UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                             ----------------------

                                    FORM 10-Q

                             ----------------------




           _X_ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended September 30, 1996

                                       OR

           ___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                        For the transition period from to

                             ----------------------

                           Commission File No. 2-91762

                             ----------------------



                         POLARIS AIRCRAFT INCOME FUND I

                        State of Organization: California
                   IRS Employer Identification No. 94-2938977
         201 Mission Street, 27th Floor, San Francisco, California 94105
                           Telephone - (415) 284-7400



Indicate  by check  mark  whether  the  registrant:  (1) has filed  all  reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934 during the  preceding  12 months,  and (2) has been  subject to such filing
requirements for the past 90 days.



                            Yes _X_               No ___









                       This document consists of 16 pages.


<PAGE>



                         POLARIS AIRCRAFT INCOME FUND I

          FORM 10-Q - For the Quarterly Period Ended September 30, 1996




                                      INDEX



Part I.    Financial Information                                        Page

        Item 1.   Financial Statements

           a)  Balance Sheets - September 30, 1996 and
               December 31, 1995..........................................3

           b)  Statements of Operations - Three and Nine Months
               Ended September 30, 1996 and 1995..........................4

           c)  Statements of Changes in Partners' Capital
               (Deficit) - Year Ended December 31, 1995
               and Nine Months Ended September 30, 1996...................5

           d)  Statements of Cash Flows - Nine Months
               Ended September 30, 1996 and 1995..........................6

           e)  Notes to Financial Statements..............................7

        Item 2.   Management's Discussion and Analysis of
                  Financial Condition and Results of Operations..........12



Part II.   Other Information

        Item 1.   Legal Proceedings......................................14

        Item 5.   Other Information......................................15

        Item 6.   Exhibits and Reports on Form 8-K.......................15

        Signature .......................................................16

                                        2

<PAGE>



                          Part 1. Financial Information
                          -----------------------------

Item 1.    Financial Statements

                         POLARIS AIRCRAFT INCOME FUND I

                                 BALANCE SHEETS
                                   (Unaudited)

                                                    September 30,  December 31,
                                                        1996           1995
                                                        ----           ----
ASSETS:

CASH AND CASH EQUIVALENTS                          $  9,733,727    $  9,807,315

RENT AND OTHER RECEIVABLES, net of
   allowance for credit losses of $0 in 1996 and
   $811,131 in 1995                                      44,774          32,863

NOTES RECEIVABLE, net of  allowance for
   credit losses of $144,884 in 1995                    633,222       1,040,505

AIRCRAFT, net of accumulated depreciation of
   $20,109,279 in 1996 and $19,166,733 in 1995        4,465,570       5,408,116
                                                   ------------    ------------

                                                   $ 14,877,293    $ 16,288,799
                                                   ============    ============


LIABILITIES AND PARTNERS' CAPITAL (DEFICIT):

PAYABLE TO AFFILIATES                              $     51,906    $     51,757

ACCOUNTS PAYABLE AND ACCRUED
   LIABILITIES                                          416,525          98,410

LESSEE SECURITY DEPOSITS                                 70,925         145,925

MAINTENANCE RESERVES                                  3,294,841       2,165,714
                                                   ------------    ------------

       Total Liabilities                              3,834,197       2,461,806
                                                   ------------    ------------

PARTNERS' CAPITAL (DEFICIT):
   General Partner                                     (618,144)       (590,280)
   Limited Partners, 168,729 units
     issued and outstanding                          11,661,240      14,417,273
                                                   ------------    ------------

       Total Partners' Capital                       11,043,096      13,826,993
                                                   ------------    ------------

                                                   $ 14,877,293    $ 16,288,799
                                                   ============    ============

        The accompanying notes are an integral part of these statements.

