Insurance and Risk!

In today's business environment corporations in all industries have made covering risk one of the highest priority's. Risk is calculated and avoided at all costs, and you can not blame the executives for this approach.

Insurance is a very powerful tool used to cover risk, and once insured a company and their executives can take on higher risks to grow their company and profits. However we can't insure everything! This is when various industries have become creative in order to reduce their risk.

The Aviation Option Market, is the first platform globally that allows for Buyers and Sellers to buy and sell an option contract against any part used on any flying machine. FlyingParts Int. has brought the Aviation Option Market to the aviation and aerospace industry to assist in counteracting the high risks that airlines and operators of aircraft face!

Options have been used successfully in various industries for many years. Although they are typically managed in the financial services industry, the option contracts act as insurance policies for performance. Farmers buy options on the crop that they grow to ensure that they have access to crops in the event that their own farmed crops fail. Companies that do a lot of international trade, buy or sell foreign currency options to ensure their costs or profits.

The Aviation Option Market allows for the following two risks to be mitigated while lowering costs;

• AOG and cancelled flights

Airlines can lose in the millions for cancelled commercial flights. Imagine if you were not able to fly because of a $100 part was not available immediately to allow your aircraft to fly. Spending $1 million to accommodate the cancelled flight over $100 does not sound logical, however if a part is not available, there is little other choices. This is a major risk of the aviation industry, and one that the Aviation Option Market is very effective and at much lower costs to the present model used by airlines and aircraft operators.

Airlines and Aircraft operators buy an option contract on a specific part on the Aviation Option Market that they could need in the future. The option contract allows the airline for example to know that the specific part is located at JFK Airport, with shelf location 13,429 in warehouse 2 of international storage. The owner of the part, XY Hedge Fund has bought and placed the part there in order to sell the option on the part. The Airline at very little cost has exclusive access to that part if it is needed, ensuring the airline won't need to cancel any flights!

• Cost of parts

The old adage, supply and demand is so true when it comes to the aviation industry. Airlines and aircraft operators pay very high premiums when they desperately need parts to operate their aircraft, often paying premiums in excess of 100%.

Airlines and Aircraft Operators can fix their potential costs through the Aviation Option Market. Since the Buyer of the Option contract and the Seller agree to the price of the part under the contract, the Airlines pay the price that was agreed to when they need the part. This does not allow for price gauging when the Airline is in a vulnerable position. The price to be paid has been agreed to long in advance, and also was compared to the market pricing for the same part.

The Aviation Option Market is the only platform where Airlines and Aircraft operators can purchase parts under an option contract, an option contract that lowers the chances of not having parts on hand and being held ransom by those that hold the parts in the time of need! Lowering these risks will allow for the aviation industry to act confidently into the future!