We should fly high as global aviation hub

Next week two major aviation finance conferences take place in Dublin, writes Joe Gill.

Well over one thousand delegates will arrive from airlines, aircraft manufacturers and banks from around the world to do business. It is another reminder of how well positioned Ireland is within one of the most exciting elements of the international aviation industry.

With over 30 aircraft leasing companies operating from bases in Dublin and Shannon, Ireland is the world leader in this fast growing financial services sector. It is now estimated that about 45% of all new commercial aircraft are owned through leasing companies and over 50% of that leasing group is headquartered in Ireland.

To put some numbers on these bones; (1) there are currently 21,000 commercial aircraft in operation worldwide; (2) orders are in place for about 1500 commercial aircraft in 2015 with the key manufacturers including Airbus and Boeing; (3) over $120bn of financing is needed each year for at least the next decade to fund newly delivered airplanes, and a further €100bn is already exposed to the worldwide fleet.

This backdrop helps explain the frisson that surrounds the aircraft leasing industry in Ireland. It is clear that the group of companies located in Ireland have further strengthened their relative position over the past year.

Indicators of that trend include; (1) the sharp clamp down by major western Governments on tax havens worldwide.

While that process has also prompted stern inquiries by tax authorities in many countries Ireland has come through that review well.

Indeed, it appears that major lessors are adding instead of reducing resource to their Irish offices as they beef up their presence further; (2) AerCap has successfully integrated the huge ILFC fleet which has added over 1000 planes to the business. Most of these have had their ownership transferred in to Ireland, further bolstering the State’s position on the global leasing league, and; (3) the Irish leasing company Avolon successfully launched its business on the New York Stock Exchange and by so doing has advanced its growth strategy by providing a new avenue of capital for the business as it expands over the next five years.

The conditions are now in place to grow the industry even further during 2015.

To begin, the lessors in Ireland all have large order books that imply deliveries will take place as the year progresses. Each one of those aircraft will require legal, financial and regulatory work streams that imply plenty of business for Irish based service providers. This will expand the fleet managed from Ireland as the year unfolds.

Second, the profile of the fleet managed by Irish lessors is beginning to change. New technology aircraft are starting to appear in the owned fleets and this will become a growing trend over the next five years.

All new long haul twin jet Boeing 787s are already showing up on the registers of Irish lessors and these will be joined by Airbus A350s in 2015. In 2016 and beyond Airbus and Boeing will begin shipping the fast selling NEO and MAX airplanes.

These promise to cut fuel consumption by 15% and reduce carbon emissions for a generation of short-haul aircraft flown by airlines including Aer Lingus and Ryanair.

For Ireland to continue its success in harbouring and developing world class leasing companies it must continue to find ways to defend and enhance the competitiveness of basing companies like these in our domestic economy.

That requires advanced and efficient communications, multiple and fast transport connections, competitive personal and corporate taxes together with a Government responsive to the fast moving nature of the leasing sector.

The evidence to date suggests such a menu of skills exist in Ireland and we must hope that continues and ensures events like those next week, which provide important tourism boosts in January, are continued.

*Joe Gill is Director of Corporate Broking with Goodbody Stockbrokers. His views are personal.