Economic Uncertainty Creates Crosswinds for Aircraft Financing
Alaina J. Joseph explores how economic uncertainty is reshaping aircraft financing strategies. From rate swings to tighter credit, she shares insights to help buyers stay nimble.
Geopolitical tensions. Persistent inflation. Uncertain central bank policy. These factors are stirring volatility across global financial markets—and aircraft financing is no exception.
As interest rate expectations shift and economic signals remain mixed, aircraft owners and buyers face a dynamic landscape.
So what does this mean for financing strategies? And how can buyers navigate today’s uncertainty with confidence?
Let’s take a quick dive into the numbers.
Economic Data: A Murky Outlook
The past few weeks have been eventful, marked by a flurry of economic data releases and ongoing uncertainty over trade policies.
First-quarter GDP data showed the U.S. economy contracted at a 0.3% annual rate, the first contraction since 2022. This slowdown was driven largely by a surge in U.S. imports, as businesses rushed to stockpile goods ahead of possible tariffs.
However, this GDP estimate likely overstates first-quarter weakness in the U.S. economy due to that import spike.
Even so, the full impact of trade policies has yet to be seen in broader economic data, suggesting more softness could be on the horizon.
Central Bank Policy: A Balancing Act
These mixed signals leave the Federal Open Market Committee (FOMC) facing a tough balancing act.
At its May meeting, the FOMC voted unanimously to hold rates steady. Balancing the Fed’s dual mandate of price stability and maximum employment is proving to be a challenge.
So far, first-quarter data shows no clear impact from tariffs on unemployment or inflation.
This leaves the FOMC with tough choices on which priority to address first.
Much like pilots navigating turbulent skies, the FOMC is monitoring the instruments closely. They’re waiting for clearer economic signals before charting their next course.
Financial Market Volatility: Rates in Flux
These uncertainties have sparked ongoing volatility in the financial markets.
With GDP signaling weakness, inflation still running slightly above the Fed’s 2% target, and unemployment still stable, markets are reacting to these conflicting cues.
Fed funds futures markets have pushed rate cut expectations further out, now pricing in roughly three 0.25% cuts through the end of 2025. Though, rate expectations have remained volatile since the beginning of the year.
Looking at the 10-year Treasury Rate—a key barometer for aircraft loan interest rates— we’ve seen 50-basis point swings in both directions over the past few months. It ultimately ended (as of this writing) nearly where we started the year, around 4.5%
Impact on Aircraft Financing: Stability Matters
So, what does this mean for aircraft financing?
While aircraft loan rates remain volatile, they’re still below the peak we saw in late 2023. We expect these fluctuations to continue. However, for qualified buyers, this shouldn’t deter action.
When economic activity slows, it’s not unusual to see credit tightening. While some banks may start to pull back, we remain committed to supporting aircraft buyers through our consistent underwriting approach and deep industry knowledge.
Our advice? Work with a strong, experienced finance institution to provide stability and guidance in these turbulent times.
One Big, Beautiful Bill: Proposed Tax Reform for Aircraft Owners
Angel Houck breaks down the proposed “One Big, Beautiful Bill,” which includes major tax changes that could benefit or burden aircraft owners. Key highlights include permanent bonus depreciation and limits on deducting losses against non-business income.
On Monday, May 12, the House Ways and Means Committee released the first draft of its proposed tax reform bill, titled “One Big, Beautiful Bill.”
The first draft includes proposals on many anticipated items and introduces several new concepts.
It’s organized into four main sections:
- Subtitle A – Make American Families and Workers Thrive Again
- Subtitle B – Make Rural America and Main Street Grow Again
- Subtitle C – Make America Win Again
- Subtitle D – Increase the Debt Limit
Subtitle A
The first section of the bill focuses on individual taxes and credits. It proposes making most of the Tax Cuts and Jobs Act provisions permanent.
These include adjusted tax brackets, lower rates, increased standard deductions, enhanced child tax credits, and higher estate and gift tax exemptions.
The Qualified Business Income (QBI) deduction, which helps decrease the tax burden for many business owners, would also become permanent. The deduction rate would increase from 20% to 23%.
Unfortunately, many of the limitations on itemized deductions could also become permanent, including miscellaneous deductions.
Subtitle A of the bill also introduces new tax proposals. These include eliminating tax on tips and overtime, deducting car loan interest and offering new breaks for seniors. It also proposes a MAGA account, which appears to be similar to a 401(k) for children.
Subtitle B
Here, we find what’s been top of mind for many aircraft owners: bonus depreciation. The Big, Beautiful Bill proposes that 100% bonus depreciation will become permanent, starting January 20, 2025.
Qualifying property requirements would remain similar to previous years. This move would eliminate the current phase-out.
Interestingly, there’s a proposal for bonus depreciation to apply to certain production property, including new and existing factories. This would be the first time that bonus depreciation would be available for real estate, and is in line with the overall tone of the bill that favors U.S. production, jobs and manufacturing.
