First Quarter Aircraft Finance Reflections: What 2026 Has Taught Us So Far

Well, that was a wild start to 2026, wasn’t it? To call these times interesting would be an understatement. What have we learned so far?

1. Interest rates haven’t materially fallen. There was an expectation going into the year that we’d see a 0.5% or higher drop in interest rates from the Federal Reserve; as of now, they’ve held rates steady.
   
2. Inflation remains sticky. The Iranian War’s impact on energy prices has increased the annualized inflation rate, which isn’t showing signs of reversing anytime soon.
   
3. Geopolitical dynamics are as obscure as ever. There’s not much point in even commenting here,  the news changes by the minute. As with everything, clarity helps, and until we have it, uncertainty remains.
   
4. Loan and purchase demand remains strong. The first quarter seemed to be pretty strong across the board, as I heard at the National Aircraft Finance Association conference this week.
   
5. Aircraft values remain elevated. This continued strong demand impacts aircraft prices. The caveat is whether the demand and value curve will remain strong throughout the loan term or whether values will be impacted over time. 

What does this mean for the aircraft finance market for the rest of this year? At a high level, these items all interplay. Interest rates will adjust in response to what the market feels is happening with inflation and overall economic strength. Those factors may be impacted by geopolitical developments. On the aircraft side, basic economics show that aircraft values are affected by demand, and that demand is affected by overall market conditions. Market conditions are created through economic conditions. Call it the “aircraft finance market circle of life”.

Stay tuned, there’s still quite a lot of 2026 ahead!

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