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From time-to-time, transactions or scenarios occur that require consideration of whether an operating lease or a finance lease is the best way forward for parties involved. Whilst their structures are similar, there continue to be key differences in how operating and finance leases are structured and function. …
Continue Reading Operating lease and finance lease – the key differences

In 2021, the International Air Transport Association (IATA) announced its goal for the global aviation industry to meet net-zero emissions by 2050. The International Civil Aviation Organisation reinforced the commitment to this target at the most recent UN Climate Change Conference. While there are a number of ways to drive aircraft decarbonisation, in recent years, there has been an increased focus on sustainable fuel to power flight.…

Continue Reading The Take-Off of Sustainable Aviation Fuel

The European Union, through its aviation safety authority (EASA) has taken steps to address the future VTOL traffic management challenge with the development of an unmanned traffic management system, called the “U-Space.”…
Continue Reading EASA’s U-Space: The future of air traffic management for drones and VTOL

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

Hail a black cab on a busy London street, and you can assume that the driver will follow the ‘rules of the road’ to your destination. However, what can a commuter expect when taxis begin to take flight?

With Airbus, Boeing and even Uber, amongst others, developing and investing in electric take-off and landing (eVTOL) aircraft, the concept of flying taxis is quickly becoming a reality rather than a concept relegated to Sci-Fi. Test flights are currently being conducted on eVTOL aircraft, and while estimations for their commercial roll-out vary, it is likely we will see flying taxis in the next few years. One market research company has estimated that 430,000 air taxis will be in operation by 2040. As such, ‘rules of the air’ are in order for the safe operation of air taxis.…

Continue Reading ‘Rules of the Air’: EASA Publishes World’s First Air Taxi Rules

“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

As a result of the COVID pandemic, with the resulting payment defaults amongst several airlines , the past few years have seen a surge in interest in distressed debt opportunities within the aviation sector. One particular area which has seen a lot of attention has been Japanese tax leasing – namely the Japanese operating lease (“JOL”) and Japanese operating lease with call option (“JOLCO”) products.

JOLs and JOLCOs have been staples of the aviation market for many years. Both are essentially operating leases with an investment of Japanese equity, typically provided by a Japanese corporation with tax capacity. This is usually twinned with limited recourse senior debt from a Japanese bank or a Japanese branch of an overseas bank, such that the credit of the underlying lessee is integral to the transaction as the revenue flowing from the lease would be used to pay the debt.…

Continue Reading Distressed Assets: JOLs and JOLCOs

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

As the global economy becomes more interconnected, aviation takes on an increasingly central role in our collective economic growth. The aviation industry supports 65 million jobs and enables the best part of $3 trillion in global GDP annually. If aviation were a country, it would rank among the world’s largest economies.

With the loss of…

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?

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?