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BROUGHT TO YOU BY FLYING FINANCE
The aviation finance industry is shrouded in misconceptions, even among seasoned professionals and pilots. These myths can and do lead to poor strategic decisions and missed opportunities.
Let’s debunk the most common fallacies that continue to circulate in boardrooms and financing negotiations.
Myth 1: Aircraft Always Depreciate Predictably
Many buyers, particularly in business aviation, have a notion that aircraft depreciation follows a neat, linear pattern that can be plugged into spreadsheets with confidence. The reality is far more nuanced.
While certain aircraft types do follow relatively predictable curves, depreciation is heavily influenced by factors that differ from other classes of asset. Regulatory changes, fuel price volatility, and demand for private aviation mean that many models do not follow a standard depreciation curve in the slightest.
Smart buyers and aviation financiers build flexibility into their models and maintain healthy skepticism about any depreciation schedule that looks too clean.
Myth 2: Older Aircraft Are Always Bad Investments
There’s a pervasive bias against older aircraft. A lot of people assume that anything beyond a certain age becomes a liability, which is true for some types of assets. This oversimplification ignores some compelling economics that are unique to aviation.
Well-maintained older aircraft can offer superior returns in specific markets, particularly where operational flexibility matters more than fuel efficiency, or where capital constraints make newer equipment prohibitively expensive. Not to mention, post-pandemic years have seen unprecedented wait times for new aircraft production, and as a direct consequence, older models are retaining their value exceptionally well.
The key to assessing aircraft isn’t necessarily the age. It’s much more important to match the asset to the mission and understand the total cost of ownership in that specific context.
Myth 3: Sale-Leasebacks Are Desperation Moves
Sale-leaseback transactions still carry an unfortunate stigma. They’re often viewed as distress signals of cash flow issues, but in practice, leasebacks are simply a tactic that turns an illiquid asset into capital.
Sale-leaseback allows owners to get cash for other investments, reduce capital tied up in a single asset, maintain privacy (as the lessor owns it), and shift depreciation risk, all of which make it popular for individuals, flight schools, and even some corporate jets.
Myth 4: Low Interest Rates Always Mean Better Deals
You may find yourself tempted to chase the lowest possible interest rate, but interest rates alone often lead corporate decision-makes astray. A low headline rate can obscure unfavorable terms elsewhere in the agreement—maintenance reserves, return conditions, event of default provisions, or restrictive covenants that limit operational flexibility.
The best aviation finance deals balance rate, terms, and flexibility in ways that align with the borrower’s strategic objectives. An extra 50 basis points might be worthwhile if it comes with significantly better prepayment options or more lenient maintenance requirements.
Myth 5: ESG Considerations Are Just Marketing
Perhaps the most dangerous myth currently circulating is that environmental, social, and governance (ESG) factors in aviation finance are merely window dressing for public relations purposes. This fundamentally misreads where the market is heading.
ESG considerations are rapidly becoming material factors in credit assessment, asset valuation, and regulatory compliance.
Younger, fuel-efficient aircraft command premiums not just because of operational economics but because they unlock access to green financing and hedge against future carbon pricing regimes. If you dismiss ESG as a passing fad, you’ll be making investments that will face increasing obsolescence risk.
These five myths persist because they contain kernels of truth that once made them useful heuristics. But the market has evolved, and clinging to outdated assumptions creates real risk.
In an industry as dynamic as aviation, you need healthy skepticism and in-depth research to make decisions that age well. If you want to learn more about your financing options for your first aircraft, talk to us at FLYING Finance today and our team of experts will be happy to answer any questions.
