Saturday, June 15, 2024

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Market hedging, non-aviation risks driving captive conversations among airlines

  • Profile of all-risk, hull war make captive utilisation unsuitable for most airlines
  • Broader business risks, for larger airlines, can make captive feasible
  • Internal buy-in and capital commitment common stumbling block for captive projects
  • Third party, customer lines a profit opportunity for airline captives

Captive formation activity has been slow going for airlines, with large, established carriers benefitting from long-term utilisation but entry to market presenting significant obstacles. There are signs, however, that new formations could be around the corner.

While it is not uncommon for aviation companies to have captives, a large proportion have utilised them to write non-aviation risks.

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