Another proposed change is increasing reporting thresholds on Forms 1099, which will reduce the reporting burden for many businesses.
Subtitle C
This “Make America Win Again” section focuses on repealing many of the clean energy credits introduced in the Inflation Reduction Act of 2022. It also would repeal portions of the Affordable Care Act of 2010 (Obamacare).
Proposed repeals include clean vehicle credits, energy-efficient home improvements, and alternative fuel incentives. Changes to nuclear and hydrogen credits are also on the table.
A potential positive for personal-use aircraft owners is a proposed increase in the state and local tax deduction. It could allow many personal-use owners to deduct sales and use tax paid on their aircraft.
However, the biggest hit that I’m disappointed to see is the proposal to make the Excess Business Loss (EBL) limitations permanent. This impacts many aircraft owners, as bonus depreciation losses often can’t offset non-business income like W-2 wages or investment earnings.
Further, the proposal would create an EBL rollover. The current law allows the excess loss to be included in the net operating loss in later years.
Subtitle D
Lastly, this section includes only one goal: to raise the debt ceiling by $4 trillion.
What It Means for Aircraft Owners
This first draft of “One Big, Beautiful Bill” includes several wins for aircraft owners—most notably, the push to make 100% bonus depreciation permanent. That’s a major incentive for those planning to buy aircraft after January 2025.
But it’s not all good news. Making the EBL limitation permanent could severely restrict how aircraft owners deduct depreciation losses against non-business income.
Bottom line: While the bill offers meaningful tax advantages, especially for aviation and manufacturing, it also introduces long-term limitations. Aircraft owners should work closely with their advisors now to plan ahead.
For the full text of the Big, Beautiful Bill and updates, visit this link.
Importing Aircraft, Part 3: Airworthiness: How to Get Your Imported Aircraft Ready to Fly
In Part 3 of the importing aircraft series, John Farrish explains how to obtain an Export Certificate of Airworthiness and the steps needed to secure FAA approval. Learn what documents and inspections are required to ensure your imported aircraft is ready to fly legally.
An airworthiness certificate is one of the basic requirements for a plane to legally fly. Now that your plane is imported through U.S. customs and registered with the FAA, how do you get one?
That’s where a "DAR" comes in.
Designated Airworthiness Representative
FAA airworthiness certificates are issued by a “Designated Airworthiness Representative” (DAR).
The DARs are deputized by the FAA to review the aircraft’s paperwork and issue the airworthiness certificate once they confirm that the plane is airworthy according to the FAA standards.
Export Certificate of Airworthiness
One of the key pieces of paperwork typically required by the DAR is an “Export Certificate of Airworthiness” issued by the aircraft’s previous country of registration.
For instance, if you bought a plane from Canada, the Export Certificate of Airworthiness would be issued by Transport Canada.
This is essentially a note from one country to another confirming that the plane meets the requirements for airworthiness for the next country.
There are sometimes exceptions marked, such as a note that the plane’s systems need to be changed from kilograms to pounds, for instance.
But I hope you did some planning.
Once a plane is deregistered from a country’s aircraft registry, that country loses jurisdiction over the plane, and can no longer issue an Export Certificate of Airworthiness.
Every purchase agreement should document the timing and requirement for the seller to arrange the Export Certificate of Airworthiness, although who bears the cost is usually negotiable.
It’s something that only the seller can obtain, due to their relationship as the registered owner (or operator, in some countries).
A failure to get the Export Certificate of Airworthiness could delay the FAA airworthiness certificate. Additionally, the DAR could require more in-depth (and expensive) inspections to confirm that the plane is in the correct condition.
An Export Certificate of Airworthiness can sometimes be skipped for U.S.-manufactured aircraft or planes that were previously registered with the FAA and issued FAA airworthiness certificates.
That’s why it’s imperative to check with your DAR well in advance – while negotiating the purchase agreement – so you have certainty on what’s needed.
Each DAR has their own interpretation of the requirements, so never assume anything.
Aircraft Conversion
Once you have the Export Certificate of Airworthiness, and complete your FAA registration, the final piece required for DAR approval is to physically prepare the plane for the FAA.
Such preparations include:
o Painting the FAA registration number on the plane
o Replacing placards
o Reprogramming avionics and transponders
o Performing any required service bulletins
This can take approximately one week, and then the DAR will review your aircraft and issue the airworthiness certificate. With this and the registration, you’re now ready to fly!
Stay tuned for upcoming articles that break down the challenges of buying a foreign aircraft—and how to navigate them with confidence.
Plus, check out our past two articles in this series:
Part 1: Navigating Aircraft Import Tariffs & Customs
Part 2: Importing Aircraft: Aircraft Registration and Deregistration
Part 4: How to Balance Taxes Between Multiple Jurisdictions
Part 5: Logistics: Where to Inspect the Plane and Complete Closing?
