One of the ways they have been in search of efficiency is looking for newer airplanes
NEW YORK--(BUSINESS WIRE)--NEW YORK--(BUSINESS WIRE)--The emerging markets that offer the greatest growth potential for the commercial aviation industry include China, the Philippines, Malaysia, Indonesia, and Latin America, according to Jeff Knittel, President of Transportation Finance at CIT Group Inc. (NYSE: CIT) cit.com, a global leader in transportation finance. This topic is one of many discussed in CIT’s 2012 Global Commercial Aviation Industry Outlook (cit.com/vodcastknittel), the latest in a series of in-depth executive video Q&As featured in CIT’s Executive Insights series(cit.com/executiveinsights).
Emerging Markets Ready to Take Off
With recent growth in emerging markets and a growing base of flyers, Knittel emphasizes that: “It’s really about demographics. Every day there are more and more people entering the middle class. They want to have nicer things – whether it’s TVs or refrigerators. But they also want to see the world. And the best way to see the world is to fly.”
Rising Fuel Creating Efficiencies
With oil hovering at more than $100 a barrel, airlines have now developed an operational hedging program in search of efficiency. “One of the ways they have been in search of efficiency is looking for newer airplanes,” Knittel explains.
Aircraft Leasing Provides Financial and Fleet Flexibility
According to Knittel, aircraft leasing provides the airline industry financial and fleet flexibility. In addition to using less capital, fleet flexibility allows lessors and airlines to optimize a specific situation. “As assets, airplanes have 25 to 30 years of useful life, but airlines may only have a demand for that asset for 10 to 15 years,” says Knittel. “The role of the operating lessor is to take that aircraft, deploy it for that 10 to 15 year period, and then redeploy it to someone else who has a demand for that type of asset.”
Long-Haul Aircraft Is the Future
According to Knittel, the 2012 outlook for the global aviation sector is dependent on overall economic growth. “I think we’ll see continued slowness in Europe until there is a resolution to some of the European debt issues.” Despite these headwinds, Knittel says, “I think underlying growth in the United States and Asia is going to be a net positive and you will start to see an acceleration of growth throughout the year.”
And as the world becomes a smaller place, “people want to visit new places and go to places they couldn’t go before. The way they do that is with newer, fuel efficient long-haul equipment.” Knittel continues, “Efficient long-haul aircraft are going to allow the industry to grow profitably and we believe that’s a segment that will continue to grow in the future.”
Individuals can go to 2012 Global Commercial Aviation Industry Outlook to view the complete video. Other recent video Q&As featured in CIT’s Executive Insights series(cit.com/executiveinsights) include: 2012 U.S. Energy Sector Outlook and the Retail Finance Outlook.
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About CIT Aerospace
CIT Aerospace provides financing solutions to a broad spectrum of the global aerospace value chain ranging from operators of commercial and business aircraft to manufacturers and suppliers in the aerospace and defense industries as well as financial institutions. cit.com/aerospace
Founded in 1908, CIT (NYSE: CIT) is a bank holding company with more than $34 billion in financing and leasing assets. A member of the Fortune 500, it provides financing and leasing capital to its more than one million small business and middle market clients and their customers across more than 30 industries. CIT maintains leadership positions in small business and middle market lending, factoring, retail finance, aerospace, equipment and rail leasing, and global vendor finance. CIT also operates CIT Bank,BankOnCIT.com, its primary bank subsidiary and an FDIC-insured online bank which offers a suite of savings options designed to help customers achieve a range of financial goals. cit.com