Name any of the world's top 10 aircraft leasing firms and they will have a significant presence in Dublin or will have originated in Ireland. Gecas, AerCap, SMBC, BOC Aviation, Avolon, DEA, ICBC Leasing, BBAM, CDB Leasing – they are all here in Ireland, as are many of the top 50.
Not only has Ireland given birth to many of the top players, the relatively new kids on the block have been attracted to locate here as well – the majority of them from China and the Far East.
For example, a number of Chinese and other Asian banks have decided to establish their European headquarters in Dublin. These include ICBC Leasing, the leasing arm of ICBC, the largest bank in the world; and CDB Leasing, the leasing division of China Development Bank, which both established European headquarters in Dublin in 2012.
These were followed by Goshawk Aviation, which established an office in Dublin in 2013. The following year, the Bank of Communication Financial Leasing (JY Aviation), another Chinese firm, announced it had chosen Ireland for its leasing operations.
The flow continued into 2015 with China Construction Bank announcing the establishment of its leasing business's international headquarters in Dublin while Shanghai-based Ping An International Financial Leasing established a new office in Dublin. That was followed at the beginning of 2016 by the acquisition of Dublin-based aviation lessor Avolon by Chinese company Bohai Capital.
Specialist niches
But the industry in Ireland runs far deeper than just the top 10 or even 20. The country boasts many highly expert firms which have carved out specialist niches for themselves in discrete market segments. These have become the industry leaders in those markets.
Among these is Aergo Capital. Founded in 1999 as an aircraft leasing and trading company, the company has now established itself as a profitable commercial aircraft trading and leasing company specialising in narrow-body mid-life aircraft.
“Aergo is what you might call a boutique aviation leasing firm,” explains chief executive Fred Browne. “We focus on emerging markets. Our experience in those markets helps us achieve very good lease rate factors and yields.”
Those improved returns usually entail a bit more credit risk but firms like Aergo, with market expertise, can usually manage that.
Browne believes this approach is necessary for many firms outside the top 20. “You have to find a niche and something that differentiates you in the market if you want to grow a business,” he says. “I believe many of these emerging markets will grow rapidly, particularly Far Eastern counties like Cambodia and Vietnam.”
Ireland will continue to attract firms like these, both the industry giants and the niche players, according to Deloitte’s Brian O’Callaghan. “Ireland is at the epicentre of the industry and will remain so,” he says. “Ireland ticks the boxes in terms of the legal, tax, commercial and technical support infrastructure required by the industry. The ecosystem that has grown up here makes this country a very attractive location for the industry.”