General Regulatory Requirements a Lessor/Financier Needs to Be Aware of in Regard to Aircraft Leasing and Financing in Saudi Arabia

In general, the principal legislation in Saudi Arabia which regulates aviation is as follows.

• General Authority of Civil Aviation (GACA) law – 2005, which is the primary legislation for the regulatory, legislative, and governing entity of the aviation industry in the Kingdom of Saudi Arabia (KSA).
• The Civil Aviation Law – 2005, which is the primary legislation for the aviation industry in Saudi Arabia, providing the legal framework for aviation operation in Saudi Arabia.
• The Civil Aviation Tariff Law and Implementing Regulations thereof – 2005.
• Finally, Saudi Arabia is also a party to the Chicago Convention on International Civil Aviation since 1962 and the 1999 Montreal Convention for the unification of certain rules for international carriage by air, which sets out the liability regime of air carriers in case of an accident.

For leasing and financing, it is crucial for a lessor or a financier to be aware of how the operations of aircraft are regulated in Saudi Arabia, as it is stated in the Saudi Civil Aviation law, Article 69 that: “The owner of a leased aircraft shall remain jointly liable with the lessee for all legal obligations of the investor with respect to the aircraft and flight crew thereof pursuant to the provisions of this Law if said lease term does not exceed fourteen days. If the lease term exceeds fourteen days or in the case of sale-type lease, the lessee operating the aircraft shall be solely liable for obligations referred to in paragraph 1 of this Article, unless otherwise stated in the lease contract.”

In addition, Article 60 states that: “Any legal disposition of national aircraft may be made to any person by means of sale, lease, pledge or any other form of disposition based on Sharia or law. Said disposition shall come into effect only upon entry thereof in the Register.”

As Saudi Arabia has ratified the Cape Town Convention 2001, a lessor who has registered its interest in the international registry has a right to detain an aircraft upon default payment of the lease, and the judicial procedures related to rights on aircraft are subject to the system of the court that has jurisdiction to consider these procedures.

Moreover, both lessor and lessee must comply with GACA Part 119 – Certification: Saudi Arabian Commercial and Non-commercial Operators, as it states that unless authorised by the GACA’s President, no air operator certificated under the aforementioned part may conduct operations involving either a wet or dry lease arrangement. The Part mentioned several requirements for leasing of aircraft. For example – and not limited to – prior to conducting a lease in operations, the lessee must provide the President with:

• a copy of the lease to be executed;
• the names of the parties to the agreement and the duration thereof; and
• the nationality and registration markings and aircraft serial number of each aircraft involved in the agreement.

Also, it is important to note that the registration of an aircraft is not considered as evidence of ownership in any proceeding in which ownership by a particular person is an issue, as the President of the GACA does not issue any certificate of ownership or endorse any information with respect to ownership on an aircraft certificate of registration (CR).

These are the general “must know” regulatory requirements for any lessor and/or financier who wishes to have aircraft operations in Saudi Arabia. Though, other rules for each case can be different, as the Saudi Civil Aviation Law deemed the aircraft lease contract as a right established on civil aircraft pursuant to Article 56. However, it depends on the wording of the leasing contract. As operating and finance leases are governed solely by the terms of the lease agreement, a lessor’s right to possession and its legal title and ownership of an aircraft or aviation assets are secured and provided by the terms of such an agreement. Payment of contractual lease by a lessee under the lease does not create rights capable of overriding the lessor’s contractual rights or ownership in the aircraft or aviation assets.

The Announcement of AviLease

Saudi’s Public Investment Fund (PIF) is one of the largest and most impactful sovereign wealth funds in the world and it plays a leading role in advancing the Kingdom of Saudi Arabia’s economic transformation and diversification, as well as contributing to shaping the future of the world economy.

PIF announced on 30 June 2022, the launch of the Aircraft Leasing Company (“AviLease”), and it was made clear that the company aims to be a leading institution across the aviation leasing world, as well as maintaining an optimal portfolio of assets with its core focus on leasing, trading and asset management services. After the announcement in June of 2022, AviLease officially launched on 18 July 2022, and the launch took place in London, UK, to coincide with Farnborough International Airshow week.

AviLease, having its headquarters in Riyadh, Kingdom of Saudi Arabia, and as a full-service commercial aircraft lessor, is dedicated to delivering tailored fleet solutions to its airline partners, whether engaging in leasing, trading or asset management.

AviLease has been initially focused on scaling through purchase-and-lease-back transactions with airlines, portfolio acquisitions and direct orders from aircraft manufacturers. It will also look into expansions through corporate acquisitions. The company’s fleet will consist of the new generation of narrowbody and widebody aircraft from the world’s leading manufacturers.

Since AviLease’s establishment in 2022, it has rapidly expanded its portfolio, featuring new Airbus and Boeing fleets with updated technology. Additionally, the company’s establishment is set to contribute to the reduction of value leakage in Saudi Arabia, while enhancing integration into the global aircraft financing market.

The launch of AviLease underlines PIF’s mandate to unlock the capabilities of promising sectors locally that can help drive the diversification of the economy and contribute to non-oil GDP growth. In addition, the company will be supporting a thriving aviation sector and driving financial sustainability within the aviation ecosystem in line with Vision 2030.

On 18 July 2022, the day of the official launch event, AviLease signed its first leasing agreement with the leading low-cost-airline “Flynas”. The agreement was made then to see AviLease purchase 12 new A320neo aircraft to be delivered in the same year of the agreement and 2023, and then leased back to Flynas. AviLease considered its deal with Flynas its first milestone.

