Moving to a Transfer of Economic Ownership Basis for Trade in Aircraft

New methodology for trade in aircraft 

Under the transfer of economic ownership methodology, all trade in aircraft by an Irish resident with the rest of the world is recorded as imports and exports of goods – regardless of where the aircraft is registered for aviation purposes. Therefore, an import of an aircraft is when a company buys an aircraft and it appears on their balance sheet as an asset. An aircraft is included in the exports of Goods statistics when it is sold or shown as a disposal in the balance sheet of the company. There are offsetting effects as both imports and exports of goods increase, but generally, the new methodology has a greater effect on aircraft imports with the inclusion of purchases of aircraft by resident aircraft leasing companies in Ireland’s imports of goods.

The main effects on the statistics of the new methodology are typically to:

• add to imports of goods into Ireland, decreasing the Trade in Goods balance;

• decrease the Balance of Payments Current Account balance; and

• increase imports in the National Accounts, with an offsetting increase in Capital Formation.

In addition, the new methodology:

• decreases Other Investment assets in the Balance of Payments Financial Account and in Ireland’s International Investment Position;

• reduces net lending/borrowing of Non-Financial Corporations in the Institutional Sector Accounts; and

• removes Foreign Aircraft assets from operational leasing companies’ Financial balance sheets and adds to their Capital Stock.

Under the new approach, the balance sheets of operational leasing companies who re-locate to Ireland are included in Ireland’s Balance Sheet (International Investment Position, Financial Accounts) at the time of re-location and their aircraft fleets are also added to Ireland’s capital stock.

In the National Accounts, the net increase to Imports of Goods and Services is offset by an increase in Capital Formation and the new methodology has little or no effect generally on GDP and GNP. However, there is a significant increase to the National Accounts Provision for depreciation based on the higher capital stock, which results in an offsetting change in the level of Net Domestic Product, Net National Product and related aggregates.

Transactions previously included in the National Accounts, Balance of Payments and Trade in Goods statistics triggered by aircraft moving on/off the Irish register are not affected by the new methodology. The new methodology has no impact on Operational Leasing services in the Balance of Payments Current Account (see Figure 1). Similarly, income in the Balance of Payments Current Account earned by these operational leasing companies is not affected.

Revisions to data

Revisions back to 2000 for the Trade in Goods, Balance of Payments, International Investment Position and National Accounts series affected by the new methodology are generated for users. As part of the development of the revised series, a review of the non-response and other estimation processes for Trade in Goods statistics was carried out. The revisions arising from the improvements identified for these processes are also included in the revised Trade in Goods, Balance of Payments and National Accounts back series.

Figure 2 shows the effect of the revisions on the trade surplus and the net exports of commodity group SITC 79 (Other transport equipment, including aircraft) as published in the May 2015 Goods Exports and Imports release

Figure 3 shows the revision to the Current Account balance as shown in the Quarter 1 2015 Balance of Payments release, which includes the effect of the revised Trade data.

Figure 4 shows the revisions to the National Accounts Trade Balance and Capital Formation data. This Figure compares the previously published data with that released in the National Income and Expenditure 2014 publication. The increased imports of aircraft, which reduce the Trade Balance, are offset by increased Capital Formation leaving GDP largely unchanged.

__________________________________________________________________________________________________________________

¹ Article 17 of Commission Regulation (EU) No 96/2010 of 4 February 2010 (Intrastat) and Article 19 of Commission Regulation (EU) No 113/2010 of 9 February 2010 (Extrastat)

² European System of Accounts ESA2010

³ Irish Civil Aircraft Register, https://www.iaa.ie/commercial-aviation/aircraft-registration-2/latest-register-and-monthly-changes-1

July 2015