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SWEDISH AIRLINE SAS announced this week that it has applied for an Irish air operator certificate, or AOC.
That means it will set up a management team and register planes here.
Those Irish-registered jets will be based in London and Spain for use on “a small number of departures to complement existing services” that SAS operates, according to a statement on the airline’s website.
Of course, SAS won’t be the first foreign airline to apply for an AOC in Ireland – its Scandi rival, Norwegian Air, was granted a certificate for its subsidiary in Dublin three years ago.
SAS is following Norwegian’s flight path so it can “reduce the cost differential to newly established competitors” - a clear message that it wants to up its game against its ‘low-cost’ competitor.
So, how exactly would having an Irish licence help the overseas carrier drive down costs? Let’s look at why foreign airlines are queuing to set up offices in Ireland.
What is an AOC?
A company that operates commercial flights is required by law to hold a valid AOC from any national aviation authority.
In Ireland’s case, the IAA is responsible for registering civil aircraft and approving AOCs.
In a nutshell, the certificate means that the airline operates under the regulations in the chosen jurisdiction. The company is granted the protection of that country’s aviation agreements.
For SAS, having an Irish AOC means it plays by labour laws here, which are comparatively favourable to employers than the much stricter rules in Sweden.
SAS has made no secret about this. It said it will hire staff locally. In a statement to several news outlets, spokesman Fredrik Hendriksson said that the cost advantage of an Irish AOC would come from having lower social security expenses and taxes.
It’s interesting that one of the main objections to granting Norwegian’s Irish subsidiary access to the US market was over fears that Ireland was being used to skirt labour laws.
Bilateral agreements
A key selling point of an Irish AOC is that it grants airlines access to the clatter of bilateral agreements Ireland has struck up with other regions around the globe.
Many of the treaties Ireland signed with other countries date back to the days when Shannon Airport was a compulsory refueling stopover for airlines operating long-haul routes.
A historical accident caused by our barrage of bilateral deals is that Ireland is more favourable to airlines in terms of tax law, accountancy rules and on a bureaucratic level.
For example, Ireland offers a tax depreciation on aircraft of 12.5% per year over an eight-year period. That can be used to reduce the amount of taxable income reported by a business.
Our national bilateral agreements became less important in recent years, especially after the EU-US open skies agreement was signed, which made it easier for carriers to fly between Europe and the US.
They’re becoming an attractive asset again with Britain set to exit the EU. There’s a good chance you’ll hear more about Ireland’s AOC as airlines move UK-registered jets to maintain access to the EU travel zone.
History
The noble story of Ireland’s great aviators – like leasing legend Tony Ryan, who went on to co-found Ryanair, one of the country’s most successful companies – certainly helps Ireland live up to its reputation as a ‘centre of excellence’ in the air travel business.
But the story alone isn’t exactly a deal breaker when it comes to making boardroom decisions. It’s more significant that our long history of flight means we know how to ‘talk aviation’.
Regulation agencies here are more familiar with how the industry works because it is so big: aviation contributes an estimated €4 billion to our economy, according to the IAA, and roughly half of the world’s aircraft are owned by Irish-based leasing companies.
We have developed a culture of aviation and we understand the requirements of an business in the industry.
Anywhere there’s a meeting of airline bigwigs putting together a business plan, there’s a good chance an Irish person is sitting somewhere at the boardroom table.
Written by Conor McMahon and posted on Fora.ie
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Nice to see ireland being world leaders in industries like aviation and horse breeding. Positive news
That’s an unfair comment.
They only stock the beer. Do you expect a Clonakilty hotel not to stock a Clonakilty beer just because the brewers may or may not be taking unfair advantage of the jobs bridge scheme?
What about all the other shops/restaurants/hotels that stock products that have less than favourable hiring policies? It’s a fairly sly dig to make at a hotel
Below the belt comment. Uncalled for. Must actually have lunch there, never been! Thanks for sending them my business.
@Tony. Am in Colm on business next week- must take the group to lunch there now.
Tony… Do you know where things are you idiot or do you just fire off comments randomly. I would gladly put you in the job bridge scheme if I could think of something you might be able to do. Fool!
Is the job Bridge scheme not finished ? Anyway your beef should be with Clonbrew and not the hotel ..
@Tony Stephens:
I too will be bringing a party to the hotel now.
Never saw the comment. People are free to take their custom where they like though. For the record we have never employed anyone under jobs bridge. We were advised to use it but it was not something we wanted to be involved in. While we are are not the perfect business we do constantly try to get better. We were the first restaurant in Munster to join the Sustainable Restaurant Association which advises on things like ethical sourcing http://www.thesra.com. We were also named the “best business working with the community in Ireland” in 2016 https://m.facebook.com/FernhillHouseHotel/posts/10153899462118522. The award is in the Clonakilty town hall if you would like to see it
I worked in your hotel a long time ago & was one of the nicest places ever to work I have to say & management treated their staff well there..
Thanks Veronica! Michael jnr here. In fairness we have been very lucky to have such a great team here at Fernhill over the decades
@Fernhill House Hotel: My original comment politely stated that following the theme of Ireland / lax labour laws, one of the suppliers to Fernhill House Hotel is Clonakilty Brewing, or Clonbrew. This brewery uses JobBridge Interns as full time labour at a rate of €10 per day.
