Brian Hayes (Dublin South West, Fine Gael) | Oireachtas source

I move amendment No. 95:

In page 135, before section 78, to insert the following new section:

78.—Section 85 of the Principal Act is amended—(a) by inserting the following after subsection (1):

"(1A) For the purposes of subsection (2)(d) 'enhanced equipment trust certificate' means loan capital issued by a company to raise finance to acquire, develop or lease aircraft.",

and
(b) in subsection (2) by deleting "and" at the end of paragraph (b) and substituting "business, and" for "business." in paragraph (c) and by inserting the following after paragraph (c):

"(d) the issue, transfer or redemption of an enhanced equipment trust certificate.".".

This amendment provides for an exemption from stamp duty in respect of the issue, transfer or redemption of enhanced equipment trust certificates, EETCs. These certificates are an aviation-specific form of asset-backed security, that is, security on the aircraft as opposed to the revenue stream. The established market in EETCs exists in the US and the business relating to it in 2012 amounted to $27 billion. A full adoption of Alternative A of the Cape Town treaty or equivalent domestic legislation is necessary to ensure the requisite level of security for investors. Such adoption could enable a discount for borrowers. The Departments of Transport, Tourism and Sport and Jobs, Enterprise and Innovation are currently progressing heads to adopt conditions equivalent to Alternative A.

The adoption of provisions equivalent to Alternative A of the Cape Town treaty by Ireland could create the potential to make this country an attractive location for EETC issuance, if completed by appropriate fiscal policy measures. EETCs are primarily employed in the used aircraft sector. In view of the fact that banks only have so much capacity at present, it can be difficult for airlines to raise the level of funding required through bank debt alone. In addition, airlines are increasingly seeking to diversify funding resources. EETCs enable the financing of older assets, something which is not generally possible by means of bank debt. In the US market, the aircraft that are financed through the use of EETCs would typically be five to ten years old. To facilitate the successful issuance of EETCs in Ireland, in addition to the insolvency provisions being examined by the Departments of Jobs, Enterprise and Innovation and Transport, Tourism and Sport, an amendment to the stamp duty provisions is required in order to exempt EETCs from such duty, thereby making this form of financing more attractive to investors.

Ireland is a major global centre for aviation leasing and the host of international registry associations linked with the Cape Town Convention on International Interests in Mobile Equipment. In such circumstances, there is a significant opportunity for Ireland to leverage its existing expertise in this area to create new and cheaper sources of funding for Irish airlines and to raise the country's profile as a centre for aviation finance. This was noted in the report of the aviation business development task force, which was published on 12 November last, and has been included as an action point in the Action Plan for Jobs. The benefit to the State of what is being done in this instance could be to root our aviation industry more firmly here, enhance the country's attractiveness as an aviation hub and increase revenue streams from trading in the instruments. Additional jobs should be created, although mostly in the professional services arena.