By Francois McManus, Client Relationship Director, Ireland
Interest rates are up. Aircraft supply is down. For lessors, this creates both pressure and opportunity. Higher funding costs are pushing lease rates higher, while delivery delays and engine groundings have tightened aircraft availability to levels not seen in years. Against this backdrop, Ireland’s role as a global leasing hub – managing over 60% of the world’s lease fleet – has never been more critical. Its well-established special purpose vehicle (SPV) capabilities, extensive treaty network and established aviation finance ecosystem enable lessors to navigate complexity while maintaining profitability.
The new rate reality: what rising costs mean for lessors
- The European Central Bank (ECB) deposit facility rate stands at 2.00% as of June 2025 (a rate held steady at the December 2025 monetary policy meeting), with markets expecting rates to hold through mid-2026
- In the U.S., the Federal Reserve’s earlier rate cuts have seen 10-year swap yields stabilise around 3.8% by the end of 2025, closely linked to aircraft financing terms
Lessors pass these elevated costs through to airlines via lease rate adjustments, keeping capital-intensive leasing transactions viable for lessors even as monetary policy tightens.
Supply squeeze: why aircraft are commanding premium rates
- Primary and secondary lease rates remain elevated. Brand-new narrowbodies like the A320neo and Boeing 737 MAX 8 command around $400,000/month, stretching to $460,000/ month for longer variants
- Mid-life narrowbodies, such as A320ceo and 737NG, are leased for $230,000–$250,000/month
Supply constraints have intensified since 2023, as Airbus and Boeing miss delivery targets and engine-related groundlings limit fleet availability – dynamics highlighted in KPMG’s 2025 Aviation Leaders Report.
Ireland’s advantage in lease economics
- Ireland-based entities manage over 60% of the global leased aircraft fleet, with estimates indicating that an Irish-leased aircraft takes off every two seconds
- A vast ecosystem spanning specialised legal advisory, aircraft technical services, tax structuring and capital markets expertise, supporting everything from operating leases to structured deals
This infrastructure enables swift deployment of capital, efficient SPV formation and robust securitisation – all critical for managing financing complexity amid rising rates and supply constraints.
When high rates meet tight supply
- Funding cost increases
- Lessors’ borrowing costs are directly linked to market rates, raising minimum lease rate factors (LRFs) to maintain target yields
- Asset access constraints
- Delayed original equipment manufacturers (OEM) deliveries and grounded fleets push airlines toward leasing, increasing demand for both new and mid-aged aircraft
- Pricing power for lessors
- Under constrained supply, lessors enjoy heightened negotiation strength, evidenced by strong lease terms and rate renewals
- Financial engineering capabilities
- Ireland’s ability to package leases via SPVs, asset-backed securities (ABS), or structured finance instruments enables lessors to mitigate rate volatility and tap diverse capital sources
This synergy ensures that Ireland-based lessors can sustain profitability and portfolio stability even under tight funding conditions.
Structural advantages in Ireland
- SPVs and Cape Town Convention: Ireland’s common-law foundation and full Convention adoption facilitate structured asset isolation and enforceability
- Tax and treaty network: A 12.5% corporate tax regime and double-tax treaties reduce withholding tax, streamlining cross-border lease payments
- Capital markets ecosystem: From aviation finance teams to specialist trustees, Ireland offers seamless access to ABS, unsecured bonds and ESG-linked structures
These enablers position Ireland as an ideal jurisdiction when navigating the twin pressures of rising capital costs and supply-constrained demand.
What’s next: key trends reshaping aviation leasing
A sustained high-rate environment and persistent supply constraints are reshaping priorities for aircraft lessors. Beyond managing immediate cost pressures, the focus is shifting toward long-term resilience, optimising capital structures, embedding pricing discipline and leveraging financial engineering to maintain competitiveness.
Several trends are set to define the next phase of aviation leasing:
- ABS and securitisation growth: As interest rate cycles remain elevated, expect Irish SPV-based ABS and securitisations to dominate, recycling capital effectively
- Rate pass-through mechanisms: Lease rate adjustment clauses tied to reference rates like the EURIBOR or 10-year swap will be critical in lease contract design
- Deepening role of ESG capital: Environmental metrics will increasingly influence leasing terms – ESG-linked financing is expanding within Ireland’s ecosystem
Beyond these trends, Ireland’s leading role in aircraft leasing is a direct result of its ability to align capital market innovation with operational and structural robustness – a challenge amplified by today’s elevated rates and tight supply dynamics. Through SPVs, capital structures and cross-border execution capabilities, Irish-based lessors remain uniquely equipped to define the future economics of aviation leasing.
A global platform for regional lessors
Ireland’s value extends far beyond European operators. For lessors operating in Hong Kong, Singapore and the Cayman Islands, Ireland offers a strategic gateway to global capital markets and structured finance expertise. Its robust legal framework, extensive tax treaty network, and proven securitisation capabilities enable cross-border portfolio optimisation and efficient funding solutions.
By leveraging Ireland’s ecosystem – specialist advisors, SPV structures and access to deep investor pools – regional lessors can mitigate interest rate volatility, enhance asset financing flexibility and align with international best practices. In short, Ireland is not just a hub for European aviation finance; it is a global platform that empowers lessors everywhere to scale and innovate.
Ready to optimise your leasing strategy?
As a leading provider of aviation finance services, IQ-EQ offers a suite of solutions to help lessors navigate rate volatility, structure efficient SPVs and access Ireland’s deep capital markets. Whether you’re managing portfolio pressures or exploring new financing structures, our team brings decades of expertise to every engagement.
Get in touch to discuss how Ireland’s ecosystem can work for your portfolio.
Meet our team at Airline Economics 2026, Dublin
IQ-EQ will be attending the Airline Economics Growth Frontiers Global Conference at The Mansion House in Dublin from 26–28 January 2026. This leading aviation finance and leasing event convenes global industry stakeholders to examine market trends, valuations and financial developments shaping the sector.
As part of the programme, Karl Cowman will moderate the panel discussion “Aircraft Leasing – Lease Rates Valuations” on 28 January at 11:35am, sharing insights on how current rate dynamics and supply constraints are influencing lease pricing.
We look forward to connecting with industry peers and contributing to the conversations that matter
