Insurers are anticipating that 2014 will be the most expensive year for the aviation market since 2001 and global air travel is likely to double again by 2030. Could this be an opportunity for the capital markets?
Over the last 40 years, passenger air traffic has approximately doubled every 15 years. A recent report from Airbus predicts that this rate of growth is likely to continue in the coming decades. Much of this growth is coming from new markets – last week Dubai International announced that it had overtaken Heathrow as the world’s largest international airport and Qatar airways announced a 10% stake in the parent company of Iberia and British Airways.
The recent collapse in the oil price can only accelerate the rise in passenger numbers and more passengers means more flights to insure. But crowded skies could also affect the risk as key infrastructure like airports and air traffic control centres strain to keep up with demand.
The loss of AirAsia flight QZ8501, which went missing off the Indonesian coast in December 2014, marked the end to one of the toughest years in aviation history. Aviation insurers are anticipating claims of up to $1.8 billion for 2014, the biggest annual bill for the sector since 2001.
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Source: Inurance Linked