This year’s Airline Economics Growth Frontiers Conference in Seoul, South Korea, highlighted both the opportunities and headwinds shaping Korea’s aviation landscape, revealing how the region is adapting to the unfolding tariffs situation, while also demonstrating its resilience in the changing face of the sector.
Keynote speaker Jeff Lewis, CEO and founder of Hanwha Aviation, set the tone by emphasizing Korea’s unique position in the Asia-Pacific region. Throughout the conference, panellists continued this theme, while also addressing the challenges the region faces from supply chain issues, competing demands and geopolitical uncertainty.
Speakers underlined the need for Korean players to adopt a longer-term, resilient mindset in order to position Korea as a homegrown leasing hub. Delegates heard that success depends on timing, pricing and strategic commitment, as well as a solid regulatory framework to support the industry.
With these elements in place, the opportunity for Korea to establish itself as a premier aviation leasing and finance hub in Asia was a consistent theme echoed throughout the conference.
Lessors
There was much talk during the event of leasing opportunities in Korea. During the keynote address, Hanwha Aviation’s Lewis noted that the country’s low-cost carriers (LCCs), combined with regional growth, present a dynamic market for lessors. He advised Korean investors to think about alternative investment opportunities in areas such as engines and midlife aircraft, which can generate solid returns.
Other speakers discussed some of the challenges lessors are facing, with day-one’s lessor panel, noting the impact supply chain issues, competing demands and the current geopolitical tensions are having on the Korean market. Dónal O’Neill, managing director for East Asia and Oceania at lessor Avolon, told delegates that the Korean market saw approximately 20 percent growth in and out of Korea in 2024, compared with 30 percent growth internationally. 2025 is unlikely to see the same figures, he noted.
Kevin A. Ford, director of business development for Asia Pacific in the asset transaction group/LIFT at lessor GA Telesis, told delegates that the 2024 increase in demand in Korea meant an increase in requests for mature aircraft, in particular from new entrants to the Korean market.
The panel also discussed the impact of the current global trend of consolidation in both the leasing and airline industries, notably in Korea. O’Neill described the Korean market as a microcosm of the wider industry, given the merger of Asiana and Korean Air. He told delegates the merger creates an important replacement cycle from a fleet perspective, given the large number of older aircraft within the fleet on both the passenger and freight sides.
Along with the Asiana-Korean merger, the panel also noted the impact of LCC subsidiary mergers in Korea, along with the impact of restructurings, such as Eastar Jet’s bankruptcy journey and Fly Gangwon’s takeover and reemergence as Parata Air. O’Neill told delegates that an important question for the Korean market is to consider how many airlines the country needs. With this in mind, the current consolidations may serve Korea better and offer greater opportunity for the sector, he said.
During a later engine leasing panel, moderator Charles Viggers of Watson Farley & Williams highlighted Korean investors' history of investing in widebody aircraft. He sought insights from fellow panellists on the widebody engine-related challenges these investors currently face and may encounter in the future. Panellists noted lower liquidity as a significant challenge in this area when compared to narrowbody engines. Tony Shen, VP of sales and marketing for Korea and Greater China at Rolls-Royce & Partners Finance, told delegates that this makes repossession and placement more difficult.
Shen added that availability of shop solutions is also a challenge for widebody engines compared to narrowbodies, in large part owing to OEMs being protected by power-by-the-hour agreements, as well as spare engine availability to support them. On the flip side, Shen pointed out, because of the liquidity in narrowbody engines, competition for investors is greater, which means returns can be compressed. Widebody engines, on the other hand, can be compensated as a premium owing to fewer investors exploring them.
Other panellists agreed with Shen. Masafumi Hayashi, deputy general manager of the aviation product solutions department at SMFL, told delegates that the faster turnaround time and increased liquidity of narrowbody assets is the reason SMFL focuses on narrowbodies.
Financing
During day two of the Airline Economics Growth Frontiers Conference, a Korean Investment Workshop saw panellists discuss investor prospects in Korea. A key theme of the conversation was focussing on the criticality of people and timing. Delegates heard that the key to airline investing in Korea (and elsewhere) is buying the right product at the right time at the right price and, critically, committing to the market long term. Simon Goodson, CEO of AerFin, noted that buying at volume and with conviction helps to create the right conditions for long-term success. He also advised delegates that having good, reliable partners is a key component for successful airline investing.
