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Leadership crisis in the aircraft leasing industry in Asia Pacific
The size and scale of the aircraft leasing industry in 2018 globally is bigger than it has ever been before in terms of global revenue, net profit, and operating lease aircraft fleet size. The majority of major aircraft lessors’ are bullish about the market conditions this year, and highlight a shift in the strategic importance of Asia Pacific as a key growth driver for their businesses.
It’s no wonder that given these dynamics the one thing keeping many aircraft leasing industry leaders awake at night is the regional shortage of talent of qualified professionals across the industry throughout Hong Kong and China.
So where is the talent?
In the Asia Pacific market, specifically Hong Kong and China, there is a massive shortage of experienced senior qualified professionals in the aircraft leasing industry overall.
With global talent hubs for the aircraft leasing industry across Dublin, London, Toulouse, Seattle and Tokyo, many of the commercial leasing platforms established their Asian operations offices initially by ‘lifting and shifting’ existing company resources to Asia to set up their APAC operations.
This talent pool can no longer support and sustain the massive demand for talent in Asia Pacific without creating a ‘brain drain’ from Dublin. It also cannot provide the solution for many Hong Kong and Chinese firms long term who are increasingly demanding bilingual candidates for Greater China mandates, or to manage relationships with Hong Kong or Chinese shareholders.
This talent shortage is now reaching a ‘tipping point’ where we are approaching a leadership crisis in Hong Kong and China, as there simply are not enough experienced qualified aircraft leasing professionals to staff the industry.
Lack of perceived opportunity is contributing to the crisis
To add more complexity to the Asia leadership crisis, there is also a ‘bottleneck’ of experienced VP and SVP level candidates based in Singapore who have the Asia Pacific experience, and track record of success in the region who cannot progress to next level where they are.
Many feel that although there has been a shift in revenue and customer demand to APAC, globally, the majority of senior leadership level opportunities simply doesn’t exist in the region without moving to Dublin.
To move to the next level i.e. Head of Region or Function, they would need to relocate to Dublin or the US depending on the platform, as the opportunities do not exist in Singapore. Therefore, Hong Kong is becoming an increasingly attractive location of choice for those who want to move up and remain in Asia Pacific
Industry shift to Hong Kong
Since the tax change last year, and Hong Kong being billed as the ‘Dublin of the East’ we have seen major changes to Asia Pacific leasing landscape already and Singapore is no longer the dominant player.
Hong Kong has become increasingly attractive to global lessors to hub their Asia operations, attracting Orix, SMBC Aviation and Goshawk. We’ve seen also seen the major Chinese Bank leasing platforms choosing the HK Stock Exchange to list their companies such as BOC Aviation, and CALC.
According to Flight Global’s top 50 aircraft lessor rankings, they show that the value of Chinese lessors is now over $40 Billion USD, with ICBC Leasing being the first to complete a transaction under a new regime with CALC closely following.
The China market continues to be largely a domestic market or ‘closed shop’ for many of the European aviation banks and lessors who find it difficult to compete on RMB financed deals versus the major China SOE banks.
It’s clear that as the industry shifts to Hong Kong, companies also need to focus on solving the leadership talent shortage as well. Whether this will be solved by offering more attractive benefits packages, building talent internally at the grassroots level, or upskilling existing professionals remains to be seen.