If we told you that Ireland had orders in with Boeing and Airbus for more than 17,000 aircraft over the next decade, who would you think placed those orders? Aer Lingus, with massive expansion plans up their sleeve? Ryanair, ready to take over the world with their low cost services? Well, it’s neither.
Ireland is one of the biggest centres for airline leasing in the world. Many of the world’s biggest and best airline leasing companies are based in the Republic, including:
- AerCap Holdings N. V.: AerCap owns and manages more than 1,000 aircraft and has $42bn in assets. They have a further 411 aircraft on order and work with over 200 companies across 80 countries worldwide.
- Air Lease Corporation: As of August 2018, ALC owned 271 aircraft and has 391 more on order. They work with 100 customers across 60 countries and have offices in both Los Angeles and Dublin. One of their recent notable leases is the A330-900neo to TAP Air.
- General Electric Capital Aviation Services (GECAS): This Fortune 50 company has a 70% market share of narrow body jets. They specialise in supporting start-ups as well as low cost and regional carriers. Their fleet includes more than 1,970 aircraft, making them the largest commercial airline leasing company in the world.
- SMBC Aviation Capital: Formerly RBS Aviation Capital, SMBC are another of the worlds largest aircraft lessors. Their portfolio includes 453 aircraft and has been servicing the airline industry for over 15 years.
- Avolon: Avolon pride themselves on owning and maintaining the youngest fleet out of all the major lessors. They focus on the A320, A330 and B737 families, and work with clients as diverse as Delta, KLM, China Airlines and many more.
In total, 14 of the 15 largest aircraft leasing companies make their home in Ireland. Irish based leasing businesses manage more than 5,000 aircraft in total worldwide, representing more than $130bn in assets. That’s more than half of all the leased aircraft worldwide, and one in five of the global commercial fleet!
As a rainy rock stuck out on the very periphery of Europe, Ireland might seem like an odd choice of base for these global leasing giants. But actually, there are some pretty solid business cases for trading from the Emerald Isle.
For a start, Ireland has a taxation regime which is one of the most attractive in the world. The headline rate of corporation tax is stable and competitive, and the tax depreciation write off period of eight years is one of the most generous.
In addition to this, they have an extensive double taxation treaty network, with agreements in place for 74 countries. This creates a positive business environment for any large corporation.
They also have the skills these companies need to survive and grow. As one of the first countries in the world to make a foray into aircraft leasing, with the formation of Guinness Peat Aviation in the 1970s (by the man who co-founded Ryanair), the leasing business has run in the blood of the locals for many decades.
As such, there are specialist aviation finance programmes run at both the University College of Dublin’s Smurfit Business School and at the University of Limerick, which provide a steady flow of talent for the firms based there.
But 17,000 aircraft? Really?
The industry in Ireland is still rapidly expanding, with aircraft numbers globally rising 36% over the last five years. Much of the predicted growth is attributed to a massively increasing demand from Asia, and in particular China, which is expected to overtake the US as the world’s largest aviation market by the year 2024.
Estimates place passenger numbers worldwide at more than 73 million by 2030, and that means a lot of new aircraft will be required. Irish companies already manage more than 1,100 Chinese owned aircraft, and that number will only increase as time moves forward.
Next time you buy an airline ticket, remember, there’s a one in five chance that you’re flying on one of the planes that’s netting the Irish economy around $660m every year.