My comment received a load of abuse from trolls to the point where the Journal deleted it.
If you do not want to be involved with JobBridge and are into ethical sourcing, then may I politely suggest that you don’t support local businesses that use JobBridge to exploit local people.
Thank you.
Noble story of Irish aviatores me backside! Tax haven and exploitation of weak employee protections more like.
You can’t blame anyone for wanting to write off a plane over 8 years, for tax purposes – they can be in service for over twice that lenght of time!
Well this must not be The best tax haven for jets because DOB has to register his jet in the isle of man to avoid Irish aviation tax
@Luke Campbell: Swedish living standard is the same as Irish Standards, the laws and costs as such might be more favourable for employees in Scandinavia, and yes, they have a bit more paid holidays than we do, and they might work in general 1-2 hour less a week, but taking that aside. the average Swedish industrial wage and living costs is similar that Ireland’s. Norway is far more expensive to live than Ireland, many things cost twice as much, like rents, housing, eating out. Things like groceries and expenses as much as 50%. But Norwegian salaries are not twice as much as the Irish equivalent. I was offered a job in Norway, full expenses paid, relocation package, flew me in for a job interview, and I didn’t take it, because even with the higher wages I was going to receive, my rent and costs would be skyrocketed so it wasn’t’ worthy. I don’t think the employees in Ireland would see much difference between the technicalities and costs of employing someone in Sweden or Ireland. I welcome these news
If we only had a few more Tony Ryan’s! Not the greedy bunch we now have. Sell sell not build build.
Why are all of the comments, on every news story, of negative and complaining tone ? We certainly are a negative bunch. Shut up.
stick around bob patches will be along with his AAA PBP rants in a bit after his breakfast roll.
@Rob Hopkins: Totally agree Rob . Uniformed wafflers making noise.
@Rob Hopkins:
Welcome to the journal
@Rob Hopkins: __ Stop complaining and being negative :p
@the truth:
No sign of Wally, must be having a “love in” on the article about PBP about 10 spaces down.
We are not world leaders in aviation.
We have never built so much as kite in this country.
What we are is a facilitator for light tax and weak employment laws.
The Irish Aviation authority is also seen as very much a light touch regulator.
@Journal…Your report above states than Shannon used to be “a compulsory fuel stop over” .
Shannon was never a compulsory fuel stop. When Shannon was developed decades ago the Irish govt imposed a compulsory stop at Shannon for all Irish passenger traffic on the North Atlantic between Ireland and the USA and Canada. The EU eventually negotiated an open skies agreement betweenthe EU and both the US and Canada . This agreement only came in to force in April 2007. This agreement in addition to good work by the DAA and despite the Irish Govt’s parochial bias against Dublin, has lead to Dublin becoming the fifth largest transatlantic hub in Europe..
@Michael Fehily. Irish governments bias against Dublin. Lol.
I don’t want to be on a 9/10 year old plane that was written off after 8 years. No chance
I can guarantee you have already been on an aircraft that has been written down for tax purposes over 8 years. All Irish assets are written down for tax over that length of time. It makes absolutely no difference to how it is written down for accounting purposes which is generally 15-20 years so your worry makes no sense.
Thanks for clarifying that, due to fly this week and was just about to call airline to ask what age the plane is…. phew….. thanks for that
It’s a tax deferral. If you sell the plane after eight years you are taxed on the proceeds.
No problem happy to have helped!
Ben yes – but it’s my understanding that most commercial aircraft are eventually sold for scrap, so the tax payable is minimal?
It wouldn’t be most aircraft that are sold for scrap many are sold on to other commercial airlines first. Any proceeds received at all on the aircraft will be taxable if the eight years of tax depreciation are up.
Firstly SAS is not “Swedish” is Scandinavian air services. Partly owned by all 3 Scandinavian states. SAS announced last year that they would start flying Dublin to Shannon, which is a bizarre route, considering they can barely supply enough flights for the Dublin to Stockholm route (which they now have the monopoly on thanks to messing around from aer lingus 5 years ago) Arlanda was waiting on getting the go ahead to have US customs pre-screening. This was recently rejected and the following day SAS announced (again) the new route.But the TRUTH is these flight don’t exist. If you try to book on the SAS site it give you the option to Shannon, but its via London with an aer lingus connection EI380 . The prices are 500 euro return!! Its called a scam.
@iMoan Brutal:
1..Its actually Scandinavian Airline System ( not services )
2..Ryanair fly Dublin Stockholm . SAS do not have a monopoly
@Michael Fehily: Check your facts!! Ryanair stopped flying Dublin to Skavsta 8 years ago! ONly SAS fly direct Dublin to Stockholm. They DO have an monopoly. THis is a SCAM.
We are really modern now. No clear skies at nit and we can look forward to all the wonderfully modern illnesses that come with aviation pollution that the modern world suffers from. Yipeeeeeee!
Funny Noonan was floating the air travel tax again this week, so we’d rather punish airlines that actually fly in and out of Ireland and in turn cause a hindrance on Dublin becoming a transatlantic hub, but we have an open door policy to anyone who wants to get around the labour laws of their home country. Come to Ireland to avoid tax and labour laws but we’ll stick taxes on you should you dare do any real business here. Great country.
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