David Power - Solus Capital | AviLease | Aergo

Flightpath with Alok

02-06-2023 • 1 hora 8 min

In this, episode of Flightpath with Alok, we hear from David Power, a much-respected figure in the world of aviation leasing. David currently holds multiple board and advisory positions within the aviation sector. These include being, a special advisor to Aergo Capital; Vice Chair of the Advisory Board - The Hague Court of Arbitration for Aviation and Chair of Technical Standing Committee; Board Member of AviLease; Founder and Principal of Solus Capital Partners, and Chair of the board at FADO an Irish manufacturing company. Prior to this, David was the Chair of Orix, Hong Kong. David held the position of Orix Aviation CEO until 2019, crowning a career with the company, spanning more than twenty-six years. David grew ORIX Aviation from a small 20-aircraft lessor to an Asset Management powerhouse and top 10 lessors. At the time David left Orix, it owned and managed a fleet of approximately 300 commercial aircraft, worth US$12bn as well as a 30% stake in Avolon, a top three Lessor. David talks to Alok about his early years, what it was like growing up in a rural setting on the west coast of County Clare, Ireland, his early career and studies, and how he found himself on the path of aviation leasing. David speaks openly about the highs, lows, and successes of his career. And, David’s professional experience certainly demonstrates the level of variety and longevity a career in aviation can offer to the next generation of young executives, possibly considering their own careers and whether aviation may offer them the opportunity, purpose, and fulfillment they are seeking.

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Transcript:

Alok: David, welcome to the show of this podcast Flight Path with Alok. This is the fourth episode I'm recording and I'm very grateful and thankful for your time, which you have especially made to join me today. You are in Portugal right now, morning 9am for you and I'm recording you all the way from India. So, let's get right into it. Just to know, if you can just tell me a little bit about yourself. I know you have been in the legal field in the very beginning of your career, right? And so I would just like to understand how you got into aircraft leasing. What has been your background? Where are you from really? A little bit about that.

David Power: Great, thanks, Alok. Good to see you. Good morning. And, you know, it's great. Technology is fantastic. Now we can have a proper fireside chat conversation. You're in Bangalore and I'm in Portugal. So, you know, the joy for technology. But yes, I did. I started my career as a solicitor and I trained in Dublin, Ireland, and I worked for a large firm called McCann Fitzgerald. And it was one of the top two or three firms in Dublin at the time. And I went to school in Dublin, but I grew up in West Clare, actually west of Shannon, which would have been just west of GPA, where GPA, Guinness Peace Aviation, one of the first aircraft lessors started in the late 1980s, 1985, 1986. And I grew up in a very rural part of the west of Ireland where there were not too many roads. A lot of singing and dancing and a lot of Gaelic sports and you know, a very, very nice place, but very rural and very poor actually at the time. And I was close to the Shannon Free Industrial Zone and that was the start of aircraft leasing and actually many other businesses that now form, not those businesses, but subsequent businesses that formed the core of the success of Irish society and Irish financial services. So there's a long and rich tradition, both of musical and heritage and young people and people going to the American US and then the Shannon Free Zone, and then ultimately the Dublin IFC growing out of that environment and Guinness Beat Aviation and the start of aircraft leasing. But back to myself anyway, that's a long, long way around. I grew up in the west of Ireland and then my parents moved to Dublin like almost everybody else. And I went to university in Dublin. I didn't study law though.
I studied accounting, finance, maths. I got a bachelor of commerce degree. And during that degree I had to do a law module and I discovered that I liked it. So I sat night time exams, to do the solicitors exams. And I passed them and I got my apprenticeship or traineeship with McCann Fitzgerald. And then they, by coincidence, worked for Aer lingus. And Tony Ryan had left Aer lingus to set up GPA and they were acting for GPA. And given that I was not a lawyer as such, so I was an outsider to the lawyers because I had to be gone. I didn't do a law degree, but I'd passed the law exam. And this was good for McAnviss Herald, as they saw it at the time, and placed me immediately into the aircraft leasing section. So I grew up as a baby in aircraft leasing, basically, carrying various people's briefcases, learning how to draft documents, and learning about corporate debt facilities. And actually, I remember one of my first tasks was a task probably nobody wanted to do, but I thought it was great. It was great to be innocent and young. Like it's great to be young because you don't really sometimes understand things. So I was doing the worst job in the world, which to me was the best job in the world, which was going out to all the countries in the world because they had a corporate debt facility at GPA. Actually at the time it was even massive and it was almost a billion dollars. It was NatWest and Chemical Bank and others. And this was in the late 80s. It was, I think, it was extended from 800 million to 1.2 billion. So I put it in perspective, it was a big business even then. And my job was under Catherine Dean at the time. I think you know Catherine Dean. And she was chairwoman of, or I should say chairperson of McCann Fitzgerald. I don't know if she, maybe recently, I don't know if she still is, but she was directing me. I had to go out to all the countries with a questionnaire. and find out what the legal system was like.
So India, China, you know, Saskatchewan, South America, you know, Brazil, places that were barely, you know, and that I'd barely heard of that were on my world map, my Atlas, you know, we had Atlas's then and we had Globes and things, you know, and so that was my job, go out to all of these countries, do a questionnaire, find out what the legal system's like. and get the legal opinion for placing aircraft in those jurisdictions. So a very, very great introduction to the world of aircraft leasing. I was also doing stuff like I specialized in tax for a while. So it wasn't all aircraft leasing, but one, I remember one of the jobs I had was to find out where, you know, I could set up companies with no capital tax. So I found out a great country, a great place is called Manitoba, Saskatchewan. And then you got Isle of Man, and you got Guernsey, and then of course you had Sartre and other places like that. Because at the time people were able to double or triple dip aircraft. So you could buy an aircraft one place, you could sell it to another place, you could lease it to another place, but you might get three sets of capital balances. Of course that was legal and permitted at the time, of course all of those things have changed. Another big part of my job was going to Sweden. with Mike Dolan and Mark Pearson and people like that. Mike Dolan passed away, may he rest in peace, and they used to sell the aircraft into Swedish investors. So very early on I was getting a broad taste of how aircraft leasing and financing worked.

