Feb 2026
Airline Economics Dublin 2026 highlighted a sector in the midst of change, shaped by shifting capital markets, currency dynamics and technological advancements. Discussions across the conference underscored how aviation finance is adapting to a more volatile macroeconomic environment, with private capital playing a larger role, traditional funding structures being reassessed, and new sources of value emerging beyond physical assets. From the growing influence of private equity and the recalibration of JOLCO transactions, to the monetisation of intangible assets and the expanding use of artificial intelligence, the themes from Airline Economics Dublin point to a more diversified and innovative aviation financing landscape.
1. Greater use of private equity funding
Private capital is increasingly shaping aviation asset finance. Over the past 18-24 months, the market has experienced a shift as private equity and alternative credit investors deepen their participation in aircraft leasing and structured asset finance. Specialist platforms backed by PE and private credit firms are acquiring mid life aircraft portfolios and engaging in securitisations, reflecting strong investor confidence in aviation collateral and long term lease cashflows. Notable examples include new ventures targeting up to US$1 billion of leased aircraft assets, and sizeable aircraft asset backed securitisations brought to market, underscoring the depth and diversity of capital sources now active in the sector.
This trend reflects broader shifts in capital markets. With traditional bank lending constrained by rate volatility and regulatory pressures, private credit funds and PE investors are stepping into financing gaps, attracted by the durable, dollar denominated cashflows and residual value visibility that aviation assets offer. Institutional allocators are signalling growing appetite for aviation exposure within diversified credit strategies, further broadening the investor base beyond conventional leasing houses and banks.
The result is a more competitive and dynamic financing landscape. Private equity capital is not only providing equity to grow leasing platforms but also participating in structured debt products, securitisations and co investment vehicles. This influx of private capital supports liquidity, fosters innovation in financing structures, and contributes to market resilience – even amid broader macroeconomic and geopolitical uncertainty.
2. Weaking of Japanese Yen and impact on JOLCOs
Currency dynamics are reshaping participation in JOLCO structures. The prolonged weakness of the Japanese yen has materially impacted the economics of Japanese Operating Lease with Call Option (JOLCO) transactions. As the yen depreciates against the US dollar, the effective cost of acquiring aircraft assets in JOLCO structures rises for Japanese equity investors, who typically provide the equity leg of these deals. This dynamic has pushed Japanese investors to demand higher returns to compensate for currency exposure, ultimately reducing the pool of domestic equity willing to participate on traditional terms. Unlevered returns for JOLCO and JOL structures have been observed to creep up as a result of these FX pressures.
The weaker yen also affects investor appetite and deal volumes. When aircraft and engine assets are priced in USD or other hard currencies, a weak yen makes the required Japanese yen equity contributions more expensive in local terms, discouraging some participants and prompting a shift toward alternative assets or structures. This has coincided with selective investor behaviour, with Japanese capital being more cautious and focused on deals with stronger credit profiles or more compelling return profiles.
In a broader context, this FX linked recalibration is influencing asset finance strategies. While JOLCOs remain a valuable financing tool, the relative attractiveness of the structures can ebb and flow with exchange rates and tax driven incentives. As a result, lessors and airlines are balancing currency risk, investor return expectations and broader portfolio strategies when considering JOLCO execution in the current market.
3. Intangible Assets
Intangible assets are playing an increasingly central role in airline valuation and financing. Airport slots at capacity-constrained hubs have become strategically critical, underpinning route economics and competitive positioning. While often subject to regulatory constraints on ownership and transferability, their economic value is now widely recognised by lenders and investors, with slots increasingly factored into enterprise value assessments and, in some cases, used as part of secured financing structures.
Loyalty programmes have evolved from marketing tools into core financial assets. Frequent flyer programmes generate substantial, recurring cashflows through partnerships – particularly with credit card issuers – often at margins that exceed those of the underlying airline operations. In the current market, these programmes are increasingly viewed as standalone businesses embedded within airlines, providing resilience and diversification of revenue beyond passenger demand cycles.
This evolution has driven the growth of loyalty programme financing. Airlines have successfully monetised future loyalty revenues through secured debt, bond issuances and other structured financings, using these predictable cashflows to enhance liquidity, refinance existing debt or support strategic initiatives. Investor appetite for such structures remains strong, reflecting the perceived stability and transparency of loyalty revenue streams relative to more cyclical operating income.
Overall, the increasing focus on intangible assets reflects a broader shift in aviation finance. As traditional sources of value and collateral are reassessed in a more volatile operating environment, assets such as slots and loyalty programmes are becoming key tools for balance sheet management, capital optimisation and long-term strategic flexibility.
4. Use of AI
Artificial intelligence could be a catalyst for greater uniformity and efficiency in aircraft lease agreements. The aviation leasing sector has long been burdened by highly bespoke contracts, complex paperwork and inconsistent terms across jurisdictions – factors that slow negotiations, increase legal risk and elevate administrative costs. This fragmentation makes it challenging to automate core processes and extract consistent insights from lease portfolios. AI driven tools, particularly those leveraging machine learning and generative capabilities, can help address these issues by automating contract review, extraction and standardisation. By interpreting terms, flagging inconsistencies and suggesting harmonised clauses, AI platforms can reduce manual effort, minimise errors and accelerate deal execution – creating a stronger foundation for interoperable documentation across lessors, airlines and legal teams. This digital transformation is already evident in AI enhanced analytics being used to streamline lease management, risk assessment and compliance tracking, and points to broad productivity gains when paired with more consistent contractual frameworks.
More uniform lease agreements would amplify these benefits. Standardisation can reduce negotiation cycles, improve transparency, and make it easier for AI systems to deliver reliable insights and predictive outputs – which in turn supports faster decisionmaking and stronger risk management across the industry. While bespoke terms will always have a role, a more harmonised baseline for key clauses can make AI tools more effective and bring measurable efficiency gains to both lessors and lessees. making and stronger risk management across the industry. While bespoke terms will always have a role, a more harmonised baseline for key clauses can make AI tools more effective and bring measurable efficiency gains to both lessors and lessees.