Part 6: Contractual Quirks of Foreign Transactions
This article is not intended, nor should it be construed or relied upon, as legal advice. The comments, recommendations, and analysis expressed in this article are those of the individual author, John Farrish, are purely informational. This article does not create an attorney-client relationship between you and the author or his law firm. If specific legal information is needed, each person should retain and consult an attorney with knowledge of the subject matter.
7 Regrets of Business Owners—and How to Avoid Them
Exiting a business can leave owners with costly regrets if not planned carefully. Dustin Cordier shares seven common missteps—and how to avoid them.
For many business owners, exiting their company is one of life’s most significant events of their lives.
Yet too often, that exit is marked by regret. Whether due to lack of planning or poor execution, these missteps can derail not just the transaction, but also the legacy an owner hopes to leave behind.
Below are seven of the most common—and avoidable—exit regrets:
- Wrong Team: Many owners underestimate the complexity of exit planning and fail to assemble the right advisory team. A successful transition demands coordinated input from legal, financial, operational, and emotional intelligence advisors.
- Wrong Numbers: Without a clear understanding of the business’s value and personal financial needs, owners are often blindsided. Too many rely on hearsay or gut feel instead of objective valuations, leading to mismatched expectations and undervalued exits.
- Wrong Structure: Poor entity structuring, outdated shareholder agreements, or tax-inefficient deal terms can strip away wealth at the finish line. Last-minute planning can cost owners millions in unnecessary taxes and legal disputes. Legal and financial planning should be proactive—not reactive.
- Wrong Capital: Owners may be unclear about the kinds of buyers or capital partners best suited to their goals—whether family, private equity, ESOP, or strategic buyer. Lack of alignment here can result in an exit that funds the future, but leaves the owner feeling disconnected from the outcome.
- Wrong Identity: Too often, the business is the owner’s identity. Without a compelling next act, many owners struggle to find their post-exit purpose. A successful transition includes purpose beyond the paycheck.
- Wrong Timeline: Timing the exit for market highs or personal convenience—without preparation—leads to regrets. Value Acceleration is a process and built over time, not captured overnight. Planning should start years before a transaction.
- Wrong Focus: Owners who chase income over enterprise value often leave money on the table. Exit planning is about building transferable value—shifting from being the center of the business to building a business that thrives without you.
The good news? Regret is optional.
With the right preparation, execution, and mindset, you can turn exit planning into a strategic advantage—and a legacy-defining decision.
For a deeper dive into avoiding these regrets, join four expert in this "Top & Regrets" webinar as we unpack key lessons in exit planning.
Staying Sharp: Why the AIA Conference Is a Must-Attend for Insurance Pros
Tom Hauge shares why the AIA Conference is a must for aviation insurance brokers looking to sharpen skills and build carrier relationships. Staying competitive means showing up, learning, and connecting at this pivotal industry event.
Every year, the Aviation Insurance Association (AIA) hosts a four-day annual convention. It’s a great meeting point for everything aviation insurance, bringing together brokers, underwriters, reinsurers, attorneys and training providers in one spot.
Together, we network, receive continuing education and discuss industry trends shaping the future of aviation insurance.
The AIA convention is also a terrific platform for new insurers to formally launch, and for legacy insurers to announce expanded capabilities and product offerings.
News from AIA2025
This year’s show, which wrapped in late April, saw some major news and announcements from Class A, a new insurer in the owner-flown turbine space.
Two major product line announcements were unveiled by Beacon and IAT, who both confirmed expanded product line offerings and capacity increases in hull and liability limits. This news is expected to further soften the aviation insurance market while expanding legacy insurers’ offerings to compete in the space.
As a result, liability limits for owner-flown risks are becoming more attainable and cost-effective, depending on the underlying pilot qualifications. Increased competition in the space continues to breed softer market conditions.
The AIA Conference: A Must-Attend Event
In the evolving landscape, the AIA conference plays a critical role for aviation insurance brokers. It provides a rare opportunity to meet face-to-face with underwriters and discuss everything from agency portfolios, service and technology topics to lessons learned from the past year’s business with each carrier.
The four days at AIA are full of meetings, continuing education classes/sessions and social/networking events. It’s invaluable for insurance brokers to attend each year to keep in touch with product offerings, but more importantly, keep relationships moving forward with underwriting carriers in the space.
Early in my career, I’d often skip the AIA conference, unaware of its value. As my career has matured, I’ve realized how important this annual event is to remain at the top of my craft in the brokerage space.
As the industry moves forward, the market leaders in the underwriting and broker space are rising to the top. They’re the ones who remain on the cutting edge of technology and product information, both on the underwriting side and brokerage side.
Relationships typically trump everything, and those are built, cultivated and maintained at AIA. So, it behooves us as insurance underwriters and service providers to take in this incredible resource annually to keep our tools sharp.