                                        3

<PAGE>


<TABLE>
                           POLARIS AIRCRAFT INCOME FUND I

                              STATEMENTS OF OPERATIONS
                                     (Unaudited)

<CAPTION>
                                       Three Months Ended         Nine Months Ended
                                           September 30,            September 30,
                                           -------------            -------------

                                        1996         1995         1996         1995
                                        ----         ----         ----         ----
<S>                                 <C>          <C>          <C>          <C>
REVENUES:
  Rent from operating leases        $   475,000  $   540,800  $ 1,463,900  $ 1,553,450
  Interest                              126,711      157,648      365,021      417,992
  Claims related to lessee defaults        --        400,000         --        409,698
  Gain on sale of aircraft inventory     89,738         --        346,508         --
  Other                                     468         --         15,033      102,297
                                    -----------  -----------  -----------  -----------

         Total Revenues                 691,917    1,098,448    2,190,462    2,483,437
                                    -----------  -----------  -----------  -----------

EXPENSES:
  Depreciation                          314,182      195,294      942,546      700,882
  Management fees to general partner     24,337       27,039       58,837       77,672
  Provision for credit losses           354,019         --        663,600         --
  Operating                             104,698      500,314      381,048      534,409
  Administration and other               35,351       36,740      116,178      118,003
                                    -----------  -----------  -----------  -----------

         Total Expenses                 832,587      759,387    2,162,209    1,430,966
                                    -----------  -----------  -----------  -----------

NET INCOME (LOSS)                   $  (140,670) $   339,061  $    28,253  $ 1,052,471
                                    ===========  ===========  ===========  ===========

NET INCOME (LOSS) ALLOCATED
  TO THE GENERAL PARTNER            $    (1,407) $     3,391  $   253,351  $   153,930
                                    ===========  ===========  ===========  ===========

NET INCOME (LOSS) ALLOCATED
  TO LIMITED PARTNERS               $  (139,263) $   335,670  $  (225,098) $   898,541
                                    ===========  ===========  ===========  ===========

NET INCOME (LOSS) PER LIMITED
  PARTNERSHIP UNIT                  $     (0.83) $      1.99  $     (1.33) $      5.33
                                    ===========  ===========  ===========  ===========


           The accompanying notes are an integral part of these statements.
</TABLE>
                                            4

<PAGE>



                         POLARIS AIRCRAFT INCOME FUND I

              STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
                                   (Unaudited)


                                         Year Ended December 31, 1995 and
                                       Nine Months Ended September 30, 1996
                                       ------------------------------------

                                       General        Limited
                                       Partner        Partners         Total
                                       -------        --------         -----

Balance, December 31, 1994         $   (578,793)   $ 15,553,044    $ 14,974,251

  Net income                            147,868         298,425         446,293

  Cash distributions to partners       (159,355)     (1,434,196)     (1,593,551)
                                   ------------    ------------    ------------

Balance, December 31, 1995             (590,280)     14,417,273      13,826,993

  Net income (loss)                     253,351        (225,098)         28,253

  Cash distributions to partners       (281,215)     (2,530,935)     (2,812,150)
                                   ------------    ------------    ------------

Balance, September 30, 1996        $   (618,144)   $ 11,661,240    $ 11,043,096
                                   ============    ============    ============

        The accompanying notes are an integral part of these statements.

                                        5

<PAGE>


<TABLE>
                              POLARIS AIRCRAFT INCOME FUND I

                                 STATEMENTS OF CASH FLOWS
                                        (Unaudited)

<CAPTION>
                                                              Nine Months Ended September 30,
                                                              -------------------------------

                                                                    1996             1995
                                                                    ----             ----
<S>                                                            <C>              <C>
OPERATING ACTIVITIES:
   Net income                                                  $     28,253     $  1,052,471
   Adjustments to reconcile net income to
     net cash provided by operating activities:
     Depreciation                                                   942,546          700,882
     Net provision for credit losses                               (471,908)            --
     Changes in operating assets and liabilities:
       Decrease in rent and other receivables                       799,220          232,025
       Increase (decrease) in payable to affiliates                     149          (25,682)
       Increase in accounts payable and accrued liabilities         318,115          490,403
       Increase (decrease) in lessee security deposits              (75,000)          20,925
       Increase in maintenance reserves                           1,129,127          996,363
                                                               ------------     ------------

         Net cash provided by operating activities                2,670,502        3,467,387
                                                               ------------     ------------

INVESTING ACTIVITIES:
   Proceeds from sale of aircraft                                      --            300,000
   Principal payments on note receivable                             68,060          116,288
   Increase in aircraft capitalized costs                              --           (244,000)
   Net proceeds from sale of aircraft inventory                        --            482,836
                                                               ------------     ------------