Alok: So David, through your career path, as I mentioned, after Audix, you moved on into various roles. And what you're currently doing is you're working as a member of board of directors of AV Lease. And I think you're also a special advisor in Ergo Holdings and principal in Solus Capital Partners. Right? If I may just request you to just give us a little understanding of your role in these organizations AV Lease, Ergo Capital, Solus Capital, that will be great to know please.

David Power: Great, thanks Alok. So AV Lease has been set up over a year by the PIF of Saudi Arabia and it's a really exciting company. It's being run by Ted O'Byrne, who you know from Carlisle and from Air Cap days and it's growing very rapidly with a regional focus in the first instance and then a pivot internationally. Really proud of my involvement with that company and on the various committees audit committee, remuneration committee and transaction committee there and I think it's a company with great prospects and future obviously very well capitalized and looking forward to the growth there. With Ergo Holdings, I'm an advisor and given my background in asset management, I've set up for Ergo their asset management division. Historically, actually it goes back to your first question, historically there were balance sheet lessor managing funds for their main investor, which was Carval and now they've pivoted to be an international asset management company. And actually since then we added about, there's been added in the last two to three years, 6 billion of assets. So it's a very significant growth within Ergo, 4 billion of which are assets under management. So a very, a period of very strong growth. Solace Capital is an asset manager in the wealth management fund and I set it up in 2016 before I left Rx and it basically provides asset management and fund services as in It has set up a number of investment funds, particularly in Malta and it's UK regulated. And I'm the principal of that company. I founded it and we'll see where that goes. So far, so far it's still going good, which is, which is, which is good. And then there is the arbitration court issues as well.

Alok: That's excellent. It looks like you have 48 hours in a day, not 24.

David Power: Yeah,

Alok: That I can say already.

David Power: yeah, well, it's

Alok: You do so many things, you

David Power: important to time yourself

Alok: know. Yeah. Yeah.

David Power: as well. I mean, you can play a role, but not In some occasions be too much in the weeds either. So it's important to have the right perspective.

