According to the fourth Norton Rose "The Way Ahead" Transport survey - Where are you now?

A global survey of 1,000 plus respondents across aviation, rail and shipping

  • 83% of global aviation respondents deem government investment in infrastructure "essential".
  • However, just 33% believe government support will be adequate over the next five years.
  • Increased financial constraint is highlighted as one of the most significant changes to aviation businesses between 2010 and 2012.
  • Of aviation respondents, 66% have sought to change their market position or geographical focus since 2010.
  • 25% intend to draw on structured finance for the first time, 24% on long term leasing, 17% on bond financing and 16% on private equity.
  • London leads as the financial centre considered best able to meet the aviation sector's financing needs (31%), followed by New York (15%) and Singapore (8%).
  • Fuel cost is the sector's biggest concern - 64% regard more efficient fuel consumption as the most important development focus for the aviation sector.

Calls for additional and new airport capacity are intensifying according to international legal practice Norton Rose's "The Way Ahead" Transport survey - Where are you now? Eighty-three per cent of respondents from the global aviation sector believe that government investment in infrastructure is "essential". Despite this, only a third of aviation respondents believe that government support will be adequate over the next five years.

The need for additional airport capacity at existing airports is regarded as the most urgent infrastructure need by 41 per cent of the aviation sector, followed by the development of new airport capacity in new or growing markets, which is favoured by 32 per cent of respondents.

While demand for government investment in infrastructure is high, the survey suggests that the aviation sector has weathered the years following the global financial crisis marginally better than the rail and shipping sectors. A third (36 per cent) highlighted increased financial constraint as one of the most significant changes to their business between 2010 and 2012, against 40 per cent of rail respondents and 42 per cent of shipping respondents.

This may be due to the fact that aviation businesses are more likely to have sought to change their market position in response to a more challenging business environment than rail or shipping. Two-thirds of aviation respondents have sought to change their market position or geographical focus since 2010, compared to 58 per cent of both rail and shipping respondents. The new strategies adopted by the aviation sector include entering new market segments (52 per cent), entering new geographical markets (45 per cent) and increasing the range of products and services they offer (45 per cent).

The aviation sector anticipates that the majority of its funding will come from traditional sources such as shareholders, bank debt and the capital markets over the next two years. Despite this, there is evidence that the sector is exploring alternative forms of finance. A quarter of respondents are using, or intend to use, structured finance for the first time, 24 per cent long-term leasing, 17 per cent bond financing and 16 per cent private equity.

The survey also suggests that the aviation sector is looking to a wider range of financial centres to meet its funding requirements. While 31 per cent believe that London is the financial centre best able to meet their funding needs, followed by New York (15 per cent) and Singapore (8 per cent), the aviation sector is also looking to markets other than the traditional financial centres such as Canada, Australia, Switzerland and the Middle East.

Neil Poland, Global Head of Aviation, Norton Rose, comments:

"Despite a difficult few years, the aviation sector now appears more robust in terms of recovering from the global economic slowdown, and is looking to grow into new markets."

"While the aviation sector has changed its market and geographical focus, traditional forms of financing remain entrenched although there is interest in alternative forms of finance including structured finance and longer term leasing."

"Overall, the aviation industry appears relatively buoyant but the cost of fuel is a major concern and demand for government investment in infrastructure is growing. Additional and new capacity in both developed and new markets is felt to be needed urgently in order to support future growth."

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