AB CarVal's Gregory Belonogoff explains where institutional investors are allocating in aviation and whether they're pulling out amid airline disasters
For an industry plagued by headlines of air disasters, aircraft malfunctions and labour strikes, commercial aviation remains sticky in institutional portfolios. It might not command hefty allocations, but as one aviation leasing expert highlights, it’s not going anywhere either.
If you were to ask Gregory Belonogoff whether plane crashes, global regulatory scrutiny and other headwinds have cooled institutional appetite for aviation, he simply disagrees.
“No, they’re not pulling out,” said Belonogoff, a principal at AB CarVal and head of the firm’s aviation leasing business. “First and foremost, these are always tragedies… but on a percentage basis, it’s actually very low, and the incident rate continues to decline... Aviation leasing remains an attractive and uncorrelated investment, especially for experienced investors with established partners and leasing platforms."
According to Belonogoff, some investors treat aircraft like infrastructure, comparing it to assets such as toll roads, power stations, or even real estate, due to its steady cash flow and hard-asset characteristics. Others view it through a fixed income lens, drawn to the lease-attached income stream that aircraft provide.
“At the end of the day, you have that hard asset, but it’s got a lease attached to it that’s producing monthly cash flows,” Belonogoff said.
AB CarVal, as a specialist in aviation leasing, typically allocates 10 to 20 per cent in aviation within its commingled strategies but at the institutional level, allocations are modest, noted Belonogoff.
“It’s a very small percentage of what they’re adding to a portfolio, but it gives diversification,” he said.
While it's not a dominant position, Belonogoff argued the sector’s value lies in its lack of correlation to traditional assets. Aircraft leasing, he noted, has shown resilience across market cycles, unlike airlines themselves.
“Bankruptcies are common in the airline space, but the actual aircraft leasing bid is very stable and continues to produce cash, come what may,” he said. “It is a private market. It's not easy to access and has high barriers to entry. There are some big, listed companies out there, but they typically start to trade on earnings multiple when they reach a critical mass. So you're valuing the business, not necessarily on how the assets are acquired. To actually acquire, own, [and] harvest an aircraft, you have to have specialist skills and be able to tap into that market.”
For Belonogoff, the appeal lies in stable, risk-adjusted returns, with diversification benefits. Unlike equities or even other private markets like real estate, aviation tends to move independently.
“It’s not correlated. We don’t believe it’s going to be fluctuating when you’ve got periods of volatility in listed markets,” Belonogoff said, noting that flexibility and consistent cash flow make aviation “a part of anyone’s portfolio” worth considering.
He added that aircraft have an advantage most hard assets lack: mobility. If a building in San Francisco underperforms, for example, it can’t be relocated. But aircraft can be shifted from weak markets to stronger ones, with minimal turnaround
The aviation industry also offers a long-term demand story. For more than 50 years, air travel has expanded at roughly 1.7 times global GDP growth, he explained. In emerging markets like India, that multiplier is even higher, with airlines such as Indigo recording growth above 15 per cent in 2023. He pointed out that Americans average two air trips annually, while in Asia the figure is less than one, signaling significant room for expansion.
On the supply side, the fundamentals are just as clear. With Boeing and Airbus forming a duopoly, order books stretch years into the future. But COVID-era production cuts left the market structurally undersupplied and is “taking them forever to catch up,” Belonogoff said.
Additionally, Boeing’s recent setbacks have only tightened the squeeze, leaving airlines grappling with higher ticket prices and limited fleet capacity.
That imbalance, he argued, ensures ongoing demand for lessor capital. Airlines not only need aircraft to support growth but also to replace aging fleets that become too costly to maintain. For investors willing to navigate the private market’s complexity, Belonogoff sees aviation leasing as a durable source of income with a long runway for growth.
For investors concerned about catastrophic loss, Belonogoff pointed to the strength of the aviation insurance model. Triple net leases shift all operational and insurance responsibilities to the airline. Lessors often add a secondary insurance layer, but even that has rarely been needed.
Belonogoff ultimately emphasized that many of the technical concerns investors raise are largely mitigated by insurance and the structure of aviation leasing.
