Aviation’s role in helping economy can soar

Tomorrow evening, RTÉ will broadcast a documentary called Aviators and Pioneers that underlines the role Ireland played in the development of commercial aviation.

Starting with the first non-stop flight across the Atlantic in June 1919, which ended near Clifden, Co Galway, the Alan Gilsenan-directed broadcast is a fine profile of how our country has weaved its way to the centre of a globally important industry.

It shows, over two programmes, how a combination of bravery, political guile, luck, and a large dose of entrepreneurial ambition has produced a world-class capability in the operation and financing of commercial aircraft.

Having navigated its way through independence, two world wars, and economic booms and busts, Ireland remains a potent force in the growing airline industry.

Leveraging that position to better the state of the economy is now a key challenge to those in the industry and within the policymaking apparatus who are capable of exerting influence.

So, what should these industry leaders do?

If employment creation is front and centre the priority of the Government, then it must find ways to light up investment in job-rich aviation-related activities. Two business opportunities stand out immediately: Maintenance, repair, and overhaul; and transitioning.

Maintenance, repair, and overhaul is the stuff that ensures aircraft are kept safe and efficient. It requires regular, varied levels of checks and significant amounts of labour input.

Already, Ireland has a significant presence in this market but some of it — Lufthansa Technik, for example — is under pressure for reasons of legacy work practices and older technologies.

Newer business models, including Dublin Aerospace and Eirtech, have flexible and productivity-driven work practices that deliver strong organic growth.

Supporting their strategies to grow and expand with a cost base that ensures international competitiveness in the cut-throat market for maintenance, repair, and overhaul ought to be a priority.

It would also be a way to exploit the physical infrastructure that is underutilised at airports such as Shannon, Knock, and even Dublin.

Transitioning is a quaint term for the process by which an airplane moves from one aircraft-leasing customer to another.

Typically, about 14 such transitions occur globally every week as aircraft end leases and move to new airline customers.

Each transition costs an average of about $1m (€725,000) to have the plane prepared for its next user, test-flown, and cleared through needed paperwork. This is a labour-rich activity. Ireland has about 50% of the world’s leasing community so why should we not shoot for half the global transitioning market?

This would require some collaboration between lessors, government agencies, and aircraft manufacturers to put in place the needed resources.

I would argue that Shannon is the ideal place to locate such a transitioning centre of excellence as it has the ramp and runway capacity, proximate competitively priced commercial office space, and the need for a big idea to further its nascent recovery.

These two sectors — maintenance, repair, and overhaul; and transitioning — are the physical aspects of the aviation food chain that can do a lot for the Irish economy.

The other element, less tangible but as powerful, is the aircraft finance scaffolding, where Ireland is already a powerhouse.

Now it must build on that strength to make the air finance sector in Ireland even more deeply entrenched in the fabric of the Irish economy by developing more value-added activities.

That could include research, valuation, origination services, and the trading of financial aviation assets which can bring high spending business meetings and events to the Republic.

Tapping the diaspora will be a key input to progressing any aviation agenda.

Many of the leaders in the lessor community are already based in Ireland but pressing buttons among those Irish executives who inhabit the upper echelons of airlines, aircraft manufacturers, global investment banks, and investment management companies will play a part in future success.

* Joe Gill is director of corporate broking with Goodbody. His views are personal