Alok: Another thing which came to my notice was that the in your I mean, the since I have known you when I remember first meeting you were in Aurex Aviation. I remember how kindly you took out time to meet me a few times when you were the CEO in Aurex. And one of the things which stood out for me over last few years is a lot of the if I may say so the alumni, you know, in quotes of Oryx have spread out all around the world in some very important, I may say, leadership positions in different leasing companies and in the industry. So, it seems like Oryx aviation of that time was a great breeding ground for future leaders. And obviously, for me, in my mind, the connection is there with you being at that time, the lot of people whom I meet in the industry now have worked in some form or other under you directly or indirectly. So

David Power: Yeah.

Alok: I would like to know what do you think was the reason what what was unique one of the things possibly I can think is Oryx was an early starter in the industry obviously but other than that you know what played a role in shaping up these future leaders what do you think was was happening what was the secret sauce really which helped to groom these leaders.

David Power: Yeah, so I'm really pleased you asked that question. So I can quote a fact, which is that there are currently five CEOs of aircraft lessors who worked for me or with me in RX. So I think that's a pretty good track record to have. And I do think we did have a secret sauce. So let me take you back a bit before I answer the question to go to what is that secret sauce. Not so secret, but probably a combination of things that collided. When I became CEO of Oryx, I spent some time in asset management, in finance, and I spent a lot of my time working with technical people. One of the things which I really enjoyed in my career, and I enjoyed it intellectually and physically and mentally, was to be with technical people, engineers. Now, of course, I'm not an engineer and I don't think like an engineer. I hope I don't look like an engineer. I mean, as a pen, I can put in my pocket and I could imitate one.
But we had great fun. And the fun we had was because we were different. So an engineer and a finance guy and a marketing guy, they're three different things, you know, they're chalk and cheese, really. And what I enjoyed, though, was when I was working with the engineers was we would be drafting the detail of return conditions or say an engine shop visit or say the maintenance reserves provisions. And there's big shifts in money in this and I think that I was lucky early on that I recognized and was part of drafting some very complex engine agreements and other things and I understood both the marketing implications and the financial implications, and I could translate for my technical friends, you know, and I had some really great people that I worked with, but I could translate their words and concerns and risks and opportunities into contracts. And I think that was a great foundation for me to become a CEO in the aircraft leasing space. And when I did, I set up a strong, separate asset management team, not reporting to finance and not reporting to, you know, slightly separate outside the core finance team so that we could manage technical.

Alok: Was it something which was unique at the time? Because now it is that is how all the leasing companies are mostly now right or is that something which was a different thing to do at that point of time?

David Power: Yeah. Well to be honest with you, when I didn't, another point that came up in some of the other interviews, I didn't spend much time worrying about other leasing companies. You know, I had my own job to do and so I had to carve out a business. When I started with as the CEO of Rx, we only had like 28 odd aircraft that were bought and they were A1 powered A320s. So they were problem aircraft technically. And I grew that company by 2020 to 300 aircraft and 12 billion of assets and a huge asset management business. So it was a vastly different business at the end than it was at the start. But the foundation throughout was the same. Oryx was a very disciplined, it is a very disciplined, technical company with a very strong asset management tradition and that's at the core of its activities. And that means we are not just a banking operation. In other words, buying paper with a certain yield and letting it out to the market. So the vision that I had for Rx at the time was it was very strong on both, of course, very low cost of funds, so it could compete very effectively, but also that it had a very strong asset, legal, technical capability. And that then leads itself into the market presence. You know, you get the market presence by having those other capabilities.
And obviously, you know, I grew it through a number of crises. We had, you know, the SARS, we had, well, it's September 11th to start with. With them, with SARS, we had the global financial crisis and. The ultimate challenge of all of course was COVID, which I retired though from, I retired in 2019, leaving in June 2020. So I had, I'd done 30 years from, you know, starting really the company and growing it and developing it to a huge powerhouse in aviation at that stage. So it was good timing. But the secret sauce for us, and we didn't look, I don't think we were looking too much at what other people did. And it's an interesting point because I was always looking at the other top 20 aircraft leasing companies in terms of how they're all different. Not in terms of how we all do the same things or trying to copy what they emulate, what they were doing, but they're all different. They have a different shareholder, they have a different focus on the aircraft they want, they have a different ambition. They're sometimes more focused to be a fund. They're sometimes more focused to be a banking type operation. They're sometimes more focused on the Japanese operating lease market, the asset management side. So actually the segment is very differentiated in the top players. They're not the same, they're different and they behave differently and they chase different assets at different times.

