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Aviation Finance and Leasing Regulations for 2026

Aviation Finance and Leasing Regulations for 2026
Financing Structures for Aircraft Acquisitions
The purchase of commercial aircraft registered in the Finnish Aircraft Register is predominantly financed through external sources. Finnish airlines generally operate a mixed fleet comprising both owned and leased aircraft. The majority of lessors are foreign entities, which secure their financing through a combination of debt and equity. In recent years, there has been a notable development with some lessors initiating aircraft lease securitisations involving Finnish aircraft leases, reflecting evolving financing strategies within the sector.
Legal and Regulatory Framework
Given the inherently international nature of aviation finance, transaction documents are frequently governed by the laws of the lessor’s or financier’s jurisdiction, most commonly those of England or New York. When such documents fall under jurisdictions outside the European Economic Area (EEA), enforcement of foreign court judgments in Finland may necessitate separate legal proceedings, as these judgments are not automatically enforceable under Finnish law. Regardless of the financing structure employed, Finnish legislation mandates that a Finnish law mortgage is the sole effective instrument to secure interests over Finnish-registered aircraft and their constituent parts.
Finnish law does not impose specific restrictions on the types of leasing arrangements permitted. The choice among operating leases, financial leases, sale and leaseback arrangements, and Japanese Operating Leases with Call Options (JOLCOs) is typically influenced by commercial and accounting considerations. Wet leases are also utilized, particularly to address temporary capacity shortages such as those arising during maintenance periods.
Regulatory Developments and Industry Outlook
Finland has yet to ratify the Cape Town Convention, although the Ministry of Justice is engaged in a long-term review assessing the potential benefits of ratification. No significant updates have been issued in over a decade. A political working group has proposed that ratification could be aligned with a comprehensive reform of Finnish legislation governing vehicle, vessel, and aircraft mortgages. Such reforms are anticipated to affect the registration process for mortgages and the establishment of security interests over Finnish aircraft, though detailed provisions remain to be defined.
Looking ahead to 2026, the aviation finance and leasing sector in Finland is poised to face challenges as regulatory frameworks evolve. Stricter compliance requirements may lead to increased operational costs for both leasing companies and airlines. Market participants are closely monitoring these developments, recognizing that responses may vary: some may seize new opportunities arising from regulatory changes, while others could experience heightened financial pressures. In response, industry players may pursue strategic realignments, including forming partnerships or investing in new technologies, to sustain their competitive positions.
Pre-Contractual Agreements under Finnish Law
Finnish law acknowledges the validity of non-binding or partially binding pre-contractual agreements, such as letters of intent. These instruments allow parties to engage in negotiations with a degree of flexibility, as they do not constitute fully enforceable contracts unless explicitly agreed upon. This legal recognition facilitates preliminary arrangements while preserving the parties’ ability to finalize terms at a later stage.
As the regulatory environment continues to evolve, stakeholders in Finland’s aviation finance and leasing market are preparing to adapt, aiming to mitigate risks and capitalize on emerging trends within this dynamic sector.

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