On 17 November 2022, four months after AviLease’s official launch, the firm publicly announced that it signed a sale-and-leaseback agreement with “SAUDIA Group”, the aviation holding company that owns “SAUDIA” and “flyadeal”. The agreement was made then to see AviLease deliver 20 Airbus A320neo aircraft to be operated on long-term leases by flyadeal, SAUDIA Group’s low-cost carrier (LCC).

AviLease, after the first two big agreements’ announcements, kept growing its portfolio as follows.

• Aircraft purchase from the leading aircraft lessor (“Avolon”).
• The completion of the acquisition of Standard Chartered’s aircraft leasing business.
• Portfolio acquiring of nine aircraft from lessor Avolon.
• Purchasing of Boeing 787-9 aircraft from BBAM.
• Signing an agreement with Turkish Airlines for eight Airbus A320neo aircraft.

In early 2025, AviLease won the “Transport Finance Deal of the Year” award at the Global Banking & Markets Awards, held in Riyadh, in recognition of the company’s groundbreaking USD2.5 billion transaction.

Three years after AviLease’s establishment, in October of 2025, it was publicly announced that AviLease and Riyadh Air, the new national carrier for the Kingdom of Saudi Arabia, entered into their first aircraft lease. It was made clear in the announcement that their agreement covered one Boeing 787-9 Dreamliner and positions AviLease as the inaugural lessor to partner with the Kingdom’s newest airline.

It is known that the Boeing 787-9 is among the most advanced and fuel-efficient widebody aircraft in service. The lease underscores AviLease’s commitment to expanding its portfolio of latest-generation aircraft, while supporting Riyadh Air’s strategy to introduce a technologically advanced, fuel-efficient fleet that contributes to the Kingdom’s ambition to develop a world-class aviation ecosystem.

The specific aircraft choice helps the overall environmental compliance. GACA has previously worked on developing and publishing the executive regulations of the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), with the aim of reducing carbon emissions from international flights by monitoring and investigating the amount of emissions issued by national air carriers for international flights that are subject to the plan.

The GACA’s own Environmental Department has previously begun to work with a package of initiatives, programmes, systems and recommendations to preserve the environment from civil aviation activities such as signing a memorandum of understanding with the National Centre for Environmental Compliance for the purpose of joint co-operation, and for commitment to the application of local regulations at airports and the implementation of campaigns to raise awareness of the need to preserve the environment.

AviLease continues to grow its portfolio by focusing on high-quality, in-demand aircraft such as the Boeing 787 and by fostering strong partnerships with both local and international carriers. As of Q3 2025, AviLease’s portfolio comprises 192 owned and managed aircraft on lease to 48 airlines across 29 countries, and as of the first quarter of 2026, AviLease successfully did the following.

• Acquired two widebody aircraft on long-term leases to international carriers.
• Closed 14 sales to three trading partners, including ten KSA-based aircraft to “Hassana”, AviLease’s Saudi leasing partner.
• Nine aircraft were held for sale to four counterparties, and all are scheduled to close in 2026.
• Signed lease/extension agreements for seven aircraft.
• Ended Q1 with an owned and managed fleet of 200 aircraft on lease to 50 airlines covering 32 countries.

Conclusion

Saudi Arabia’s aviation leasing and financing industry has experienced significant growth in recent years, driven by regulatory developments, government-backed investment initiatives, and the Kingdom’s broader economic diversification agenda under Saudi Vision 2030.

The legal and regulatory framework established by the General Authority of Civil Aviation has created a structured and reliable environment for lessors and financiers, ensuring that aircraft leasing transactions are governed by clear rules relating to registration, ownership, liability, and operational compliance.

Provisions within the Saudi Civil Aviation Law, particularly those relating to lease registration and liability allocation between lessor and lessee, provide legal certainty and reinforce investor confidence. Saudi Arabia’s ratification of the Cape Town Convention further strengthens creditor protections by allowing lessors to enforce international security interests and repossess aircraft in the event of default, making the Kingdom a more attractive jurisdiction for aircraft financing.

A major catalyst for the sector’s development has been the establishment of AviLease by the Public Investment Fund in 2022. This marked a transformative step in positioning Saudi Arabia as an active participant in the global aviation leasing market rather than merely a customer of international lessors. AviLease reflects the Kingdom’s ambition to localise high-value aviation financing activities, reduce capital outflow, and build domestic expertise in aircraft asset management. Its launch demonstrates how state-backed institutions can accelerate market development by creating a national leasing platform capable of competing internationally.

AviLease’s rapid portfolio expansion through sale-and-leaseback transactions, strategic acquisitions, and partnerships with major airlines illustrates the increasing sophistication of Saudi Arabia’s aviation finance market. Early agreements with flynas and the SAUDIA Group established immediate domestic market relevance, while subsequent international transactions with companies such as Avolon and Turkish Airlines demonstrated its global reach. The company’s acquisition of established leasing portfolios and aircraft assets has enabled it to scale quickly, diversify risk, and build operational credibility within a highly competitive international market.

The partnership between AviLease and Riyadh Air in 2025 further reflects Saudi Arabia’s evolving aviation ecosystem. Leasing advanced aircraft such as the Boeing 787-9 Dreamliner supports not only fleet modernisation but also aligns with environmental sustainability objectives. This complements Saudi Arabia’s implementation of carbon reduction measures under CORSIA and GACA’s environmental initiatives, indicating that future aviation financing trends will increasingly prioritise fuel-efficient and environmentally compliant assets.

Overall, these regulatory reforms, institutional investments, and strategic transactions demonstrate that Saudi Arabia is rapidly emerging as a regional hub for aviation leasing and financing. The sector’s growth reflects a broader shift toward financial diversification, international market integration, and sustainable aviation development, positioning the Kingdom to play a leading role in shaping the future of aviation finance in the Middle East and beyond.