consulting, which found that the information and communication technology sector (i.e. IT)  ‘is estimated to form ca. 1.8-2.8% of global GHG emissions in 2020’[1]. That, the FT noted, ‘is roughly the same as emissions from the aviation sector’[2].
Continue Reading Greening pains: How are we going to finance sustainable aviation fuel?

The aviation financing industry has undergone a monumental shift in the past decade. As traditional bank lenders have come under increasing regulatory pressure, by virtue of their systemic importance in a decade of low interest rates and a search for yield, private capital (private equity, hedge funds, distressed debt funds, etc.) has been attracted to the relative stability of cash flows and value retention of aviation assets. It is no secret that private equity and other alternative funds have long been accumulating capital, waiting for the opportune moment.

The COVID-19 Pandemic (the “Pandemic”) has wreaked havoc on the aviation and travel sectors. As difficult as this has been to be involved in, distress is attractive to private equity. As airlines restructure and revisit their global fleet compositions, the market reprices distressed assets to reflect evolving operating conditions. In this relatively illiquid market, therefore, there are unprecedented opportunities for longer term investors with experience in distressed assets.
Continue Reading 2020 hindsight: Finding opportunity in distress

Original decision: Wells Fargo Trust Company, National Association (trustee) v VB Leaseco Pty Ltd (administrators appointed) [2020] FCA 1269

Appeal: VB Leaseco Pty Ltd (Administrators Appointed) v Wells Fargo Trust Company, National Association (trustee) [2020] FCAFC 168

The Federal Court of Australia has provided important guidance on the meaning of the phrase “give possession of the aircraft object to the creditor” as used in Article XI of the Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment (the Aircraft Protocol) in the context of an insolvency. It is likely that other common law (and possibly civil law) Cape Town jurisdictions would reach a similar conclusion.
Continue Reading Case Note: What does ‘give possession’ mean under the Cape Town Convention?

Developments in environmental regulation for the aviation industry have gathered momentum over the last year, notwithstanding the challenges arising from the pandemic and the related groundings.

Last month saw the publication of plans for the UK Emissions Trading System, which is proposed to take the place of the European Union Emissions Trading System when the UK leaves the EU at the end of 2020. The baseline emissions reference period for the International Civil Aviation Organisation’s Carbon Offsetting and Reduction Scheme for International Aviation has also very recently been adjusted to reflect the dramatic drop in 2020 aviation emissions resulting from responses to the COVID-19 pandemic, in the context of a heated debate over long-term environmental goals and the aviation industry’s survival. You can read more about this in our earlier blog on the topic here.

Aviation is reportedly responsible for 2 per cent of global carbon emissions, and in the last 12 months we have all had to come to terms with Extinction Rebellion protests and ‘flyksgam’ (discussed in this piece by Ashleigh Standen last autumn). The industry is very aware of the need to reduce its carbon footprint – both for green reasons and to help mitigate its exposure to oil price fluctuations. However, the drivers are frequently external factors. We had become familiar with the push by financial institutions, which are subject to increased regulatory requirements and public scrutiny, as part of a drive for increased sustainability. However, as attention turns to what emergence from the pandemic might look like and our prospects of entrenching green imperatives in our recovery infrastructure, one of the major points of discussion in aviation is the ‘green strings’ attached to government bailouts of airlines.
Continue Reading Airline bailouts: a golden opportunity to take balance sheets from red, to black, to green

The landscape of environmental regulation is changing for aviation operators, due to a powerful combination of global pressures to reduce emissions for one of the transportation sectors with the largest emissions outputs. Plans have recently been published for the UK Emissions Trading System (UK ETS), which is proposed to take the place of the EU ETS when the UK leaves the European Union at the end of 2020.

Plans to establish a baseline emissions reference for the International Civil Aviation Organisation’s Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) have also been adjusted to reflect the dramatic drop in 2020 aviation emissions resulting from responses to the COVID-19 pandemic, in the context of a heated debate over long-term environmental goals and the aviation industry’s survival.

The UK ETS…
Continue Reading All about that baseline: Developments in the UK ETS and the CORSIA emissions baseline

Aviation was exceptionally – and often uncomfortably – visible to the public eye over the course of 2019. The powerful combination of the grounding of the 737 MAX fleet as a result of tragedies and the advancing ‘flygskam’ (‘flight shame’) movement had influenced the global conversation to a significant extent by the middle of the year, which was then compounded by various airline insolvencies and an announcement from a British political party as part of an election campaign that it would investigate a complete ban on private jets from 2025.