Peter Min, managing director and head of Pacific transportation Asia at CLSA Capital Partners, agreed, noting the cyclicality of aviation. He discussed the implications of focussing too heavily on lessee counterparty risk without paying enough attention to the cyclicality of aviation risk and residual value risk. Min also noted that for most deals where he has seen capital lost, it was because of a mispricing of risk with too much mezzanine and leverage. With this in mind, he advised those considering investing in Korean aviation to operate with a longer-term view that accommodates the cyclical nature of the industry.
A key question for the panel was whether the capabilities and appetite exist in Korea for global lessor businesses. Goodson was very clear that the answer is yes, noting that Korea offers capital, assets and financing, and with the right strategy and a long-term view, could be a highly successful environment for a global lessor.
The investor workshop was followed by a panel discussion on Korean investor market status and sentiment, where panellists also discussed the aviation opportunity in Korea.
Panellists noted that the changing face of the Korean investor market post-Covid has seen buoyant activity from both local and international players, specifically in financing. Ji Woon Kim, a shareholder at law firm Vedder Price, told delegates that one of the main impacts of Covid as far as financing opportunities in Korea are concerned is that banks, investors, lessors and even airlines have been able to reset and take stock of their place in the market. This has led to a number of resets and potential new-normals, including airlines and lessors willing to execute non-US dollar (USD) transactions and manage deals in euros or Japanese yen or other local currencies. Kim noted that given current geopolitical risks and macro issues, the use of non-USD currency is worth exploring.
The focus on the Korean market continued with a Korean bank market update, featuring panellists from Hana Bank, KB Kookmin Bank, Woori Bank and Korea Development Bank, who told the conference that the Korean aviation sector is seeing positive movement in both the aviation finance sector and in the aviation sector more broadly. Of note is the regulatory approval at the end of 2024 for the merger of Korean Air and Asiana Airlines, which Matthew SH Kim, head of the international finance team in the investment banking department at Hana Bank, told delegates highlights how dynamic the Korean market is.
Matthew SH Kim added that other regional players, such as T’way Air, Eastar Jet, Air Premia and Jeju Air, are also very active at the moment and are contributing to the buoyancy of the financing space in Korean aviation.
Panellists also discussed the changing face of lenders in the industry over the last 12 months, with moderator Patrick Moore, a partner at law firm Watson Farley & Williams LLP, noting that alternative lenders are now firmly established and growing in the aviation space.
Joon Lee, manager of the aviation and shipping finance team in the global investment banking department at Woori Bank, told delegates that along with alternative lenders, competitors for Korean banks in the airline financing space include banks from other jurisdictions, such as Japanese banks and European banks. These banks may take a different financing approach to Woori bank, he pointed out, for example, focusing more on easy credit, easy asset, full payout and other areas.
Matthew SH Kim noted that he deals with this competition by finding a way to differentiate Hana Bank from European banks or Japanese banks, offering deals with flexibility to airlines that have excellent credit.
Sustainability
An ongoing market trend discussed at the conference was sustainability. During the Korean bank market update, Watson Farley & Williams’ Moore noted that the European Union’s Taxonomy framework for sustainability includes wording around aviation, giving EU banks a framework within which to review their sustainability policies. He asked the panellists for their thoughts on what this means for Korean banks transacting in the aviation space.
Joongho Cho, head of the global aviation finance team in the investment banking department at KB Kookmin Bank, told delegates that environmental, social and governance (ESG) was a hot topic in 2024 and that it has generally been a trend of the last 10 years, especially for global banks. Meanwhile, Hakyu Lee, a manager at Korea Development Bank (KDP), noted that while the EU framework has no direct impact on KDP, the bank has an interest in ESG because of its role as a government bank.
Following the ESG conversation, Moore closed the session by asking if sustainability-linked loans are as popular now as in previous years, noting that some of the banks on the panel had been involved with them.
Cho told delegates that KB Kookmin Bank has some products that are linked to sustainability, for example supporting rechargeable batteries in order to get a sustainability discount. He explained that being in the investment banking side means they can’t reflect sustainability in the loan agreement, but they can find ways to offer other ways to reflect sustainability efforts.
Hanwha Aviation’s Lewis also discussed sustainability during his keynote, telling delegates that airlines, investors and lessors must align ESG principles, along with sustainable aviation fuel, innovation financing models for green aviation projects and next-generation aircraft with lower emissions. He also advised Korean financial institutions to integrate sustainability considerations into investment strategies in order to remain competitive.
