The growth and expansion of the Asian aviation market has been well served by Appleby's Hong Kong office, which has long been recognised for its expertise in aircraft finance law.

Today, the firm's aircraft finance practice encompasses the entire region from Moscow to Tokyo with a focus on the markets of the Middle East and the People's Republic of China (PRC).

Appleby's aircraft finance clients include banks, transaction arrangers, finance and operating lessors, manufacturers, airlines, export credit agencies and private owners. The firm's lawyers have acted as lead offshore counsel for these clients on almost every type of structure from Shari'a compliant entities to Japanese operating leases.

The credit crunch and its impact on the wider economy has had a negative effect on the aircraft finance market and the airline industry, which has also had to deal with high fuel costs or wide fluctuations in price. There is little evidence of new deals being put in place although existing deliveries have continued due to the costs of cancellation. Existing deals are also being restructured to take into account the new economic order.

The PRC and India should continue their long term growth trends despite the current crisis. Both emerging markets have a critical need for an infrastructure and an airline industry that can support the size of their populations and the rapid growth (at least historically) in their economies. This is an issue that will undermine potential development if not properly dealt with by the industry and government. This concern has often been raised by the press in relation to India over the last year. With slower growth, though, one can expect a slower aircraft finance market and at the current time many in the industry are finding that it is difficult to find lenders willing to provide funds.

In the PRC, the central government has responded to the issue recently by, amongst other things, approving applications by a number of banks to set up financial leasing companies. Additionally, there has been a general rise in the role played by domestic aircraft leasing entities that will, we expect, offer increasing competition to overseas leasing companies. This development has in turn been supported by investments by China Development Bank.

In the Middle East there has been a rise in the number of Shari'a Law compliant structures in what has, at least until the recent credit crunch, been a booming market.

In the Asian market generally there has been an increase in the number of low cost carriers that have developed along similar lines to the established low cost model in Western markets.

All of the aircraft finance lawyers in our Hong Kong office are multi-jurisdictional in terms of their own practice, which provides the firm with a distinct advantage because of the increasing number of offshore multi-jurisdictional transactions.

We are supported by the firm's aircraft finance practice worldwide, including our Mauritius office, which has been the location of a number of aircraft financings designed to capitalise on the double taxation treaty Mauritius has with the growing markets of Singapore and India.

The overall picture for the regional aircraft market is positive (despite its highly cyclical nature- and the current crisis) and that in turn means a healthy future for the law firms active in this region. Appleby stands ready to continue to be a major offshore player in this growth and development.

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