Alok: One question which maybe just to, this is very interesting what you have just explained about how Oryx was heavily focused on the asset management piece also, right? I mean, and I know a big part of, if I'm not wrong, Oryx business was from the asset management side. I mean, is there a way where you can maybe define for the sake of our audience how that... asset management model is different from just a pure leasing model for example. Just a way to and I think this is more like an academic question just to understand the difference.

David Power: Yes, so Oryx was both a balance sheet lessor and an asset manager. So a balance sheet lessor is effectively buying, selling, trading aircraft, holding them, but not bringing in external investors or capital. Whereas an asset manager is either going out to the market and managing assets on behalf of existing owners or distressed owners. Or buying aircraft and specifically putting them in, say like Castle Lake to the ABS market, like Oryx to the Japanese operating lease market, like other, you know, B-BAM, etc.
So they're asset managers and they're placing aircraft into specific marketplaces, be it the ABS market, like Carlisle, be it the Jarl market, be it US investors and funds who want to hold the assets for the yield, or pension funds who like the lower yielding but higher credit type assets. In fact, almost everybody is an asset manager as opposed to a pure balance sheet player. Aircap is the most pure balance sheet player, but you could say it's a public company which manages public money and puts it into aircraft. So ultimately, everybody's an asset manager. But some players are much like ALC and Aircap are much more focused on their balance sheet and taking public money, creating a balance sheet and creating profitability and growth for their investors, which is the public. So they are in effect an asset manager also, but they're more using their balance sheet as opposed to providing investment products in different segments.

Alok: I think that's very well put. If I may try and summarize it, my understanding is that all lessors are effectively asset managers as you have already said, but that doesn't mean that all asset managers are necessarily lessors. There could be asset managers who are not lessors, but all lessors are definitely asset managers as you have rightly explained, I think even though they're managing public money. So, you know, looking at your illustrious career, if I may say David, this is really impressive. I have this list here of, since you moved on from Oryx, you have been on the board of various companies. And recently, you're associated with Airgo Holdings as a special advisor as well. And one of the things which I noticed, which you're doing, is a great initiative is on the Hague Court of Arbitration for Aviation, where you're working as a vice chair of the advisory board.

David Power: Yeah, yeah.

Alok: Would you just like to just? tell us a little bit because this is a new initiative. I think it will help the audience to understand what is this all about and what is your role in this and what is the hey code of

David Power: Yeah, of course. Delighted. So, Paul Gepley, lawyer. Usp Pillsbury and is now with us, actually had the idea to set up the Hague CA, which is the Hague specialist court of arbitration, which works within the framework of the Hague international court of arbitration. And he started that endeavor 2020. And since then, it's obviously up and running. And I'm the vice chair of the advisory board. and the chair of the standing technical committee. So the court is designed really to be an arbitration court with very specialist focus on aviation. And that's why we've brought together over 80 experts from the aviation sector, from the lessors, the finance side, the MROs, the manufacturers. etc. to advise and input into the rules of arbitration in the first instance and now that the rules of arbitration have been settled with the Hague Court, with the rules of mediation.
So our focus now just currently, and we just had a meeting on it last week with a large number of attendees, actually it's very challenging to have these meetings because we have so many attendees to get a time slot and to have an agenda and to get the minutes right etc. But what we're trying to do now is to have more influence on the mediation rules so that people in aviation can with confidence put in a mediation or arbitration clause into their contracts knowing that they won't just be going to a court where maybe that court doesn't have the specialist expertise and not just to an arbitral institute which you know so they go they can get a specialist arbitral and mediation service but actually, our viewpoint is that we want to promote arbitration generally whether it's in London or Singapore or the Hague court as well because it's a not-for-profit operation organization, it's a foundation. in fact and I think that over time It is not a quick fix. I mean, over a few years, three, four, five years, it'll begin to have a major impact. I mean, I was just thinking about it the other day and thinking about all the supply chain issues and Alok, you'll be seeing it in your business.