As an asset class and as an industry, aviation has been attractive to investors for some time now, as its relative youth as a market compared to its peers and the reliability of its returns have drawn funds from all over the world. Recently, however, it has seemed that some of the features of the market we have come to take for granted have been evolving. For example, the words ‘long haul’ now bring to mind an image of the two-engined 787 Dreamliner, rather than its four-engined predecessors. The famed “double digit” returns for investors may be easing (with IATA reporting a 5.7 per cent ROI for the end of 2019)[1], investments once considered “platinum” are now being sent for part-out, reports of ‘trade wars’ are developing on a weekly basis and we appear to be coming to the end of the era of low interest rates and oil prices.

However, we are also seeing increasing attention from new investors and ever-growing passenger demand figures which, together with the evolutions noted above, indicate a maturing market with a new set of trends being observed by aviation financiers.
Continue Reading The eye of the beholder: After a dramatic year in aviation, how is the industry perceived by investors?

I went to the Bath Children’s Literature Festival a couple of weekends ago, and at one of the events a very well-known illustrator mentioned that the main focus of the climate strike movement was aviation, before going on to suggest that in her opinion another industry was more particularly culpable. A hall full of primary school children (and their parents) nodded soberly – this was not news to them. They know what ‘flygskam’ means.

It is a commonplace in the press at the moment that the aviation industry is a major contributor to humanity’s carbon emissions, especially with the renewed efforts of Extinction Rebellion also hitting headlines. Private aviation is an especially soft target, with high-profile (and even royal) individuals and occasions attracting criticism for their use of corporate and personal aircraft.

The thing is, I have been trying to write this blog post for months now, hoping to be able to do some research and identify some positives to try to respond to this, but there is a dizzying amount of press coverage of the issue every week, and a bewildering number of industry reports from the last twelve months alone, and it is exceptionally difficult to find a unifying message or distil an accurate sense of the progress we are making – even if, like me, you work in the sector and are actively looking for some digestible takeaways.
Continue Reading Means, motivation and opportunity: How can we better respond to flygskam?

Speed read

A party should not assume that the failure of its counterpart to provide or satisfy conditions precedent gives rise to an automatic right to terminate or not perform a contingent obligation, where it could have obtained or satisfied those conditions precedent itself.

Summary

The recent Odyssey Aviation Ltd v GFG 737 Limited[1] in the English High Court saw both the buyer and seller under an aircraft purchase agreement (the ‘APA’) claiming the deposit, as both parties attempted to terminate the APA on the basis of various alleged breaches of warranty, failure to satisfy conditions precedent and non-payment of purchase price and fees.

The case is significant for aviation sale and leasing practitioners, especially in relation the satisfaction of conditions precedent which is noteworthy for transactional lawyers more generally. It was held that a term should be implied in the APA where a party was to ‘have received’ certain documents, evidence or confirmations, or that the sale would take place ‘subject to the fulfilment’ of conditions precedent, the recipient should take ‘reasonable steps’ to obtain them themselves. This was held to be the case even where there is no express obligation to this effect. Failure to take these steps will mean that the intended recipient would not be able to rely on the other party’s failure to satisfy the condition precedent as a ground for termination.
Continue Reading Case Note: Odyssey Aviation Ltd v GFG 737 Limited

Well, sort of.

There are parallels to be drawn – I know, but indulge me for a moment. With Avengers: Endgame released this week, it’s the end of an era.

Much like the Avengers, we in aviation have lost a few of our heroes recently, and there are likely to be more losses to come. As the cover of the latest issue of Airline Economics (pictured) demonstrates, we are seeing very high airline casualty rates at the moment, with forecasts of further collapses in the short and medium term. While it has been sad to see some greats fall (although the disappearances are attributed variously to flawed business models, rising fuel prices, Brexit uncertainty and lack of funding rather than a super-villain snapping his gauntleted fingers…), and we are undeniably looking at challenges as the industry cycle begins to turn, we are also seeing this provoke some self-reflection and perhaps re-direction in the industry.

Some of this reflection relates to Earth Day, which also happened in the last week, and while the commentary on the environmental impact of aviation is more or less constant, there are moments of hope peeping through the fog. We have written before about the need to develop some sort of Tony Stark-style arc reactor to innovate out a lot of the fuel-related environmental side effects, but (if we could turn for a moment from Iron Man to Thor and his lightning bolts…) there are also increasingly viable options emerging in electric technology, which are particularly suited for countries like Australia where there are high volumes of short-haul travel, and few cost-effective options for accessing remote areas. It is predicted that we could see electric 150-seat aircraft with a 500 km range in operation before 2030, which could significantly reduce both the environmental costs of air travel and the operating costs incurred by airlines running these routes, who would gradually become less reliant on expensive and polluting aviation fuel. Innovation in this vein would be a meaningful step forward for our industry.
Continue Reading Aviation: Endgame (… not really)