City of Derry Airport is regarded by many in the city, including its civic leaders, as vital infrastructure. That view has been supported by the Northern Ireland Executive and the UK and Irish governments. It has, though, received strong criticisms, not least within the Belfast Telegraph – with some commentators arguing that the costs outweigh the benefits of an airport that handles significantly less than one million passenger numbers per year. Given this context, it is very positive that proposals have come forward to increase other activity and revenues.
The commercial aircraft sector is one of Ireland’s largest industries and in global terms is of growing significance, equalling in size car manufacturing. For Ireland it is not merely that two of the largest airlines – Ryanair and Aer Lingus – are based on the island, owning nearly 900 planes. Even more important is the aircraft leasing sector, with 37% of the world’s commercial airline fleet owned and managed from Ireland. This involves 10,000 aircraft and twice as many aircraft engines, with total values around £225bn.
Northern Ireland has its own major footprint in the aviation industry, as a manufacturer of aircraft components including wings and seats. This employs 5,500 people, generating revenues of £1.5bn. Attracting increased research and development in drone and other new aircraft technologies, the industry is becoming ever more important to Northern Ireland.
More generally, expenditure and revenues across the aviation sector are set to rise sharply. It is projected that there will be an 80% increase in the size of aircraft fleet globally over the next 20 years. The need for the maintenance, repair and overhaul (MRO) of engines will grow at an even higher rate. A new generation of engines is more sophisticated as it focuses on greater efficiency as it tries (almost certainly unsuccessfully) to meet lower emission targets. This will require far more frequent servicing and repair.
The existing MRO market globally generated £67bn last year, forecast to grow to £110bn by 2035. Europe is responsible for more than a quarter of this activity. As the sector expands it will require the employment of 200,000 highly skilled specialist technicians, much more than are currently available, as well as the development of new MRO facilities.
These projections and statistics are included in a report published in May this year by a major investor in Irish aviation, Irelandia. The company is led by Declan Ryan, founder of Ryanair, and the report was the result of consultation across Ireland’s aviation sector leadership.
Irelandia proposes the establishment in the island of Ireland at least one major engine overhaul facility, meeting the needs of airlines and aircraft leasing fleets. The location should be an underused existing airport which has sufficient adjacent vacant land and is currently underused for commercial passenger flights. Preferred locations are Derry or Shannon, or both. Shannon has a substantially larger passenger flight schedule, which might be regarded as a drawback.
A subsequent report from brokers Goodbody has backed the Irelandia report, while suggesting that the initial focus should be on short-haul engines, where the growth prospects are strongest. Goodbody’s analysts suggest that Ireland could support three to five engine maintenance facilities by 2030, which between them could create 2,500 new jobs and billions of euro/pounds in revenues.
The Irelandia report additionally considers the potential for aircraft pilot training in new facilities, again placed at underused airports. For this, Irelandia proposes that Derry, Sligo, Waterford and Weston airports might be best suited. Ireland might, it suggests, become a European centre of excellence for pilot training. Demand for new pilots is rising significantly not only because of the continued growth in the commercial airline sector, but also because of the mandatory retirement age for pilots of 65.
With pilot training costs over an 18 months period of around £83,000, plus accommodation, this is a potentially lucrative sector to invest in. As well as this, Irelandia suggests that Derry could become a centre for training apprentices in other aviation trades, working with local third level institutions.
City of Derry Airport is seeking to exploit the Irelandia and Goodbody reports to expand its activities and is engaging with sector insiders to promote itself as a location for this new investment. But none of this is easy. Irelandia estimates that an MRO site requires an investment of more than €200m (£174m), backed by private and public money.
The Irelandia report seeks support from the South’s main industrial development agency, IDA Ireland, whose remit is the Irish economy, not the North’s. And historically there has been competition rather than co-operation between IDA and Invest NI. But it would probably now need a partnership between them to bring this project over the line. However, Taoiseach Micheál Martin has spoken positively about both the need for greater co-operation between the agencies and also offering support for major projects located on the border that offer economic benefits to both jurisdictions.
Overcoming difficulties caused by the two countries’ different tax, pensions and benefits regimes would be helpful, but requires agreement between the UK and Irish governments. Planning approval could be another barrier, given the often very long lead times to get significant applications agreed.
The big picture, though, is attractive in creating additional economic activity at an airport that is being financially as well as politically supported by three governments. Common sense suggests they should work together to get the developments over the line.