Aviation has an often overlooked importance for the Irish economy.
Conventional economic analysis can miss this point because it usually stems from data in large economies. Countries like Germany, the US and China have enormous land borders that dilute the critical role of aviation. On top of that these big countries have very large domestic economies that can exist independent of international trade.
In Ireland, we have a number of stand-out features which explain why aviation needs to be treated differently at a policy level.
First, we live on a relatively small island which has a high dependence on international trade for our economic well-being. Although sea ferries do operate to and from Ireland their activities are eclipsed by aviation. Second, alongside the air services operating in Ireland we have developed a world class sub-set of the financial services industry which is the largest aircraft leasing cluster in the world.
Taken together, these two factors explain why aviation is a key component of the nation’s infrastructure while it also supports a lot of high earning jobs directly and indirectly. For this reason alone policymakers have to be on their toes leading change and innovation that ensures this key industry continues to thrive as it augments the economic future of the country.
There is encouraging evidence that politicians and civil servants are alive to the challenges and opportunities that reside in aviation.
The current plans being rolled out to build an all new runway in Dublin Airport, alongside improved terminal and ramp facilities, is a case in point. While this might not garner the banner headlines attached to a giant IT company setting up a headquarters in Ireland it has even greater long-term value.
By creating the bandwidth to accommodate a much greater volume of aircraft and their passengers and freight a larger Dublin Airport helps grow the economy and, thereby, add jobs for the future.
The leasing community continues to expand, too. Despite highly charged competition from other centres Ireland continues to command investment by existing lessors adding to their fleets and new platforms being established.
Moreover, evolving tax regulations are encouraging many companies to adopt Ireland as a legitimate low tax rate centre that is respected in particular by key European, US and Asian authorities.
From such a strong base the opportunity to do much more is crystal clear. Alongside the continued development of airports and leasing entities the scope to step change another element of the aviation industry – maintenance and repair – stands out.
Although Ireland has a number of so-called MRO (maintenance, repair and overhaul) facilities it can strategically target a whole lot more. This segment is job-rich but needs a strong relationship with third level training and access to competitively-priced large hangars in order to thrive.
I observe a number of significant air fields in Ireland that are remarkably quiet compared to Dublin. While we can forever argue why that is so, a clear opportunity exists - if politicians, local councils and state agencies combine to rapidly develop a major MRO network in Knock, Shannon and Cork in particular.
This requires imaginative thinking and some forward-looking policies towards rates on facilities inside airport perimeters but it promises to unlock a lot of economic activity and jobs if handled right.
Having done so well to create a successful aviation industry in Ireland, for good economic reasons, it seems a shame to be ignoring a business that has particular potential for airports outside Dublin.
- Joe Gill is director of corporate broking with Goodbody Stockbrokers. His views are personal.