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Dubai International Financial Centre Gears up for Boom in Emerging Markets Aviation Leasing and Finance
(13 November 2017)

 

Dubai International Financial Centre (DIFC), the leading international financial hub in the Middle East, Africa and South Asia (MEASA) region, is well positioned to support the expected boom in aviation finance required for the rapid growth of air travel forecast over the next 20 years.  DIFC is the leading centre for aviation finance in MEASA.

The International Air Transport Association (IATA) has forecasted that the global volume of passengers is expected to double over the next 20 years, led by a surge in air travel in the Asia-Pacific region.  Four billion passengers are expected to fly in 2017, increasing to 7.8 billion passengers in 2037.  

Strong demand growth is driving the expansion of the world’s fleets of leased aircraft, with a consequential growth in the need for aviation leasing and finance.  According to Flight Fleets Analyser, the number of leased fleets operated in the Middle East has increased by 38% from 189 in 2011 to 260 in 2016. In Asia-Pacific, the number of leased fleets grew from 781 to 1,857, more than doubling over the same period.

The first aviation finance transaction was conducted at DIFC in 2009 by Emirates Airlines.  Since then, the Centre has grown to become the regional leader for aviation finance in the Middle East, Africa and South Asia.

Salmaan Jaffery, Chief Business Development Officer, Dubai International Financial Centre Authority, commented, “We are witnessing continuous strong growth in DIFC’s aviation finance sector. The use of our structures for aircraft leasing and financing transactions represents the third wave of finance enabled by the DIFC after banking and asset management.”

Salmaan Jaffery was speaking at an aviation finance forum hosted by DIFC for representatives from leading banks, leasing and finance companies, fleet operators and specialist advisors.  The forum took place during the 2017 Dubai Airshow where the world’s airline industry convened in Dubai.

The sustained growth in traffic at Dubai International Airport strongly supports IATA’s forecast that global passenger volumes will double over the next 20 years.  The volume of passengers at Dubai International Airport has more than quadrupled over the past 10 years and is forecasted to reach 90 million passengers in 2017.

Over the next 20 years, growth in air travellers in this dynamic region is set to outpace the global average of 3.6%, with Africa and the Middle East emerging as the two fastest growing regions through 2037, expanding annually at 5.9% and 5%, respectively.

At the same time, the MEASA region is also expected to dramatically expand both its passenger and freighter fleets at rates far above the global average of 3.5%. The Middle East fleet size is set to grow by 5.1% annually, Africa is set to grow by 4.1%, and South Asia by 8.2%.

According to Boeing Company and Airbus SE forecasts, the global passenger and freighter aircraft fleet will nearly double to around 45,000 aircraft to accommodate demand growth for more aircraft over the next 20 years. 

Salmaan added, “Dubai’s incredible success as global aviation hub will continue to support the industry. The increase in regional demand creates significant opportunity for aviation leasing and finance firms in MEASA who are driving deal flow via DIFC’s established regulatory and legal frameworks.”

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