Irish aircraft lessor exploring idea of air taxi service in Istanbul

Avolon confirms Turkish player Gözen will lease or buy 50 VX4 Evtol aircraft from it

Irish aircraft lessor Avolon could invest in a zero-carbon air taxi service in Istanbul with Turkish aviation player, Gözen Holding. Avolon confirmed on Tuesday that Gözen has committed to lease or buy 50 VX4 Evtol electricity-powered aircraft from the Irish company, ensuring it will place all of the 500-plus planes it has ordered from their manufacturer, Vertical.

Dómhnal Slattery, Avolon chief executive, said that, as part of the deal, the Irish company would explore the possibility of launching an air taxi, or urban air mobility, service with Gözen.

He noted that Istanbul was ideal for this. The city straddles the Bosphorous Strait, which links the Black Sea with the Sea of Marmara. It has a population of 15 million people while its main airport is at least two hours from the central business district. “All of those characteristics make it ideal for the Evtols,” said Mr Slattery.

He added that ultimately the big opportunity could lie in Turkey's tourist destinations. Avolon and Gözen could establish a joint venture to operate the service. Gözen owns Freebird Airlines and is a key player across all sectors of aviation.

Mekin Gözen, the Turkish group’s chief executive, pointed out that congestion constantly hindered Istanbul’s development and attractiveness.

"We strongly believe that the deployment of the VX4 will dramatically reshape Istanbul and the rest of Turkey, " he said.

Russian assets

Vertical, in which Avolon is an investor, hopes that European safety regulators will approve its VX4 Evtols by 2024/2025.

Avolon has ordered 500 of the aircraft from Vertical, established by its chief executive, Belfast man Stephen Fitzpatrick, and has an option to take a further 50. Its deal with Gözen means that all of those aircraft are now spoken for.

Meanwhile, Mr Slattery said Avolon believed the insurance policies covering a number of its planes that have been moved to Russia’s aircraft registry following the country’s invasion of Ukraine were valid.

“We continue to try to repossess those aircraft every day,” he said. Mr Slattery noted that Avolon had secured four of 14 planes leased to Russian carriers since the war began.

He calculated that the remaining 10 left it with an exposure of less than $200 million, which put the problem in the “headache zone rather than a migraine”.

Mr Slattery explained that Avolon had always regarded political risks in Russia to be high, so had been cautious about doing business there.

Speaking on RTÉ’s Morning Ireland, he warned that it would be difficult for the aircraft leasing sector to do business in Russia in the future.

“I think it’ll be very difficult for the aircraft leasing sector in general, and Avolon specifically, to underwrite new business in Russia for a very long period of time – if ever,” he said.

Oil price

The oil price volatility that followed last month’s invasion of Ukraine now poses the biggest barrier to air travel’s recovery from the Covid-19 pandemic, according to the Avolon boss.

“Oil is clearly all over the place; that’s the variable that airlines are looking at,” he said.

However, Mr Slattery stressed that Avolon, which leases aircraft to airlines around the world, was seeing growth picking up significantly. He said this was particularly noticeable in southeast Asia, in countries such as Vietnam, Malaysia, the Philippines and other countries in that region.

“Since they opened the markets there, there’s just been a flood of people getting on airplanes,” he said. “They are trying to make up for two years of lost growth.”

Mr Slattery described the domestic US air travel market as "off the charts" while he predicted that southern Europe would perform strongly this year.

Barry O'Halloran

Barry O'Halloran

Barry O’Halloran covers energy, construction, insolvency, and gaming and betting, among other areas

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