Ireland's aviation leasing industry currently contributes US$660 million (€541 million) to the Irish economy supporting nearly 5,000 jobs. The industry in Ireland experienced exceptional growth of 36% in aircraft numbers in the five years to 2016 and is expected to show further significant growth to 2021. This is according to PwC's inaugural report 'Taking flight 2018: An economic & employment analysis of the aviation leasing industry in Ireland', published today.
Launched ahead of the annual aviation finance conferences in Dublin this week, the report benchmarks the economic footprint of Ireland's aviation leasing industry. PwC Ireland carried out substantial research amongst Ireland's leading aviation leasing players compiling data for the Irish industry from 2012 to 2021 on financial, fleet and staff metrics as well as gathering insights on policy areas while also identifying key threats.
Launching the report, Paschal Donohoe T.D., Minister for Finance, Public Expenditure and Reform, said: "Launching the report, Paschal Donohoe T.D., Minister for Finance and Public Expenditure & Reform, said: ‘This inaugural PwC report benchmarks the economic impact of Ireland's aviation leasing industry and is a very valuable measure of the industry and its potential. The aviation sector in Ireland continues to grow and to be a significant contributor to the Irish economy in terms of the number of jobs created, the amount of revenue generated and of, course, the knock-on effects for the economy generally. In line with the Government’s IFS 2020 Strategy we will continue to take actions to ensure Ireland remains the leading worldwide hub for aviation leasing firms long into the future."
Key findings in the report include:
Contribution to Ireland's economy
Based on 2016 data, the report reveals that the Irish aviation leasing industry currently contributes US$660 million (€541 million) to Ireland's economy including direct and indirect spending. In addition, the sector also contributes some US$111 million in payroll related taxes.
Total Full Time Equivalent (FTE) jobs supported by the industry in 2016 were 4,970, with approximately 1,700 direct jobs. The report highlights that many of the individuals working directly in the industry are key decision makers in senior management positions.
Looking to the future, based on the work required to service the anticipated growth in assets, we expect that there will be significant growth in contribution to the economy and jobs in the next five years to 2021.
Following exceptional growth in Irish based aircraft numbers in the five years to 2016 (36%), aircraft numbers are expected to increase again in the five years to 2021 by 22%. This growth is primarily fuelled by rising wealth in Asia with Ireland capturing much of this growth. The report highlights that Asia is eroding Europe's position as the primary location for aircraft demand from Irish lessors and should overtake it by 2018.
Brian Leonard, Tax Partner, PwC Ireland Aviation Finance Practice and author of the report, said: "The report confirms the significant economic potential of Ireland's aviation leasing industry to 2021 and beyond. It is clear that Ireland has a long standing association with the industry. This, together with a continued focus on our favourable legal and tax environment for aviation leasing, has helped position Ireland as the location of choice in the global market."
Tax treaty network and skills seen as key strengths
According to the study, Ireland's key strengths in attracting the industry here are the depth and nature of our double tax treaty network, a competitive tax regime, skilled labour availability and Ireland's legal and regulatory framework. In particular, the report notes that it is very important to ensure that Ireland's current tax treaty network continues to expand and those more limited treaties are updated in order to enable Ireland to maintain its competitive advantage.
On talent the report further notes that in order to safeguard Ireland's competitive position and ensure an ongoing stream of qualified industry personnel, more educational programmes are needed, allowing Ireland to become a true centre of excellence in developing human capital for the global industry. In this regard, the report calls for a more formal strategic plan to ensure the current and future skills' requirements of the industry are identified and provision for same is delivered. This should be a priority area of focus for the industry and the Irish Government alike.
Brian Leonard continued: "The report also calls for more targeted aviation leasing education programmes. It will be very important that Ireland continues to invest in specialised industry education to ensure that we have the skills to sustain this growth and secure our leading position into the future."
Competitive tax regimes in other jurisdictions a key threat
The report reveals that the greatest threat to the Irish aviation leasing industry is competitive tax regimes in other jurisdictions. This is followed by developments from international tax reforms, the lack of a dedicated representative body for the industry and the cost of doing business in Ireland.
Yvonne Thompson, Leader, PwC Ireland Aviation Finance Practice, concluded: "It is widely recognised that the industry in Ireland has real substance and this is a key differentiator when compared to other leasing hubs. However, there are some risks to maintaining its prime position. Ireland's high personal tax regime and lack of available housing are seen as real challenges for this people centric industry and other leasing hubs are attempting to close the gap with Ireland in terms of the breadth of their treaty networks. Ireland needs to continue to build on the work it has pioneered to date and maintain its priority position."