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Asia Best For Aviation Investments

by Mary Swire, Tax-News.com, Hong Kong

05 March 2014


Asia presents the greatest investment opportunity for the aviation sector in the next two to five years, according to global legal practice Norton Rose Fulbright's fifth The Way Ahead Transport Survey.

Its latest survey, entitled Where Next?, reports that 16 percent of respondents from the global aviation sector believe China offers the best prospects for future investment, followed by South East Asia, the Middle East and North Africa (each selected by 11 percent of respondents).

The report also reveals that while various forms of government support would be welcomed by respondents in order to help unlock funding for the aviation sector, a more beneficial view of asset values for risk weighting purposes is viewed as the most effective way of increasing the availability of funding (15 percent).

State investment in infrastructure continues to be the favored form of state support (40 percent). Despite this, just 52 percent expect investment in infrastructure to increase. More expect investment to increase in rail and shipping.

75 percent of respondents believe current market conditions are positive for their aviation business. Almost half (46 percent) believe new opportunities are emerging, and investment in additional aircraft and in the development of new markets are seen as the most promising investment opportunities by 25 percent and 22 percent of respondents, respectively.

Further consolidation within the aviation sector is also anticipated. Almost a third (31 percent) of respondents are planning a strategic alliance or joint venture in the next 12 months, and 18 percent intend to make a strategic acquisition. In line with this, over a quarter (26 percent) expect larger owners and operators to increase their dominance over the market.

Almost half (43 percent) of respondents from the aviation sector have sought or offered funding in the past year, but just 16 percent are satisfied with their current access to funding. The survey indicates that the sector now draws on a more diverse range of funding sources, with 20 percent anticipating that their primary source of finance will be shareholders over the next year, followed by capital markets (15 percent) and private equity (11 percent).

TAGS: investment | business | private equity | aviation | capital markets | China | Africa | Middle East

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