JOE GILL: Ireland needs more aircraft repair firms, not just lessors

Last week, I visited a facility in Shannon that overhauls and maintains commercial aircraft, writes Joe Gill.

It was a busy site, with aircraft from various countries attended to by a workforce that reaches almost 300 during its peak.

Of all elements within the aviation industry that are employment-rich, the so-called MRO (maintenance, repair and overhaul) sector has the greatest potential. Efficient, well-managed MRO companies can create a lot of jobs, if progressive government policies and innovative companies combine to attract increasing numbers of aircraft.

Although we have some success in the area, I sense a much larger opportunity is being ignored, and one that can drive activity outside the capital’s airport.

The global aircraft fleet is comprised of 22,000 airplanes. Airbus and Boeing confidently expect this to grow to 40,000 units in the next 20 years. Moreover, because Ireland is home to the world’s leading leasing companies, much of this growth will be financed and managed through Ireland.

All of these aircraft need to be carefully maintained. Whether it is during ordinary operational activity or when the aircraft changes hands, they require painting, engineering, and electrical and metallurgic services. These are costly and highly regulated. Having an MRO infrastructure that can provide these services augments the sector’s growth, while advancing investment and employment around aviation in Ireland.

But the number of MRO companies resident in Ireland is relatively small. There is one at Dublin Airport and a handful in Shannon. Knock has a small tear-down facility, but there are none in Cork, Waterford, Derry, or Kerry.

If we have lots of land and quiet runways in airports outside of Dublin, why is it beyond the wit of policymakers and airfield owners to devise a strategy that attracts a wave of MRO investments?

Access to qualified MRO personnel is one challenge. Apprenticeship courses in a number of companies are addressing that gap, but it takes time to add suitably qualified personnel.

Rates are another problem. Remarkably, the hangars used by MRO companies in Ireland have to pay rates as if they were supermarkets or factories.

Any time I visit an MRO hangar, it reminds me of a large agricultural shed. Farm sheds in Ireland are charged zero rates, so why not extend that to MRO hangars?

If worried about that policy shift triggering demands from other sectors, then keep the policy tightly restricted to facilities that are airside and exclusively used for MRO activity.

Because aircraft-maintenance-and-repair is a low-margin enterprise, abolishing something like rates could have a material effect on the level of investment behind it.

I would tag such a policy change with a challenge to the industry to commit to new MRO hangars and jobs in return.

Imagine if you could induce an investment programme that created hundreds of additional jobs in Shannon, Cork, and at other airports outside Dublin.

Not only would it create more tax revenue for the exchequer, but it would also inject economic activity into the regional economies.

It is an uncomfortable truth that the regions beyond the Pale are underperforming the recovery. The lack of nationwide, high-speed broadband partly explains this differential, but the absence of tailored policies that turbo-charge certain sectors is another. MRO needs a political champion to energise activity and investment at airports outside Dublin.

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

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