Bank of Japan

Announcement, Financial investments

How Japan uses aviation flight data to assess the financial outlook

June 17, 2021

The Bank of Japan looked into aviation data for the first time when they created their April 2021 Financial System Report.

After more than a year into the pandemic, we see the world heading towards the path to recovery, albeit slowly. According to Ascend by Cirium’s scenario forecast, global demand recovery to 2019 levels would not be achieved until late 2024. Countries that have a strong vaccination roll-out have seen people beginning to travel for leisure once again, while many other countries remain in varying levels of lockdown. 

Prior to the pandemic, it had been 20 years since an abrupt decline in air transportation – in 1999, during the global financial crisis, and in 2001, during the 9/11 terrorist attacks. However, this is the first time we are experiencing a prolonged decline in demand for air transportation.

With this situation at hand, private and public companies, governments and other agencies rely on different kinds of data more than ever to forecast financial, economic and industry outlooks amidst all the uncertainty brought about by the pandemic.  

Last year, we featured 3 different ways governments can use aviation flight data. For more efficient airport operations, data can be used to spot trends that can be translated to process improvements for flight monitoring, preventive action in light of health scares and revenue management. This time around, we see how aviation data can help government agencies assess a country’s financial outlook. 

The Bank of Japan looked into aviation data for the first time when they created their April 2021 Financial System Report that outlined financial risks and opportunities and provided an overall financial outlook for the country. Experts applied learnings from the 1999 and 2001 drops and used current data from Cirium to complete the projections.  
 
Aircraft financing loans comprise a major share of Japan’s object finance loans. These are heavily impacted by the persistent global lack of demand for new aircraft and the continuous decline in aircraft prices. Aside from that, airlines around the world are now shifting towards narrow-body aircraft and aircraft models that have low carbon emissions. These pose a substantial risk to existing financial loans that Japanese banks and NBFIs extended to various companies. 

For this report, Bank of Japan used Cirium SRS AnalyzerCirium Fleets Analyzer and historical values from Cirium Direct to get a better picture of flight demand and capacity, as well as have a better idea of up-to-date aircraft prices in the market.

Read the full text of April 2021 Financial System Report from the Bank of Japan website in English or Japanese

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