The aviation leasing industry’s total contribution to Ireland’s economy is US$975 million (€897 million) supporting 8,543 jobs, according to the latest Taking flight 2023 report from PwC.
The PwC report benchmarks the current economic footprint of Ireland’s aviation leasing industry. Its findings are based on responses to a detailed survey provided to members of Aircraft Leasing Ireland (ALI), the representative body for aviation leasing in Ireland. The report reveals key financial, staff and other metrics as well as gathering insights on policy areas, ESG, diversity and educational impacts while also identifying key threats and opportunities. The Irish aviation leasing industry’s contribution to the economy has increase 26% since PwC’s inaugural report in 2018.
Joe Conboy, partner, PwC Ireland Aviation Finance Practice, noted that the rate of growth highlighted in the survey reflected the resilience of the industry in Ireland “despite some extensive geopolitical, ESG and other challenges”.
One of the main reasons behind the report in 2018 and again this year has been to raise awareness within Ireland and around the world of the flourishing aircraft leasing business in the country and its substantial contribution to the Irish economy, which although may be well understood within the aviation industry, is less recognised on a global stage. “Many business people even in Ireland have had the misconception that only aircraft assets are located in Ireland and are not aware of the thousands of people working the industry in Ireland,” Conboy told Airline Economics shortly after the publication of the report. “When speaking to international airline clients, it is important for us to dispel the myth that the industry is only located in Ireland to take advantage of the favourable tax environment, we are in Ireland because this is where the talent is located.”
Proven by the statistics in this report, Ireland is and remains a global player in the aircraft leasing industry and has the talent and skillset to support the rapid growth out of the pandemic.
The report was staunchly supported by the Irish government, with the Minister for Finance commenting: “This is a very valuable report measuring the Irish aviation leasing industry and its potential. The aviation sector in Ireland is 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. Government will continue to support the industry and take actions to ensure Ireland remains the leading worldwide hub for aviation leasing firms long into the future.”
PwC’s Conboy states that the industry serves as a “flagship” for the rest of Ireland’s international financial services industry and demonstrates that Ireland can attract and retain decision makers and be a global leader in finance. “It [Ireland] is a provider of highly skilled jobs, not just directly within the aviation leasing sector itself, but also in the wider professional services industry which supports it. It is important that Ireland’s aviation leasing industry stays ahead of the game and remains cognisant of the fact that Ireland’s position as a global leader in aviation is fragile and needs to be nurtured in order to enable it to continue to grow.”
The report was compiled from responses to a detailed survey sent to all members of Aircraft Leasing Ireland (ALI), which represents the aircraft leasing industry in Ireland.
“On behalf of Aircraft Leasing Ireland, I welcome the publication of this report by PwC, which reaffirms what we in the industry know – that aircraft leasing is both a critical enabler of the global aviation industry and a highly valuable contributor to the Irish economy,” said Marie-Louise Kelly, Chair, Aircraft Leasing Ireland. “Despite the challenges of recent years, the aircraft leasing sector has shown remarkable resilience, increasing its contribution to the local economy, and providing even more highly-skilled local jobs.”
Key findings in the report how that full-time equivalent jobs supported (directly and indirectly) by the aviation leasing industry in Ireland number 8,543, up 71% when PwC last reported in early 2018. Many of the individuals working directly in the industry are “key decision makers in senior management positions”, highlights the report. However, the findings show that more work needs to be done on gender diversity noting that almost 66% of respondents only had up to 25% female representation at a C-Suite level, and that outside of the C-Suite, three-quarters (75%) of aviation leasing companies reported female representation to be only between 25% and 50% across all employees.
On a positive note, the research shows that the number of industry will continue to growth since the projection of Irish-based aircraft tops 26% between 2022 and 2025 . “The largest proportion of this growth is expected to be fuelled by additional fleet leased to Asia, followed by South and Central America and Europe,” says the report.
The growth in Asia is credited for this growth rate, since Asia’s share of Irish lease rental income has increased to 43% in 2021, up from 33% in 2018 when last reported. Asia is now by far the largest market for Irish aviation lessors, surpassing Europe, which was the largest market in 2018. Europe’s share of Irish lease rental income is 23%, down from 35% in 2018 and is the second largest market. Surprisingly, the North American market has contracted by approximately 5% between 2018 and 2021, reports PwC.
In 2018, the main challenge outlined by respondents was the competition presented by other jurisdictions. At the time Hong Kong was building up its tax environment to be more accommodating and attractive to aircraft lessors, while Singapore was also a major player in Asia. Indeed a number of Irish lessors open offices in Hong Kong at the time to take advantage of the changing environment with plans to base more assets there. Following the pandemic, however, those concerns have changed. “There was some concern about the move of assets from Ireland to Asia but that never materialised,” says Conboy. “Part of it was the political situation but the level of talent was also an issue and it was a struggle for some to scale up their business with local talent. And the overriding issue was that the strength of the Irish tax treaty is hard to replicate and certainly not quickly.”
Although competition from other tax jurisdictions remains a concern for lessors, the latest report states the cost of doing business in Ireland as the main challenge with respondents specifically referencing the cost of housing and the cost of living driving pay demands to unsustainable levels. Likewise, international tax reform are noted for creating a growing degree of tax uncertainty and Ireland’s personal income tax system with a marginal income tax rate significantly higher than competitor jurisdictions.
“While Ireland’s extensive double tax treaty network was ranked as the top driver behind Ireland’s success as a global centre for aviation leasing, there is a need for its continued expansion and improvement,” said Yvonne Thompson, Leader, PwC Ireland Aviation Finance Practice,. “Ireland has an excellent image as a reputable corporate domicile and positive working relationship with EU and other markets, This provides opportunities for the industry as it further bolsters Ireland’s attractiveness as a location for aviation leasing.” With the predicted growth rate and the cost of living challenges, Ireland needs to ensure it has the tools to attract the foremost talent from within the country as well and internationally.
“The talent pool which the sector has built up in Ireland over the last four decades has provided a real competitive advantage to the industry. However, continued focus on a strong pipeline of educated employees in the sector is critical,” says Thompson. “Ireland has the opportunity to become a leading global provider of education courses to support the global aviation industry and Government and industry support in achieving this would be greatly appreciated.”