Ireland – More than Guinness for the Ship Owner and Financier

Intrigued by its central importance to the aircraft operating lease business, I thought it might be useful to examine why Ireland was so attractive for that purpose and if there might be any applicability to the shipping industry. There were two reasons for the growth of this industry in Ireland. First, and not directly related but fundamental, was that the ownership of aircraft by the airlines was not central to its strategy so operating leasing provided an alternative, which freed up capital and made use of tax benefits the airlines were financially unable to use. From the lessor’s perspective, there was no better collateral. It is fungible, easily re-deployed and seemed for long periods to always increase in value due to limited manufacturing capability, which kept supply in check. There are 25 lessors in Ireland, which have approximately 5,550 aircraft on lease. The proportion of the global fleet owned by operators declined from 71% to 54% in the fifteen years to 2005. The remaining 46% of the remaining commercial jet fleet is under some form of lease agreement of which approximately 30% are operating leases and this portion is expected to grow.

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