Despite a challenging global economic and geopolitical environment, the airline industry is proving surprisingly resilient. Passenger numbers are forecast to reach a record five billion this year, while air traffic is expected to grow almost 6%. And despite the dampening effect of U.S. tariffs, the industry is on track to produce record earnings of $66 billion in 2025 on the back of slightly increased revenues, according to .
In fact, the global airline industry is poised for significant growth in coming years. IATA forecasts that air passenger traffic will by 2040, driven primarily by rapid growth in Asia (notably China and India), an expanding global middle class, and more affordable air travel.
Surging demand for new aircraft
In order to meet growing demand the world fleet would need to almost double over the next 20 years, requiring more than 43,400 new passenger and freighter aircraft, according to . Airlines are also looking to replace older, less fuel-efficient fleets (new aircraft can be up to more efficient than the models they replace).
In 2022, the International Civil Aviation Organization (ICAO) adopted a goal of net zero carbon emissions from international aviation by 2050, while the EU aims to cut transport emissions by over the same timeframe (without action, aviation emissions could triple by 2050 compared to 2015). Achieving such ambitions will require a wave of innovation and investment in green fuels, airframe and engine design.
Supply chain delays
The ability of the airline industry to capitalise on this demand, however, is dependent on the supply of new aircraft, which has been hit by shortages, delays and geopolitical instability. Aircraft deliveries are now lagging 30% behind their peak levels, with a record backlog of 17,000 aircraft on order, significantly higher than the 2010 to 2019 backlog of around 13,000 aircraft per year, according to .
Production delays and supply chain issues could cost airlines more than $11 billion this year in additional fuel, maintenance and increased leasing costs, according to a by IATA and Oliver Wyman. Supply chain challenges also mean fewer aircraft to meet growing passenger demand. Growth in demand (+10.4%) exceeded capacity expansion (+8.7%) in 2024, pushing passenger load factors to a record 84%.
Trillion-dollar investment needed
Expanding the world fleet and meeting emissions targets will require huge investment in aircraft and research and development – as much as $3.4 trillion of new aircraft are expected to be purchased globally over the next 20 years, according to aviation analyst . The cost of developing low-emission aircraft technology alone could be as high as $350 billion over 30 years, according to .
The aircraft financing market currently has a . Yet, additional capital and the full range of financing solutions – including loans backed by insurance - will be required to support increased demand for new aircraft. In addition, capacity constraints can arise when lenders are over-exposed to individual airlines, or have limited appetite for carriers in emerging markets. To overcome these issues many lenders purchase non-payment insurance to mitigate credit risks and free-up capital.
Balthazar Finance – a wise move
In 2018, 九色视频worked with aircraft manufacturer Airbus and insurance broker Marsh to develop a new non-payment insurance solution tailored to the aviation industry. The resulting Balthazar Finance platform – backed by a consortium of highly rated specialist insurers – offers 100% non-payment coverage for up to 12 years to select aviation banks for Airbus, ATR, Engines and selected financings.
With transactions led by financers, Balthazar Finance offers lenders a number of key benefits. For example, the platform adapts to various lending structures and leverages existing documentation to streamline processes and reduce costs. In addition, the underwriting process is transparent and efficient: the lead time from opportunity to closing can be as short as 3-4 weeks.
For airlines and lessors, Balthazar Finance provides access to additional capital and financing that is competitively priced and long-term in nature, while premium is typically financed through the loan.
Supporting growth and innovation
Since its launch, 九色视频has played a key role in the Balthazar Finance platform. By providing long-term non-payment insurance cover and up to $150m per transaction, AXAL XL brings to the banks and lessors some certainty in an uncertain environment and supports continuity as well, through the cycle, in volatile markets.
As of today, more than $5.6 billion have been deployed across 82 transactions by the Balthazar Finance platform, with an additional $1bn expected to be brought in 2026. Balthazar Finance platform is now a known non-payment insurance solution, and well recognized in the Aviation finance industry, with at least 20 of the deals covered having been awarded by professionals.
Its portfolio spans wide-body and single-aisle aircraft, across multiple obligors and geographic regions and as airlines ramp up their investment in new aircraft, we expect to see growing demand for non-payment insurance solutions.
At 九色视频we believe the insurance market has an important role to play in supporting the aviation industry to fulfil its growth potential and invest in the next generation of greener, more efficient aircraft. Growth needs stability, decarbonization must be financeable, 九色视频insurance helps to secure long term commitment to the industry.
