The Role of Ireland in Aviation: From GPA’s Legacy to a Sustainable Future

Ireland is the global hub for aircraft leasing and financing, with over 60%¹ of the world’s leased aircraft being managed from there, and Dublin being home to more than 30 aircraft leasing companies². This is thanks in no small part to the vision of Tony Ryan and the establishment of Guinness Peat Aviation (“GPA”), a joint venture between Ireland’s flag carrier airline, Aer Lingus and financial services firm, the Guinness Peat Group in the 1970s. GPA rapidly became the dominant force in the emerging aircraft leasing industry and, even today, countless aviation executives and indeed aircraft leasing companies can be traced back to GPA.

While GPA may be credited with kick starting aviation leasing in Ireland (if not globally), the industry’s success in Ireland is down to a multitude of factors, including Ireland’s competitive corporate tax regime, a large and ever expanding network of double taxation treaties, a highly educated workforce and ongoing government support. The Irish government has been pro-enterprise when it comes to aviation and supports a number of policies to that effect. Ireland also has the added benefits of: (i) a stable political and legal system, (ii) free access to the European Union market, and (iii) a young, English-speaking population. Geographically, politically and culturally, Ireland has always occupied a unique position as a bridge between the United States and Europe. Over €120 billion of aircraft assets are managed or owned in Ireland. This number is up from approximately €27 billion in 2007 and the trend lines show continued growth.

Ireland is currently party to 74 double taxation treaties with countries around the globe, with industry groups like Aircraft Leasing Ireland (“ALI”) making it a stated aim to continue growing that treaty network. Ireland’s double tax treaty network facilitates efficient financing in the industry reducing or eliminating the drag which international withholding taxes could otherwise create. More generally, Irish tax authorities have encouraged businesses that create employment and economic growth and have traditionally been supportive of the aviation leasing industry in Ireland.

Not only is Ireland aware that it needs to continue to support the industry as it experiences new challenges at a global level, it is also aware of the importance of maintaining the current momentum in the aircraft leasing industry in Ireland by continuing to incubate aviation industry talent. There are now a number of courses of education at third level and beyond including, most recently, University College Dublin’s Smurfit School’s new Professional Diploma in Aviation Finance. This is in addition to a Master’s Degree Course already offered by the UCD Smurfit School. The UCD Smurfit School is not alone, the University of Limerick also offers a Professional Diploma in Aviation Financing and Leasing, Dublin Business School has a Postgraduate Diploma Programme in aviation finance and the Law Society of Ireland offers annual Certificate and Diploma courses in aviation finance. These courses produce large numbers of executives each year ready to enhance existing platforms or to help establish new ones.

While Ireland is mainly known as being the hub for aviation leasing, it also has a strong presence in the MRO industry with a cluster of facilities providing these services being located at Shannon Airport on Ireland’s west coast. While strong domestic-based MROs such as the Atlantic Aviation Group have operated in the area for more than 60 years, the region has also attracted U.S.-backed STS Aviation Group and Lufthansa Technik Turbine Shannon (“LTTS”), which the German MRO giant has operated since 1992.

But Ireland is not a jurisdiction that is happy to rest on its laurels and is already looking for ways to support the next big challenge on the horizon for the aviation industry – becoming carbon neutral by 2050. A feasibility study commissioned by Ireland’s then-Minister for Enterprise, Trade and Employment Simon Coveney, backed by research led by sustainable aviation fuel (“SAF”) supplier SkyNRG and SAF facilitation and advocacy group SFS Ireland, sponsored by Boeing and aircraft lessors Avolon and ORIX Aviation has concluded that, by 2050, Ireland could generate at least €2.55 billion in revenues and create around 1,000 skilled jobs by producing its own sustainable aviation fuel. However the report does conclude that significant research, development and government incentives would be needed to kick-start the sector.

ALI has made sustainability one of its key pillars and developed a sustainability charter setting out ESG and climate-aligned principles for the aviation industry. Collaborations such as the partnership between SMBC Aviation Capital and Trinity College Dublin to establish a SAF research facility demonstrate the commitment of the aircraft leasing industry in Ireland to tackle these challenges head-on, are essential to reaching the industry’s carbon neutrality goals and deserve recognition and enormous credit.

Leading industry executives have noted that Ireland’s potential growth in renewable energy make it a prime location for SAF production. The nimbleness afforded by Ireland’s size; the collaboration between industry players and institutions of higher education; and ongoing government support of an industry of significant importance to the Irish economy are all tangible reasons why Ireland’s aviation leasing industry looks set to continue thriving.

¹  Ireland a global centre for aircraft leasing, IBEC, https://www.ibec.ie/connect-and-learn/industries/financial-services-leasing-and-professional-services/aircraft-leasing-ireland/ireland-a-global-centre-for-aircraft-leasing.

² Ireland, World Leasing Yearbook, https://www.world-leasing-yearbook.com/wp-content/uploads/2020/07/WLY2020_Ireland.pdf.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.