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
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.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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On 22 September 2016, the General Civil Aviation Authority of the UAE issued the new Civil Aviation Regulations Part IV – Foreign Operators Regulation. The FOR shall apply from 1 October 2016.
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