Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

First of all, Deputies know that this is motivated, in the first instance, by the prospect of revitalising Shannon Airport through having repair, maintenance and refurbishment of aircraft services at that airport. This is not just speculative because the second biggest aircraft company in Russia has a base in Shannon and is doing exactly that. The company has acquired an Aer Lingus hangar to do it. There is a real prospect of the company expanding its business and other airlines using it for refurbishment purposes, provided the company has extra hangars and pads to carry out such refurbishment. When we examined this, we decided that the whole country has the potential to have a more significant aviation business. The aircraft leasing business is growing continuously. Airlines do not buy aircraft anymore, by and large, but lease them. Approximately 85% of the financing of leasing of aircraft worldwide is here in this city. There is a multiplicity of financial services companies in this city that specialise in the financing of aircraft leasing. We have an international name which has been below the radar, if Deputies will excuse the pun. There is no perception of this, except within the business. When people talk about leasing aircraft they are told to go to Dublin to finance it. One of the biggest Japanese multinationals acquired one of the aircraft leasing companies here last year and paid about €7 billion for it. The underbidder in that transaction was the Chinese Government.

There is an opportunity here and that is the perspective. The development would involve getting people involved in a manner akin to re-manufacture, whereby one is maintaining aircraft, a job that has to be done regularly for reasons of safety. However, every so often there must be a minor refurbishment and then every five or six years a major refurbishment is done when aircraft are stripped down and put back together again and new seating is put in and so on. This is a big activity internationally and Shannon Airport has its toe in the market now. Dublin Airport has a tradition in the business as well and I imagine the measures we are introducing would have application in Dublin. Under-used airports such as Shannon have an edge and Knock Airport should have an edge as well because it has rather good facilities and a good runway with a good deal of land around it.

The proposal is narrow. At issue is accelerated capital allowances for the building of hangars and the building of pads which are ancillary spaces around the hangars for industrial buildings. I have no intention of opening this up to be an incentive for the building industry. That is not the idea. The idea of the incentive is to try to develop an aviation industry which would move from leasing into the areas I have described. If we adopt the section 23 approach that Deputy Mulherin has described and we allow cross-transfer, it is likely there will be empty buildings built on the margins of Knock Airport to cater for rent allowances being accrued in Dublin city in order to secure tax write-offs. That is what happens. These allowances were like milk quota in the past; one could buy and sell them and they became a tradable commodity. A person who had rental income from Grafton Street could write it off against buildings on the upper Shannon and that is why we had so many buildings on the upper Shannon. There was a profit on tax relief to be made from under-used buildings or investments in buildings that might not be used at all. We are not going down that road again.

Anyway, I can examine it between now and Report Stage because Deputy Mulherin has made a strong case to add to the phrase "maintenance, repair or overhaul of aircraft" in the section. She has pushed very hard in private correspondence and again today for the word "dismantling" to be included as well, because Knock has potential in this area. It may be already covered by the definition but the activity in Shannon involves taking apart aircraft in the widest sense and putting them back together again in order that they go back into the air. Dismantling is a scrappage activity and, as such, it is not envisaged in Shannon but seemingly from what I have read it is either happening in Knock or it has the potential to happen. I can consider including it on Report Stage but I need to get more advice. The correspondence from Knock has come in rather late and we have had little time to examine it.