Despite trends that indicated the sector could be consolidating and gravitating towards Asia the evidence shows that new platforms continue to be established and Ireland remains a key hub in the activity of existing and new entrant lessors.

Examples abound of newly established leasing companies growing at pace. CDB Aviation has now extended its fleet to over 200 aircraft and has developed a full infrastructure in Dublin to support its efforts. Barclays Bank has backed Genesis, a new leasing platform targeting the commercial aircraft market. Airborne Capital, which was only created over a year ago, has secured a fund with a value of up to $1bn while establishing offices in Shannon, Dublin and London.

Airborne Capital, which was only created over a year ago, has secured a fund with a value of up to $1bn while establishing offices in Shannon, Dublin and London.

This pace of activity is being driven by a number of factors; (1) fresh capital continues to enter the aircraft asset market from a variety of sources including Asian investors, sovereign wealth funds and specialist infrastructure funds. This is an indication of the continued expansion of interest in aircraft as a legitimate alternative class for long term tangible assets; (2) the overall capital requirement in the air finance sector continues to mushroom as the global fleet expands and this is creating opportunities for new entrants to establish a position in the sector; (3) Ireland has further entrenched its reputation as a location equipped with the labour skills to fulfil air finance executive positions while being a respected low tax jurisdiction in the eyes of major global regulators who are clamping down on various off shore centres. Its geographical location is also optimal for an efficient business model covering customers across the globe, and; (4) the Irish Government continues to build its unique network of treaties connected to aircraft assets which helps investors in aircraft have surety about ownership and recovery for such a mobile asset.

Recent research by Boeing indicated that the leasing sector had expanded its fragmentation as the number of new entrants eclipsed consolidation among some of the legacy lessors. How this plays out as the aircraft cycle continues to turn will be watched with interest. Intense competition in a low interest rate environment has driven lease factors rates down to multi year lows while complaints of irrational pricing by certain nee entrants are circulating. Whether or not that is a function of poor decision making or a reflection of a developing sector where new powerful investors are seeking long term meaningful market shares is a moot point.

Publication date: January 24th 2019