Alok: Yeah.

David Power: And there's terrible disputes can come out of that, but also it's not the forum to litigate either. So you have genuine... problems in the supply chain, but that doesn't obviate manufacturers or suppliers from certain responsibilities, yet litigation is not the answer in the first instance. So I think that's a very good example of where mediation or arbitration clauses in those contracts can be meaningful and it can also lead to much quicker resolution. And for example, the cost of mediation as compared with, I think, arbitration litigation is in the small percentile. I was told a percentage and I didn't believe it. It was so low. So it is significantly cheaper, quicker and more responsive. But in particular more, the experts that will be used are experts in the area, which is a much quicker way. to access as well as justice are the right answer in terms of these type of disputes.

Alok: yeah. Yeah. So, and you're right. And this is where I was leading this question to the next point of a live example from where I am right now, which you must be very well aware, what is going on with Go First Airlines in India, it is going through a bankruptcy process. And they have said that their reasons are one of the reasons, key reasons is Indian issues with PW. While we may have our own opinion of why they are going down. But at least on the face of it, they're in a dispute now with the PW on their engine issues. And I believe they went through some arbitration, et cetera, et cetera. So I'm wondering, a HAC-CA possibly, when it

David Power: Yes.

Alok: Would be fully ready, can play in future a role in this kind of situation and help resolve the situation faster and in a more cost effective manner, isn't it?

David Power: Yes, and that's a really good example and I believe also that India has, and you probably know more about this than me, but I think it's adapted some legislation or it's in process to demand that certain companies have arbitration clauses before they resort to litigation. And I think that could be a growing trend. internationally. Certainly it's far far sighted by the Indian government to be introducing such legislation I believe.

Alok: Yeah, definitely. And in India, as you know, in the gift city of India on the West Coast, Gujarat state, they have they're setting up, you have mentioned the very beginning when Ireland was growing the air craft leasing business, they had set up an IFSC. So India has set up its first IFSC, so to speak. And it is in early days right now. But one of the positive steps they have taken is they have set up the Singapore arbitration bench there, so that the various parties who operate there can resolve matters through arbitration rather than through litigation.

David Power: Yes. Yes.

Alok: So I can imagine if tomorrow Hague CA is spreading and looking at various regions, possibly one of the places they would look at is also gift city in India. India is such a big country. And I think that's a very important point. India is such a big country. And I think that's a very important point. India is such a big country. And I think that’s a very important point.

David Power: And possibly with my ergo hat as an asset manager, I'll have to go down to Gift City and see if there's any investors there. So yeah, you know, it's a big world and it's always opening up and new opportunities. I mean the growth in India over the next 10, 15 years will be phenomenal.

Alok: Yeah, yeah, it looks like that. It definitely looks like that. I am going to change the beat a little bit because I have a set of special questions just for you

David Power: Oh lovely,

Alok: because

David Power: lovely,

Alok: I think

David Power: thank you.

Alok: there are areas on which you can contribute. I mean, beyond the usual, because I pretty much have tried and summarized your career here and got a little understanding of the new initiatives. But there are certain things I think, which I believe, David, you are the best person to tell us. This is a topic you know very well about JOL and JOLCO and I'm going to just Spell out the full form because I got feedback from my audience That not everyone who is hearing this podcast knows everything about the full form of these terms, you know, so Japanese operating lease is JOL and JOLCO is Japanese operating lease with a call option now I think Oryx in your Oryx days and maybe even now you have been very close to these right and during the pandemic time especially till last year I know there was a case which was most publicized about JP lease and some assets in Vietnam which had some Jolco related issues and apparently at least what I have heard is there is an issue that maybe Jolco people are saying is a thing of the past I don't know. What is your opinion? Are they still active or will they not be active now anymore?

David Power: Yeah, so I think the, actually I just read, before I actually started this, I did a bit of reading and I read because the Tokyo conference was on in Tokyo, obviously, Tokyo, conference in Tokyo

Alok: Yeah. Yeah.

