Aircraft lessors are setting up a lobby group to defend the €550 million a year industry in Ireland against competition from Singapore and Hong Kong.
The Republic’s status as the world’s leading centre for financing aircraft purchases contributes €550 million a year to the economy and supports more than 5,000 jobs.
Employers’ group Ibec, through its Financial Services Ireland arm, is formally launching the new industry body Aircraft Leasing Ireland (ALI) on Tuesday to help consolidate the sector’s position here.
The Republic has around 65 per cent of the global leasing market. Airlines will have to spend $100 billion to $120 billion a year on acquiring craft over the next two decades.
According to David Swan, chairman of the new body, Singapore and Hong Kong are bidding to lure key industry players from the Republic to their jurisdictions to get a greater slice of this cake.
“All these companies that are based here have just got visits from very slick teams that are saying to them: ‘what can we do for you to get you to move to Singapore or Hong Kong’?”
Mr Swan argued that this showed the Republic’s success in developing the industry and attracting capital to invest in it should not lead to complacency about the future.
Aircraft lessors borrow or use cheaply-raised capital to buy aircraft, which they lease to airlines, repaying their debts and investors from the rent paid.
Tax treaties
ALI wants to see the Government extend the Republic's 74 existing tax treaties, which help make us an attractive centre for leasing, to countries such as Argentina, Indonesia, and Japan, where there is high demand for new aircraft.
The group also wants to co-ordinate responses with Government to challenges posed by events such as Brazil’s designation two years ago of the Republic as a tax haven.
This would have resulted in Brazilian airlines paying a withholding tax on their aircraft leases until the country’s government realised that this was an unintended consequence of the move.
ALI will push for more education to produce graduates with the skills needed by the companies, and apprenticeships for the aircraft maintenance operations that support the sector.
