Dubai Cements Position Among Top Finance Hubs for Aviation

 - October 8, 2018, 10:34 AM

Increasing confidence in Dubai has made the Gulf’s leading trade hub one of three major worldwide commercial aviation financial centers, alongside Dublin and Hong Kong, aviation officials proclaimed at the recent Airline Economics Growth Frontiers conference held in the emirate. In addition to its status as the home of Emirates Airline, it also plays host to Dubai Aerospace Enterprise (DAE), whose leasing arm—DAE Capital—boasts a $15 billion portfolio of 370 aircraft that ranks it among the world’s top five lessors.

“Today, there are three main centers in the world [for commercial aircraft finance]: Dublin, Dubai, and Hong Kong; New York is no longer a hub,” said ABL chief executive Ali Ben Lmadani during an October 2 session at the conference. “Look at the number of lessors based in these cities. In New York, there are hardly any left.” Headquartered in Dublin, ABL Aviation also operates offices in New York, Casablanca, Hong Kong, and Dubai starting this month.

Ben Lmadani commended aircraft as an asset class because only two main OEMs compete in the industry, simplifying the investment process. “Aviation sees a 6- to 8 percent annual return, compared to 3- to 4 percent in real estate.”

DAE chief executive Firoz Tarapore expressed a similarly ebullient attitude toward the air transport industry. “We operate in an industry that is truly blessed by an extremely favorable environment,” he said. “Operating in this environment is an incredible luxury in that it allows us to plan ten years ahead, knowing that there is certainty around orders and other commitments that people have made.”

He warned of the dangers of Trump protectionism, adding that the lack of policy certainty around trade sets a barrier against large commitments. “Toning that down would be a massive enabler for us,” he said.

Panel members noted that short-term headwinds facing the regional and global industry include a 50-percent increase in oil prices in the last 12 months, along with a 50-percent rise in interest rates during the same period.

Asked by AIN to assess the size of the Islamic finance market in the region, panelists demurred. However, Mounir Kuzbari, managing director of Novus Aviation Capital, told AIN after the session that the Islamically financed fleet in the region totaled approximately 1,000 aircraft, worth around $125 billion.

A major topic at the conference centered on the question of whether or not people want to fly for 18 hours nonstop, such as from Perth to London Heathrow, or stop over halfway at a place like Dubai International Airport (DXB). Management at the Dubai gateway believes the comfort of its lounges can stem passenger migration to point-to-point intercontinental flights.