KOTI - Korea Transport institute

In order for the national strategic industry of the aviation transportation sector to enhance its crisis management capabilities and become a sustainable industry, it is essential to generate profits and maintain financial stability. To achieve this, it is necessary to formulate various policy and financial support measures by the government for the aircraft finance, which is a core component of aviation transportation industry operations and requires significant investment. In this study, the objective is to examine financial support measures for the aviation industry to prepare for future risks and provide stable development through the operation of a forum involving financial experts, aiming to propose effective policy measures. Specific financial support measures considered in this study include plans for the establishment of a aircraft leasing company, the creation of a public support fund and the introduction of an aviation industry development fund utilizing government and private sector funding. Based on the proposed measures in this study, three stages of implementation tasks have been outlined. In the preparation and execution stage, there is a need to establish policy advisory organization by the government or relevant institutions to increase the interest and effectiveness of aviation finance, along with organizing private-sector cooperation and seminars for aviation finance information sharing on an ongoing basis.

In the development stage, substantial funding and foundation projects must be pursued. In the maritime sector, the use of restructuring funds for the purchase of vessels and sales & leaseback operations were successfully conducted, with full reimbursement achieved in 2011. The aviation sector has also seen significant investments in airlines since the outbreak of COVID-19, especially with the Industry Stability Fund that was launched in May 2020, providing substantial investments in airlines and supporting the acquisition of Korean Air after the failure of the sale of Asiana Airlines with a KRW 2.5 trillion investment. Drawing from the maritime sector's example, there is a need to introduce restructuring funds utilizing the fund supporting the national strategic industry, the aviation industry. Furthermore, since 2015, maritime financehas been initiated and is in operation. Similarly, considering that aircraft are assets that require over KRW 100 billion per unit, We need a fund that can support this. In the maturity stage, comprehensive support for such funds can be provided, and it might be possible to establish an aviation industry development fund that can be returned to the industry and the people. Furthermore, from a government perspective, the establishment of specialized aircraft leasing companies and tax lease systems for aircraft could be pursued, aiming to make aviation finance a core financial industry of the country.