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Aviation leasing funds- What you need to know

01 December 2023

The aircraft leasing industry has been through a torrid few years. Having barely recovered from the disruption caused by the Covid-19 pandemic, lessors watched as hundreds of leased aircraft were stranded in Russia after its invasion of Ukraine prompted the international community to prevent outgoing flights.

Publicised impairments from trapped Russian-leased aircraft have been estimated at $8bn (Reuters 2022). Meanwhile, the invasion has contributed to higher inflation, prompting central banks to raise interest rates and therefore make borrowing more expensive.

There remains considerable need for new aircraft financing, as demand for flights continues to rise following the pandemic while airlines are seeking to take on more environmentally friendly and efficient models. However, the volatile economic environment has made some traditional lenders become risk averse.

In such circumstances, opportunities are emerging for private equity-backed aviation leasing funds to step into the gap left by traditional lenders. Such funds are likely to appeal to investors looking for the combination of potentially high-yields and only a weak correlation to other asset classes.

As private equity firms consider this opportunity, they must make some critical decisions. One choice they cannot afford to get wrong is where they domicile their fund. Below, we consider several key jurisdictions for aviation leasing funds.


Delaware is a longstanding and popular onshore domicile with which most US-based private equity firms will be familiar. It is known for its well-established and sophisticated limited partnership legal framework, with strong liability protection and flexibility for key terms.

There are considerable benefits for Delaware-domiciled private equity funds, such as a high degree of privacy, a robust legal framework for settling disputes, and no corporate taxes. However, filing costs can quickly stack up.

Cayman Islands

The Cayman Islands is one of the best-known offshore domiciles for private equity firms, due to a range of flexible fund structures suitable for the closed-ended investment vehicles typically used by private equity houses.

The domicile’s exempted limited partnership (“ELP”) structure is commonly used for private equity funds. It is established as a contractual arrangement between limited partners and a managing general partner and is usually established as a special purpose vehicle (“SPV”). ELP funds with fewer than 15 investors are typically unregulated.

Private equity funds domiciled in the Cayman Islands can also be set up as stand-alone vehicles, feeder funds or co-investment vehicles.

The Cayman Islands’ tax-neutral status has made it a popular domicile with private equity and hedge fund managers. Political and economic stability contributes to a favourable operating environment, while approachable, efficient, and effective regulators support innovation by private equity firms.


Another offshore domicile favoured by private equity firms is Luxembourg, one of the EU’s leading centres for alternative investment funds. It offers a wide range of regulated and unregulated fund structures for private equity firms, including the specialised investment fund (“SIF”), the investment company in risk capital (“SICAR”) and the reserved alternative investment fund (“RAIF”).

Some of these structures, such as the RAIF and SIF, offer considerable tax benefits, while many provide a high degree of flexibility.

There are several key advantages for choosing Luxembourg as a fund domicile. As an EU member, Luxembourg allows US-based private equity firms to market their funds to sophisticated investors across the bloc. As one of the principal domiciles for alternative investment funds, there is a strong network of professional services and a supportive legal and regulatory framework.


One jurisdiction that could play a more important role as a domicile for aviation funds in the future is Ireland. Although no aviation leasing funds have yet been launched there, the legal and regulatory framework is already in place.

The Regulated Aviation Fund is a Qualified Investor Alternative Investment Fund (“QIAIF”), a regulated structure for investment strategies focused on aviation assets. QIAIFs were first launched in 2012 and are regulated under the EU’s Alternative Investment Fund Manager Directive (“AIFMD”). Overseen by the Central Bank of Ireland, QIAIFs are exempt from Irish income tax and capital gains tax.

Ireland is already a domicile for many US-based private equity managers attracted by its EU membership, favourable corporate tax environment, pragmatic regulatory regime, and strong infrastructure.

What can Apex do to help?

Our expert aviation team has experience across the entire fund lifecycle working with stakeholders from aircraft lessors – including new entrants and established players from airlines – to private equity funds, debt funds and banks. We have extensive experience over more than 30 years in providing a wide range of bespoke corporate services to companies and SPVs used for owning and leasing aircraft.

With 76 global locations– including Ireland, the US, Cayman Islands and Luxembourg – we are on hand to help resolve any issues. Our comprehensive technology stack facilitates effective fund management through a seamless flow of information from SPVs to the fund for NAV calculation.

Contact your local representative to learn how Apex can help with your aviation fund needs.


Reuters (2022) Aircraft lessors sue insurers for $8 billion over trapped Russian planes, available at:


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