Dr Xuanyu Yue was a recipient of the first Valuation and Risk (VAR) Research Scholarship which was created by Science Foundation Ireland (SFI) with industry-leading partners to support key thought leadership challenges facing the aviation finance sector. She completed her thesis ‘Essays on Corporate Environmental Performance and Aviation-related Carbon Emissions’ at UCD Michael Smurfit Graduate Business School and is currently working on both ESG related topics and Aviation Finance.

"Demand for air transport is going to continue to rise, and both the industry and individual airlines will have to learn to balance increasing demand while simultaneously reducing CO2 emissions and complying with new stricter policies," said Dr Xuanyu Yue who is believed to be the world’s first PhD graduate in Aviation Finance.

"This is an extremely difficult balance to achieve as they seem like opposing objectives, yet my research shows ways in which a balance can be reached." 

In 2017, the VAR programme funded a research scholarship for PhD students, Postdocs and Early Stage Researchers to advance research in this area. This funding allowed for one of the world’s first doctorates in Aviation Finance to commence.

As a key industry to the Irish economy, and with many of the world’s leading aviation leasing companies headquartered in Ireland, this scholarship provides a bedrock and is a valuable part of the ecosystem to support the sector in thought leadership.

VAR and FMC

VAR is led by UCD College of Business Professor of Finance John Cotter and is a research initiative developed as part of the Financial Mathematics and Computation Cluster (FMC). 

Professor Cotter said: "The VAR research programme, working in conjunction with industry partners, has recognised the need to develop greater knowledge and skills for Asset Valuation, Sustainable Finance, Fintech, Risk Modelling and Risk Management. Today, 42 per cent of the global aviation fleet is leased through an aviation finance industry that is largely based in Ireland.”

The VAR research partnership responds to industry needs by bringing universities and industry together to create breakthrough thought leadership in finance. VAR is part of the larger FMC research collaboration led by University College Dublin, in collaboration with Dublin City University and Maynooth University, and is funded by Science Foundation Ireland and 9 industry partners including AerCap (and formerly GECAS), Avolon, Bank of Ireland, Citibank, Deloitte, The Institute of Banking, KPMG, Safran and SMBC Aviation Capital.

Professor Cotter said: "That Dr Yue’s PhD is a testament to the support of SFI and industry partners AerCap, Avolon, KPMG, Safran and SMBC Aviation Capital. Through the VAR programme, a new generation of graduates equipped with specialised training and research experience are set to enter the Irish financial services industry, creating indigenous knowledge to secure Ireland’s place at the forefront of the financial services industry."

Dr Xuanyu Yue, PhD graduate in Aviation Finance

Dr Yue commented: "I completed the MSc in Energy and Environmental Finance at UCD Smurfit School, where I developed a real interest in environmental issues, particularly transport-related emissions and how to mitigate them. I focused on the aviation industry because in many cases it cannot be substituted by alternative transport modes, yet contributes heavily to overall transport-related emissions."

She is continuing her research on topics related to aviation finance within the VAR partnership. Again, funded by leading aviation lessors and SFI, the focus of her research will examine ways to achieve the transition to net-zero carbon by 2050, the key challenge for the industry as identified by the International Air Transport Association.

Dr Yue continued: "I learned that addressing climate change is very much transdisciplinary and requires different disciplines to work together, as well as working with the public and other interested parties."

She said: "Good quality research can make a real contribution to society and our industry partners. For example, my research provides insights for airlines as to whether leasing is a better option than purchasing, and what areas individual airlines should target to control emissions."

Sustainable Finance

Associate Professor Julie Byrne is a leading academic in sustainable finance both in curriculum development and thought leadership and supported Dr Yue in her research. UCD College of Business has become a leader in this area as it becomes an increasingly important topic for society, the economy and academia.

Dr Byrne said: "This research very much focuses on the challenges airlines face as they come under increasing pressure, both as a result of more stringent policy and public sentiment to reduce emissions. While this is the case for most industries, it will be a particularly difficult task for airlines to achieve.

"Demand is forecast to increase significantly to 2050 and airlines are more restricted than many other sectors as to how they can both cater for the increased demand and curb emissions, and achieve this emissions reduction quickly. In many ways, they face a unique set of challenges — a set of challenges Dr Yue explores and tries to find solutions for in her thesis."

The scholarship was designed to train the student to address key challenges facing aviation finance. Dr Yue had several benefits from the scholarship such as access to data resources, meeting VAR’s Scientific Advisory Board members, attending VAR research days, as well as supervisory support and the team that works with her supervisor.

Dr Byrne said: "Dr Yue’s findings are very important for the industry as it identifies specific actions that can be taken to achieve least-cost solutions.

"The resulting research and this scholarship were only made possible through the generosity and foresight of the partners involved,” concluded Professor Cotter. “We thank them for the contribution to the important research happening in this area that continues to show Ireland as a leader in this field and a preferred location for leading international companies to do business here."