Aircraft leasing and non-bank financial intermediation in Ireland

Purpose Ireland is one of the world centres for aircraft leasing, largely because of generous fiscal incentives. Aircraft leasing in Ireland is widely regarded as unregulated. This paper aims to examine the economic impact as well as financial, risk and regulatory aspects of aircraft leasing firms that avail of a particular tax subsidised debt called “section 110” debt. Design/methodology/approach This paper is based on aircraft leasing firms in Ireland that use tax exempt debt, called “section 110” debt. The study population was identified from searches of publicly available files in Companies Registration Office, Dublin. A population of over 350 aircraft leasing firms was identified. Data relating to financing, profitability, ownership structure and local expenditures were extracted from company accounts and used to build a data base of 1433 cases for the period 2010–2020. Findings The aircraft leasing industry in Ireland is regarded as a ‘success story’ but has low direct employment, low linkages with the domestic economy and low tax payments. Aircraft leasing is part of the non bank financial intermediation sector, that leads to risks to the wider financial system. Risks arise from violation of international treaties, for example by Russia, high debt equity ratios, large reported losses and opaque ownership structures. Originality/value There is no publicly available register of aircraft leasing firms in Ireland. The paper is based on a unique data base of financial structure, ownership and other variables, of a subset of aircraft leasing firms that have issued “section 110” debt.