         Net cash provided by investing activities                   68,060          655,124
                                                               ------------     ------------

FINANCING ACTIVITIES:
   Cash distributions to partners                                (2,812,150)      (1,593,551)
                                                               ------------     ------------

         Net cash used in financing activities                   (2,812,150)      (1,593,551)
                                                               ------------     ------------

CHANGES IN CASH AND CASH
   EQUIVALENTS                                                      (73,588)       2,528,960

CASH AND CASH EQUIVALENTS AT
   BEGINNING OF PERIOD                                            9,807,315        7,486,952
                                                               ------------     ------------

CASH AND CASH EQUIVALENTS AT
   END OF PERIOD                                               $  9,733,727     $ 10,015,912
                                                               ============     ============

              The accompanying notes are an integral part of these statements.
</TABLE>
                                              6

<PAGE>



                         POLARIS AIRCRAFT INCOME FUND I

                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)


1.   Accounting Principles and Policies

In the opinion of management,  the financial statements presented herein include
all  adjustments,  consisting  only of  normal  recurring  items,  necessary  to
summarize fairly Polaris Aircraft Income Fund I's (the Partnership's)  financial
position and results of operations.  The financial statements have been prepared
in accordance with the  instructions  of the Quarterly  Report to the Securities
and  Exchange  Commission  (SEC) Form 10-Q (Form 10-Q) and do not include all of
the information and note disclosures  required by generally accepted  accounting
principles.  These  statements  should be read in conjunction with the financial
statements  and notes thereto for the years ended  December 31, 1995,  1994, and
1993  included in the  Partnership's  1995 Annual Report to the SEC on Form 10-K
(Form 10-K).

Aircraft and  Depreciation  - The aircraft are recorded at cost,  which includes
acquisition costs. Depreciation to an estimated residual value is computed using
the straight-line  method over the estimated economic life of the aircraft which
was originally estimated to be 12 years. Depreciation in the year of acquisition
was calculated based upon the number of days that the aircraft were in service.

The Partnership periodically reviews the estimated realizability of the residual
values at the projected end of each aircraft's  economic life based on estimated
residual  values  obtained from  independent  parties which provide  current and
future estimated  aircraft values by aircraft type. For any downward  adjustment
in estimated  residual  value or decrease in the  projected  remaining  economic
life, the depreciation expense over the projected remaining economic life of the
aircraft is increased.

If the projected net cash flow for each aircraft (projected rental revenue,  net
of management fees, less projected maintenance costs, if any, plus the estimated
residual  value) is less than the carrying value of the aircraft,  an impairment
loss is  recognized.  Pursuant to Statement of  Financial  Accounting  Standards
(SFAS) No. 121, as discussed  below,  measurement of an impairment  loss will be
based on the "fair value" of the asset as defined in the statement.

Capitalized  Costs -  Aircraft  modification  and  maintenance  costs  which are
determined  to increase  the value or extend the useful life of the aircraft are
capitalized  and  amortized  using the  straight-line  method over the estimated
useful  life of the  improvement.  These  costs  are also  subject  to  periodic
evaluation as discussed above.

Financial  Accounting  Pronouncements  - SFAS No. 107,  "Disclosures  about Fair
Value of Financial  Instruments,"  requires the Partnership to disclose the fair
value of financial  instruments.  Cash and cash  equivalents  is stated at cost,
which  approximates  fair  value.  The  fair  value of the  Partnership's  notes
receivable is estimated by discounting future estimated cash flows using current
interest  rates at which similar  loans would be made to borrowers  with similar
credit ratings and remaining  maturities.  The carrying value of the maintenance
cost-sharing  note receivable from Nations Air Express,  Inc.  (Nations Air), as
discussed in Note 4,  approximates  its estimated fair value. The carrying value
of the engine finance sale note receivable  discussed in Note 2 approximates the
estimated fair value of the collateral.

