With the International Air Transport Association (IATA) predicting a global aviation industry profit of $5.6bn (£2.85bn) for 2007, last year will rightly be viewed as a very successful year for the aviation industry. However, the cyclical demand for capital is well understood and predicting when the ‘top of the cycle’ has been reached has become something either of an art-form or a blind bet. Investors predicting correctly can make a handsome return; those who hang on for that little bit extra can get severely burned – it is not a place for the faint-hearted.

Despite record-breaking oil prices and sub-prime woes, strong performances have been reported in Asia and the Middle East, with bankers in these regions describing 2007 as a bumper year for business. There has been particular focus on China and India for a number of years now. Rapid economic growth in both countries has meant an increased demand for air travel. Chinese and Indian airlines have placed substantial orders with the major manufacturers over the past few years. Consolidation within the Indian market, notably the coming together of state-owned Air India and Indian Airlines and, in the private sector, Kingfisher’s takeover of Air Deccan, is taken by many as an indication of an increased maturity in the Indian aviation industry.