Silicon Docks might be getting the headlines, but our huge and growing success in the air travel sector is even more remarkable.
Not that long ago, it was an article of faith that living on the periphery of Europe was a huge economic disadvantage. The official line from Ireland was that living so far from the core of Europe was a serious drawback. It seemed like a pretty ironclad argument at the time, particularly as there was (and, ridiculously, still is) a tendency to suggest that Ireland’s future was one of closer and closer integration with the EU.
Today that seems fanciful, both from a political point of view (as our closest neighbour Britain votes on whether to leave the EU) and also from an economic, social and cultural standpoint. Economically, it seems fanciful given the fact that our major trading partner is actually the US, not any country in the EU. Socially and culturally, as the refugee flows from the south become greater and more problematic, being the furthest point away from the EU’s chaotic south might also be regarded as a blessing.
However, there is another reason to be thankful for our geography: air travel.
Did you know that the Irish are the most frequent flyers of Europe?
Total seat capacity in and out of Ireland is 30 million annually. This means that Irish people – or tourists coming here – take on average more than six flights a year in and out of the country. The EU average is 1.5 flights. You could argue that it’s because we’re an island, but when you look across the water at Britain, we see that the Brits only use on average three and a half seats per year on planes.
We travel a lot and we do it by air. This air travel figure is also a reflection of the fact that tourist numbers are up, but it underscores that Irish business, with a tiny home market, is hyper-globalised.
But it’s not just ourselves who are using Dublin Airport. Last week, I gave a speech at the Caribbean Development Bank in Jamaica and I flew via Charlotte in North Carolina. I had no idea that you could fly Dublin to North Carolina, or that the flights would be jammed, but they were.
Lots of Americans appeared to be using Dublin as a hub, having travelled around Europe. This is a new departure – and in the airport business, being a hub is crucial. If Dublin can become such a hub, the expansion of Dublin Airport should be impressive.
Quite apart from Americans using Ireland as a hub for shorter haul flights to other parts of Europe, as the world has become more globalised, air travel has flourished to the US from all over the world. Recently, travel between the US and India, the Gulf and parts of East Africa is on the rise. Lots of routes need a hub, for example, between Ethiopia and LA, and Dublin could easily fit the requirements for many such routes.
But the Irish airline story isn’t just a matter of hubs and geography; did you know that more than half of the world’s aircraft leasing companies are based here?
As in all businesses, people matter, and the people behind much of this global expansion in airline leasing are Irish. Arguably, the aircraft leasing business model started here, or at least was refined here.
Many years ago, Tony Ryan was asked by Aer Lingus to find a temporary home for two Boeing 747s, and he realised that leasing planes was potentially much more profitable than flying punters around. Many who cut their teeth with Ryan are still major players in the business. Colm Barrington – ex-chairman of Aer Lingus, now running his own business – and many others still involved in the sector started there. Michael O’Leary and even Denis O’Brien worked for Tony Ryan.
Today, Ireland has massive expertise in this sector, from sales to legal, financial and technical. After all, the leasing companies need engineers to kick the tyres when the airlines hand the planes back. So this is a huge global business – and the biggest leasing company in the world, Aercap, is based here, in St Stephen’s Green, and run by another businessman who learned from Tony Ryan, Aengus Kelly.
So while there is lots of talk in the media about high-tech and Silicon Docks, the deal-making and expertise in the airline leasing business is an area where Ireland is punching way above its weight. And this business is growing.
Twenty years ago, passengers were most likely to fly on an airline from Europe or North America. Over the next 20 years (according to Boeing), 62 per cent of air traffic will be from outside North America and Europe. Today, there are nearly 21,000 jet planes commercially operated in the world. The largest fleets are in the US, China, Russia, Britain and Germany. Over the next 20 years, the world’s fleet will grow at an average rate of 3.6 per cent annually. This means that more than 36,700 new planes will be built.
Of these new planes, 13,000 have already been sold and are awaiting delivery. Isn’t that extraordinary? The countries with the largest backlog are the US, China, Indonesia, Russia and India.
Back home, the two domestic-based airlines are doing very well. Ryanair is a phenomenon. It’s the biggest airline in Europe and growing quickest. Its results the other day attest to it being simply the best at what it does.
Meanwhile, Aer Lingus is the fastest-growing carrier on the North Atlantic corridor since 2010, and intense competition between these carriers means Irish consumers enjoy the lowest airfares in Europe.
This week, the global airline industry meets in Dublin for the first time since 1962. It’s apt that the most important gathering of airline leaders is happening in Dublin. There will be over 800 international delegates and 200 from the international media.
Sometimes we don’t celebrate business in this country enough. But in terms of world-beating, just look up: we’ve something to cheer about.