World Leasing Review - Ireland as a centre for global aircraft financing

The following is an extract of an article by ALI Chair in World Leasing Review Winter 2020. You can read the full article on the wlr website at https://www.world-leasing-yearbook.com/world-leasing-review/ or on page 12 of the attached PDF.

David Swan, Chair, Aircraft Leasing Ireland (ALI)

Ireland's role as a centre of excellence in the aircraft leasing sector is undisputed and working together will ensure our sustained growth. Aircraft leasing has developed rapidly in recent years, shrugging off its former reputation as a niche sector and cemented itself firmly in the mainstream thanks to the surging global demand for air travel.

In recent years, airlines have recognised the importance that leasing can play in their long-term growth strategies, enabling them to manage cash flow and thus increasing their fleets to manage passenger demand. The leasing sector has also been a key enabler of the growth of new airline entrants in the market and has helped facilitate the development and adoption of next generation aircraft types which are delivering step changes in airline operating economies and fuel efficiency.

Ireland as a centre for innovation for global aviation
We have a long tradition playing a significant role to a diverse number of companies in the sector, some of which have directly spun out of aircraft leasing - world class airlines like Aer Lingus and Ryanair, MROs such as Dublin Aerospace and progressive regulators like the IAA. We now have 15 of the world's largest leasing companies with their headquarters here. To put that in context, an Irish aircraft takes off or lands close to every two seconds in the world.

Leasing's role in supporting sustainable growth
There are issues that are facing us that mean we need to look at the way we work through a new lens. For example, how do we create more diverse and inclusive workforces so that the future workplace for aircraft leasing companies is sustainable? As facilitators of air travel, how do we address global warming and climate change and how do we innovate in a sector that could leverage technology to its advantage? It will take time and resources and working collaboratively wit the wider industry including the OEMs and our customers to come up with solutions that we acknowledge that we have an important role to play.

Harnessing technology
Leasing, trading and novating aircraft still requires onerous documentation which is costly both to ourselves and to our airline and investor customers. In reality, we have become inefficient because the number of leases and also numbers of aircraft traded have increased dramatically in recent years. But we are now starting to wake up to the benefits that technology can bring.

GATS - the Global Aircraft Trading System has been achieved through working together and was conceived by all the main leasing companies coming together to discuss how we could alleviate some of the pain for airlines cased by novations, the transfer of ownership, or creation of a new lease for an aircraft. This will ultimately revolutionise how aircraft are bought and sold.

Developed by an Irish technology company, Fexco, GATS effectively introduces an electronic trading platform with a secure, live and searchable electronic ledger displaying details of ownership, transfers and security interests in GATS aircraft owning trusts. There will now be no need for a lease novation which dramatically reduces the requirement for legal advice, thus reducing costs for all parties.

Some key highlights of GATS:
  • GATS will be a fully electronic system, with e-signatures, edelivery of documents and use of secure electronic ledger to record transactions.
  • Each aircraft will be owned by a US, Irish or Singapore trust.
  • The sale of an aircraft will be performed by an e-transfer of the beneficial interest in a trust.

In October 2019, ALI facilitated a roundtable discussion with government and advisers to look at how other sectors have benefitted from technology and now we have a framework to bring this discussion on further.

But it cannot stop there. We are also very conscious of our need to do more as an industry when it comes to ensuring that we move forward at the same pace as other industries and create new platforms for the future such as new diversity and inclusion initiatives and addressing climate change and the environment which are critical to that debate and to our future as an industry.