The  Partnership  adopted  SFAS  No.  121,  "Accounting  for the  Impairment  of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of," as of January 1,

                                        7

<PAGE>


1996. This statement  requires that long-lived  assets and certain  identifiable
intangibles to be held and used by an entity be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable.  The Partnership  estimates that this pronouncement will
not have a material impact on the Partnership's financial position or results of
operations unless events or circumstances  change that would cause projected net
cash flows to be adjusted.  No impairment loss was recognized by the Partnership
during the first three quarters of 1996.


2.   Viscount Air Services, Inc. (Viscount) Default and Bankruptcy Filing

On January 24, 1996,  Viscount filed a petition for protection  under Chapter 11
of the United States  Bankruptcy Code in the United States  Bankruptcy  Court in
Tucson,  Arizona. In April 1996, GE Capital Aviation Services,  Inc. (GECAS), on
behalf of the Partnership,  First Security Bank, National Association  (formerly
known  as  First  Security  Bank  of  Utah,  National  Association)  (FSB),  the
owner/trustee  under  the  Partnership's  leases  with  Viscount  (the  Leases),
Viscount,  certain guarantors of Viscount's  indebtedness and others executed in
April 1996 a  Compromise  of Claims and  Stipulation  under  Section 1110 of the
Bankruptcy  Code  (the  Compromise  and  Stipulation),  which  was  subsequently
approved by the Bankruptcy  Court. The Compromise and Stipulation  provided that
in the event that  Viscount  failed to promptly and timely  perform its monetary
obligations under the Leases and the Compromise and Stipulation, without further
order of the Bankruptcy Court,  GECAS would be entitled to immediate  possession
of the aircraft for which Viscount  failed to perform and Viscount would deliver
such aircraft and all records related thereto to GECAS.

GECAS agreed to a rescheduling of Viscount's  September 1996 rent obligations to
allow Viscount to make a 25% payment on September 3, 1996,  with any defaults to
be cured on or before  September  6, 1996.  The  remainder  of the rents and all
maintenance  reserve obligations were to be paid on September 10, 1996, with any
defaults to be cured on or before  September  13, 1996.  Viscount  agreed to the
proposed  cure dates and waived  any  requirement  for a notice of default to be
sent.  Viscount  failed to make the rent and  maintenance  reserve  payments  on
September  10, 1996 and  asserted  that it was  entitled to various  credits and
offsets with respect to such obligations.  GECAS disputed Viscount's  assertions
and notified Viscount that it was in default under the Leases and the Compromise
and  Stipulation.  On September 18, 1996,  GECAS (on behalf of the  Partnership,
Polaris  Holding  Company,  Polaris  Aircraft  Income Fund II, Polaris  Aircraft
Income Fund IV and Polaris Aircraft Investors XVIII) (collectively,  the Polaris
Entities) and Viscount entered into a Stipulation and Agreement (the Stipulation
and Agreement) by which Viscount agreed to voluntarily return all of the Polaris
Entities'  aircraft and  engines,  turn over  possession  of the majority of its
aircraft parts inventory, and cooperate with GECAS in the transition of aircraft
equipment and maintenance, in exchange for which, upon Bankruptcy Court approval
of the  Stipulation and Agreement,  the Polaris  Entities would waive their pre-
and post-petition claims against Viscount for amounts due and unpaid.

The  Stipulation  and  Agreement  provides that upon the return and surrender of
possession of the Partnership's  three airframes and eight engines (two of which
were spare engines), Viscount's rights and interests therein shall terminate. As
of September 13, 1996, Viscount had returned (or surrendered  possession of) two
of the Partnership's  airframes and seven of the Partnership's  engines.  One of
the returned airframes  (together with one installed engine) is currently in the
possession of and being  operated by Nations Air, with whom the  Partnership  is
currently  negotiating the terms of a potential  direct lease.  Six of the seven
returned  engines are in the  possession of certain  maintenance  facilities and
will require  maintenance work in order to be made operable.  Viscount  returned
the  Partnership's  remaining  airframe and one  installed  engine on October 1,
1996, as discussed in Note 7.


                                        8

<PAGE>



GECAS,  on  behalf of the  Polaris  Entities,  is  evaluating  the  spare  parts
inventory to which  Viscount  relinquished  possession in order to determine its
condition  and  value,  the  portion  allocable  to  the  Partnership,  and  the
Partnership's  alternatives  for the use and/or  disposition  of such  parts.  A
significant  portion of the spare parts inventory is currently in the possession
of third party  maintenance and repair  facilities  with whom GECAS  anticipates
that it will need to negotiate for the repair and/or return of these parts.

