Air Transport World

A risk worth taking. (International Air Transport Association offers political risk insurance for airlines)

Nothing better illustrates the gap between doing business in the First and Third worlds than the existence of repossession insurance, or political-risk insurance, as it also is known. The worst credit risk in Western Europe or North America will never be expected to obtain it. The best credit risk in Africa or South America may be unable to arrange financing for an aircraft without it.

Bluntly stated, repossession insurance exists because lenders lack confidence in the ability or willingness of certain nations to enforce the rights of ownership as they pertain to foreign lenders. These lenders fear that in the event of a loan default on an aircraft, they will be prevented from repossessing the aircraft by the country in which the defaulting airline is based.

Like all insurance, repossession insurance is intended to off load this risk on to a third party. But unlike hull and liability insurance, items that are understood and accepted as normal parts of doing business and which have equivalents in every industry, by its very nature, repossession insurance is discriminatory and by the very issues it raises, unsettling.

Credit history no matter

From a practical standpoint, consider that the people who want it don't pay for it and the people who pay don't benefit from it. …

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