31 Jan 2020

Cirium Interview: Acumen challenges notion of two-tier lessor market

Many in the air finance sector are of the view that the leasing market is now split into two tiers: one made up of the large, established players, and the other of newer entrants whose expertise may not run as deep. For asset manager Acumen, this classification is disparaging to much of the industry and does not reflect reality. "I would take that with a pinch of salt," founder and chief executive Alok Anand told Cirium during the Airline Economics Growth Frontiers conference in Dublin earlier this month. "I think it's a bit arrogant to think that nobody else knows what [established lessors] know – it isn't true." Styling itself as a "fully rounded" asset manager with a range that spans aircraft sourcing and trading, valuations, technical oversight and active management, Acumen argues that its depth of knowledge rivals that of any established lessor. This, Anand asserts, is how Acumen has managed to attract not only so many of the newer players but also industry giants such as Avolon. He says his firm has a strategy of bringing in experienced and knowledgeable team members well-known throughout the sector. "One other thing that puts us ahead is that we have created a clear structure with a focus on asset management," he says. "Our digital capabilities are strong, and we have a lot of real-time data." Specifically, Acumen is developing machine-learning and artificial intelligence platforms for organising fleet inspections, building contracts, and conducting cash-flow analysis, among other things. The company's status as an industry insider means its work in this area is built on knowledge of what customers actually want, Anand argues. "We are not an IT company who has developed the tool; we are an asset manager who has developed the tool... We struggled to find solutions in our industry, so we looked outside business to find solutions to allow us to leverage less people and increase productivity." Traditionally, Acumen's main customers have been lessors and banks, but it is increasingly making inroads with airlines seeking assistance with financing or asset sales. This reflects airlines' increasing sophistication in how they manage their assets. While just over half of Acumen's customers are based in Europe, the majority of its activity takes place in Asia, and China is a key growth market. Recognising the country as a challenging one in which to become established, Acumen moved early to create an office there, a decision Anand says is paying dividends now as relationships with local players mature. In the immediate term, the Boeing 737 Max crisis is having a mixed impact on Acumen's business – although the net effect is negative. "The Max not being available means that many lessors have deferred redeliveries, and there's less trades happening," notes Chief Commercial Officer (CCO) Eamonn Cronin. With fewer new aircraft entering service, the number of jets changing hands further down the chain is restricted. On the other hand, "maybe there are more opportunities to do inspections of older aircraft to make sure they have been preserved correctly", Cronin adds. A clearing of the logjam when the Max re-enters service could create business for the firm. "We don't want to sound overconfident, but we are very optimistic on our short term," Anand declares. "We are well established after 10 years in business with a recognised brand name. People know us and we are transitioning from tech service provider to a full asset manager." But he acknowledges that industry challenges lie ahead. "There is a lot of talk about the environment... It affects all of us," he says. "Regulations could get much more stringent." This article was published 30 January and has been re-produced with the kind permission of Cirium.