Macroeconomics
The Korean Airline Economics Growth Frontiers Conference saw plenty of discussion surrounding macroeconomic issues, in particular, tariffs coming out of the US. The ongoing geopolitical risk the tariffs pose was top of mind for many panellists, despite the event taking place before the latest round of tariffs had been implemented.
Despite the lack of clarity surrounding tariffs at the time of the conference, many panellists noted the impact the aviation sector is facing, as well as the uncertainty the situation brings. In an overview of the global aviation sector, Herman Tse, valuations manager at Cirium Ascend Consultancy, noted the potential disruption for the region’s aviation industry, particularly in the air cargo sector.
A key area of concern is the China–US air freight route, which has become highly profitable since US airlines stopped flying it to avoid Russian airspace following Russia’s invasion of Ukraine, Tse noted. He explained that this left a significant gap in available freight capacity because of the loss of belly cargo availability within the US flights. With tariffs now threatening these routes also, Tse expressed concern about this, along with broader concerns about the threat of a possible US recession.
Elsewhere, the Korean investor market status and sentiment panel noted that while the tariff landscape remains uncertain, if tariffs are set to be a longer-term factor, this will clearly impact how investors and financiers consider assets in the aviation industry. In terms of how this impacts the Korean market, delegates were advised to be resilient and understand the cyclical nature of the aviation sector in order to have a strong narrative to present to market players as to why they should do business with Korea.
Mingyu Kim of NH Investment & Securities advised building the right relationships, having the right conversations, and continuing to gain market knowledge, so that when the time is right to bring a deal to the market, Korean players will be ready with the right solutions.
Opportunity
Being ready with the right solutions was a key theme of the Airline Economics Growth Frontiers Conference in Korea. During the event, panellists discussed the clear opportunity for Korea in the world of aviation, focussing on the need for both the industry and the Korean government to foster the right environment for a successful aviation sector in the region.
During his keynote address, Hanwha Aviation’s Lewis told delegates that Korea is uniquely positioned to become a major player in aviation, finance and leasing in the Asia-Pacific region, owing to its strategic location and advanced financial markets. He noted the increased collaboration of Korean financial institutions, such as Hana Bank and Woori Bank, in international aviation deals alongside global lessors, as well as the impact Korea’s national carriers and LCCs have had on the evolving industry.
Like other conference speakers, Lewis noted that it’s essential for the Korean government to continue to support the growth of Korea’s aviation sector by fostering favourable conditions for investment, financial innovation and strategic partnerships.
In particular, panellists noted that in order to develop a home-grown global lessor based in Korea, the right talent is critical, but also the right support system. During the Korean Investment Workshop, CLSA Capital Partners’ Min noted that in Singapore, which is a relative newcomer in aviation leasing, the government has contributed significant resources to Singapore’s growth as an aviation hub. Min noted Singapore offers tax incentives and a clear regulatory framework for the aviation sector to work within, which has led to a thriving global lessor presence. With this in mind, he suggested that if Korea can provide more incentives and tax benefits, along with a push for homegrown lessors, it could build a thriving lessor hub.
Lewis echoed this sentiment, telling delegates that a robust regulatory framework in Korea will help create a stable and transparent investment environment for Korea’s aviation finance industry. He added that it’s essential for the Korean government to continue to support the growth of Korea’s aviation sector by fostering favourable conditions for investment, financial innovation and strategic partnerships.
Meanwhile, he noted that expansion into the APAC region would serve Korean players well. Describing it as one of the fastest-growing aviation markets in the world, he told delegates that aircraft financing and leasing solutions are in demand across the region. Likewise, Korean players should be finding ways to integrate cutting-edge technologies, such as blockchain, artificial intelligence and digital leasing platforms, into their offerings in order to position themselves as leaders in innovative aviation finance solutions, he said.
Korean players should also be embracing public-private partnerships, according to Lewis. He told delegates that collaboration between industrial conglomerates, financial institutions, airlines and government bodies will help Korea create a robust aviation finance ecosystem that will strengthen its position as a global aviation finance hub.
This year’s Airline Economics Growth Frontiers Conference in Seoul offered essential insight into Korea’s growth, along with its potential as an aviation finance hub. Speakers highlighted the country’s strategic advantages, as well as its need to continue to evolve its framework and outlook for aviation investment.
As the industry more broadly navigates the ongoing geopolitical uncertainties it faces, speakers noted that continued efforts in Korea from both the private sector and the government are critical to continuing the country’s journey to solidify its position as a leader in global aviation finance.