David Power: just a couple of weeks ago. But it seems that the Jalco market has come back a bit. But let's just get back to a little bit of definition. So a Jal will be a single investor, and a Jalco will generally be multiple investors. So now, what happened in the years 2017, 18 and 19, which were obviously very good for aircraft leasing and aircraft leasing was growing. I mean it was growing as a percentage of aircraft operated from about 42% and heading up towards the 50% mark and the airlines were moving into profitability making about 30 odd billion in aggregates, and the JAL market had expanded to about $4 or $5 billion worth of assets annually or more. It's not really transparent. So a lot of Japanese investors had bought widebody aircraft with Southeast Asian carriers and then moving to Latin American carriers. So if you take initially that the credit risks of the Jalco Airlines was a top 15 to 20 in say 2012-13 and then by 2018-19 it was a top 40.
So, as soon as COVID came, unfortunately for the Jalco investors, a lot of the airlines obviously had significant payment difficulties and problems which are well documented. So the JAL market has recovered to a stage where it's the top 15 airlines that can attract JAL funding and is beginning to recover. But there are other issues such as the strength of the dollar, you know, et cetera. So yeah, I expect the JAL market will recover. And I think the particular note is that the Japanese economy and the Japanese stock market is rising strongly and there's significant profitability within Japanese companies. So it's an improving situation for the JAL market, but slow. And credit is paramount to that market. I mean, investors need to know that the aircraft will be purchased in the case of the JALCO or that it'll get to the end of the lease term in the case of a single investor, JAL. And there is more debt in the aviation sector. I mean, debt had increased immediately post-COVID to about 800 billion, whereas pre-COVID, it was still a startling 600 billion. And I believe Ishka just issued numbers, so about 50 billion has been repaid. So there is a repayment going on by airlines. But post-COVID, what we see is that the percentage of the lease market controlled by the leasing community, is roughly 60 percent whereas pre-COVID it was you know touching heading towards 50 percent.

Alok: Yeah.

David Power: But this is a very big move upwards and also the ABS market is currently effectively sort of in hibernation until the interest rate issues. So the only market you've got other you're wondering why I'm answering that in the context of the JAL market. But the only other market you have other than the ABS market currently will be the JAL and JALCO market. And with the state of the Japanese economy being relatively strong, actually, but with the dollar, yen issues, that looks like a recovering market, but a focus really on the top, top 15 names, which actually compresses the JAL players into very tight economics with a few airlines who can command very good pricing on both the debt and the least rental side in that market place.

Alok: JAL and JALCO market traditionally has always been particular about high credit worthy airlines only.

David Power: Yes.

Alok: But what I'm understanding you're saying is that possibly that will become even more stringent in the short term now for time being.

David Power: Oh yeah, in the short term I think it's paramount that it's the top 15 of the airlines worldwide that can attract JAL or JALCO funding.

Alok: 15 or 50, sorry, 15.

David Power: No, 15. No, no, it's not top 50. No. Do you have a top 50 of airline credits? I'd love to see it.

Alok: That's why I qualified. was wondering.

David Power: I don’t mean that the bad way, but everybody knows airlines are, you know, airlines are very susceptible. That's why the industry is so interesting. We're all very susceptible to external shocks and to oil price movements, to GDP, to consumer demand etc. But the airlines are doing fantastically at the moment and it's great to see. I've been travelling a lot and I'm sure you have. Everywhere you go

Alok: yeah, flights are full.

David Power: it’s busy, it's very busy. I'm here in Portugal at the moment and it's, I would say, twice as busy as normal in the Algarve, which is a holidaying spot and it's very, very busy.

Alok: Oh, you're right.

David Power: It's great to see, but long may it last as well, but we are seeing a huge uptick in travel

Alok: You absolutely right. Last week, I was in US, and a couple of airports I transitioned through, and there was no space to, frankly, one of the airports, there was no space to stand. It was that busy. I was surprised.

David Power: Yeah.

Alok: One flight was delayed by two hours, and the airport was just jammed. It

David Power: Yeah, yeah.

Alok: was a good problem to have for airlines.

