Some things to look out for over the coming months

Victoria
By Victoria March 18, 2013 13:47

Some things to look out for over the coming months

It is the start of a new week and we are rolling fast towards the Easter break, thus it is a good time to start thinking about what is on the horizon and what could be making the news or changing fortunes for some in our industry:

Firstly Delta Air Lines could be hit during 2013 and beyond by the US Renewable Fuel Standard rules (RFS). Delta when it purchased the Trainer refinery last year switched 32% of total 185,000 barrel a day output to jet fuel but that will not be of any assistance as Capitol Hill has made clear that Jet fuel is included in the RFS. This is now becoming news worthy because the cost of biofuel credits that refineries and wholesalers in the US must purchase to offset production of non-biofuel blended fuels, known as Renewable identification Numbers (RINs), has gone through the roof by 2000% since the turn of the year and now RINs are topping the $1 mark for the first time. Shares in refineries are now falling fast because of the RIN price surge, Delta will pay a hefty price and the purchase of Trainer might look like a bum deal in another 12 months-time. All talk in the refinery market is that increased costs from RINs will not be passed down to customers – That is the variable that we all have to look out for and it is worth following this story if you have an interest in the fortunes of Delta Air Lines.
Meanwhile in Russia, businessman Oleg Tinkov is finalising plans for the launch of Tinkoff Airlines. Lessors must take note of this man’s plans as he is looking to lease up to 200 737NGs as he aims to link-up what was the USSR with a viable low-cost carrier. His greatest problem will be the unstable regulatory platform in Russia that is, at times, down to whatever Mr Putin thinks is best. If you can confirm that your aircraft are secure under the local jurisdiction(s) then this is indeed an opportunity.

As pension funds around the globe continue to fret about the lack of safe investment opportunities (do they still exist?) and the complete lack of return in the same, many are turning to aircraft and aviation related-investments for obvious reasons that we have gone over a thousand times over the past four years. Now though it is worth keeping an eye on some of the largest funds in the APAC region (and indeed the world). The Japanese government-run fund, GPIF, is the largest pension investment fund in the world and it is starting to drop its conservative thinking in favour of emerging markets equities and alternative assets. This is a far cry from investing in aircraft, which are small numbers indeed to these guys, however it is clear that the appetite for risk is returning and it is now more than ever that aviation should be putting the case for the transferable asset that has double-digit returns and clear timelines – aircraft. It is time to start courting the likes of the GPIF and going in through Baring Asset Management in the first instance is the best bet to get a word to the correct ears.

Finally it is worth noting that Airline Economics Growth Frontiers Dublin 2014 is at this time open for booking. Our original lower-cost room blocks at the Shelbourne Hotel are all but exhausted and we have a block of about 20 rooms remaining. The sponsorship slots are now all taken bar two on hold for returning decisions and the booking site is live and running at www.aedublin.com. Due to the huge demand we have set up hotel deals with the Westbury and the Fitzwilliam and we have hired the entire Cliff hotel (next door to the Shelbourne). The provisional schedule will be out by the end of the week. Take a look at the site it is all the same as 2013 including the venues prices and dates. I look forward to seeing you there.

Victoria
By Victoria March 18, 2013 13:47
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