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by Charlotte Stockton 12th March, 2019
2 min read

The aviation industry: onwards and upwards?

It seems like investment in the aviation sector is flying high, as 69% of private equity and venture capital professionals expect the amount of money their industries invest in the sector to increase throughout 2019 and 2020. But why the upwards interest in investing in an industry that could pose many risks, including that of an ESG and regulatory nature.

The aviation sector has been growing significantly and rapidly worldwide, thanks to both increasing demand for tourist and business travel. We live in a global economy that is more connected than ever before, thanks to technological advances as well as lower airfares. Research by Boeing found that annual average passenger numbers on commercial airlines increased by 6.2% between 2012 and 2017.

However, it is not just the commercial aviation segment that is booming. In our globalised economy, we now also demand the import and export of goods from around the world, and planes are often the preferred method of delivery, despite the environmental impact.

Therefore, as the sector continues to grow, much investment is needed in airport infrastructure as well as the airlines and planes themselves in order to continue the increasing rate of route expansion and fleet capacity. Investors must however be aware of the challenges to various components of ESG that the sector faces due to its speed of expansion – indeed some are concerned it is expanding too quickly. These opponents are passionate about their cause, as has been seen in the fight to stop another runway being built at London Heathrow Airport. Therefore, investment will also be needed in technologies to counter these risks, such as cleaner and greener fuel solutions.

Every investment has it owns risks and rewards, and GK Investor Services help investors and portfolio companies manage domestic and international political, policy, regulatory and ESG risks. Creating political risk advisory in private equity as a discipline, our analysts advise on buy and sell side mandates, enabling investors to identify risks and create value over investment hold.

Get in touch below to learn how we can help you mitigate risks and maximise opportunities to increase your asset value throughout the investment lifecycle.

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