David Power: Oh yeah, it's definitely a parts world problem, but the only thing I wish actually, you know, I always feel sorry for my airline customers because I often think they're very let down by the airport authorities and I'd love to see better accountability by the airport authorities for some of their decisions around the way they, you know, load passengers onto planes to space to give to airlines. generally the security aspects as well, you know, going to some bizarre sort of queues and unnecessary hindrance to travel. It's probably quite something we should debate at some of the conferences, but there should be, you know, the airlines should be better served to get passengers in and out of airports. And it also goes actually to the environmental issue because we talk a lot about SAF, we talk a lot about you know, aircraft, but simple solutions such as not having aircraft, you know, idling and taxiing for hours might be a good way to start.

Alok: Yeah, the full one is high and you're right, bad for environment. On the support to the airlines, you know, one area which maybe you can weigh upon even more, I was hoping to hear what is your thoughts on the supply chain issues. You mentioned that briefly in the previous answer, but those issues are very much here. They're staring us at the face now and we are seeing the impact real time. I am like the kind of the airplanes which we are managing, for example, through various processes for various clients. We are seeing airplanes getting delayed, stuck in MROs, waiting parts, all that is really happening. And engines taking time to come out of the shop. Do you see that ending anytime soon? Maybe do you have any inside knowledge to share with us as to what do you think will happen eventually? How will this play out the next few months?

David Power: Well, I'm quite concerned about it because there's some conflicts of interest there. In fact, as you know, some suppliers may benefit from the supply chain issues in that they charge higher prices for their stock and also for the refurbishment of parts. There may be a shortage and they can charge what they want for exchange parts. So I think there is a real problem in the supply chain and I don't see any resolution to it within 2023, more likely 2024, 2025. Now in capitalistic systems, these things generally resolve themselves because the void is, the vacuum is met by somebody else producing and supplying. But in the case of aviation, you can't get the licenses. You don't have the intellectual property. So, you know, in a situation where you have a duopoly, effectively, there needs to be real focus on this by Boeing and Airbus and the major manufacturers, and it needs to be resolved. And I would suspect that people will soon become very tired of it and we'll see a lot of disputes. You know, because there is significant cost being added to the airlines by lack of parts and on occasion, lack of an ability to get an engineering drawing. So how long can it take to get an engineering drawing? In your mind, Alok, and you're well used to looking at reconfiguring aircraft, how long would you say it would be reasonable to procure the drawing? This is before you even start the modification work.

Alok: Engineering order for a cabin modification matter of few days is what we have been used to at least in the past.

David Power: Well, what would you expect it to be today?

Alok: I think today it is a matter of it has gone maybe exponentially high. It's even taking two to months is what I’ve been told and in case of some of the parts as you rightly mentioned the pricing of refurbished parts, computers and all I've heard is gone three times now from pre-COVID times. So you're right there is a serious problem here and what you mentioned underlines to a large extent why that is happening. So hopefully it will come to a head and get resolved at some stage soon. But right there is only so much the industry can take.

David Power: Yeah, I think it's a big problem and I think you'll get resolution through people having some hard conversations, maybe eventually through arbitrations or litigations, but unfortunately, but it's definitely a major feature of the world we live in, the transitions of used aircraft are all the more difficult in this environment. It sort of goes back full circle to where we are about asset management and that's why when you're dealing with asset managers are less or so to speak, you need to have people who can navigate their way through that just as you need sort of your technical guys and your technical team who have specialized and who have you know hands-on experience not like last year's experience, but you know experience within a continuum and that's why I think the aviation sector is so interesting because there's so many different experts that we have to draw them all together so we get good outcomes.

Alok: This whole story, the way it is playing out now, like I mentioned to you about Go First and what is happening with Pratt engines. And I know Pratt has come back with their statements about Go First, and maybe none of us are in a position to basically say who is right or wrong. We don't know. Though we know there is some there is a middle ground, there is somewhere the truth is somewhere in between as always. But having said that, the fact remains that Pratt engines, the gear turbofan engine is causing problems worldwide. Yes, India is maybe the most affected due to other reasons too, but it is having an effect not just in India, it is having an effect in Europe and elsewhere too. That's what we know of. How will this, how is your opinion this affecting the market in the law? How like in your role as an advisor in various companies as a board member, what advice are you giving to those boards or what is your opinion on this? How this is weighing on the