The Stipulation and Agreement also provides that the Polaris Entities, GECAS and
FSB shall release any and all claims  against  Viscount,  Viscount's  bankruptcy
estate, and the property of Viscount's  bankruptcy estate,  effective upon entry
of a final  non-appealable  court order approving the Stipulation and Agreement.
The Bankruptcy  Court approved the Stipulation and Agreement on October 23, 1996
as discussed in Note 7.

Viscount's affiliates, Rock-It Cargo USA, Inc. and Riverhorse Investments, Inc.,
assumed Viscount's engine finance sale note to the Partnership as provided under
the  Compromise  and  Stipulation.  Payments are  scheduled to begin October 31,
1996. The note balance was $455,685 plus accrued  interest at September 30, 1996
and December 31, 1995.

As  discussed  in the  Partnership's  June 30, 1996 Form 10-Q,  the  Partnership
recorded  allowances  for credit losses of  approximately  $1.25 million for the
aggregate  unsecured  receivables from Viscount.  The line of credit,  which was
advanced  to  Viscount  in 1994,  was, in  accordance  with the  Compromise  and
Stipulation, secured by certain of Viscount's trade receivables and spare parts.
The  Stipulation  and  Agreement   releases  the  Partnership's   claim  against
Viscount's  trade  receivables.   As  a  result,  the  Partnership  recorded  an
additional  allowance for credit  losses of  approximately  $354,000  during the
third quarter of 1996,  representing  Viscount's outstanding balance of the line
of credit and accrued  interest.  Payments  received by the Partnership from the
sale of the spare aircraft parts (as discussed  above), if any, will be recorded
as revenue when received.  The  Stipulation  and Agreement  provides that,  upon
entry of a final  non-appealable court order approving it, the Partnership would
waive its pre- and post-petition claims against Viscount for all amounts due and
unpaid. As a result, the Partnership  considers all receivables from Viscount to
be  uncollectible  and has  written-off,  during the third quarter of 1996,  all
notes, rents and interest receivable balances from Viscount.

The  Partnership  has  evaluated  the  condition of the returned  equipment  and
current  market  conditions  in order to  determine  the  cost of  placing  such
equipment in airworthy  condition and to determine whether such equipment should
be  marketed  for  sale  or  re-lease.   The  Partnership  estimates  that  very
substantial maintenance and refurbishment costs will be required with respect to
the re-lease of any equipment  returned to the  Partnership.  To remarket all of
the three aircraft for re-lease,  maintenance and  refurbishment  costs may well
exceed an estimated $3.2 million.  A portion of these costs would likely be paid
from the Partnership's current maintenance reserves. The balance would likely be
paid from the Partnership's  cash reserves and would be capitalized or expensed.
Alternatively,  with  respect to a sale of any of the  Partnership's  equipment,
such sale  would  likely  be made on an "as is,  where is"  basis,  without  the
Partnership  incurring  substantial  maintenance  costs.  As  noted  above,  the
Partnership is currently  negotiating  with Nations Air the terms of a potential
direct lease of the Partnership's  aircraft Nations Air is currently  operating.
The  Partnership  estimates  that a sale of the remaining two aircraft and spare
engines on an "as is, where is" basis would maximize the economic return on this
equipment to the Partnership.

Viscount's  failure to perform its financial  obligations to the Partnership has
had a material  adverse effect on the  Partnership's  financial  position.  As a
result of Viscount's  defaults and Chapter 11 bankruptcy filing, the Partnership
has  incurred  legal costs of  approximately  $375,000,  which are  reflected in
operating  expense in the  Partnership's  statement of  operations  for the nine
months ended September 30, 1996.

                                        9

<PAGE>




3.   CanAir Cargo Ltd. (CanAir) Payment Deferral

CanAir has been allowed to defer certain rent and maintenance  reserve  payments
due the  Partnership.  The deferred rents,  which  aggregated  $60,000,  and the
deferred maintenance reserve payments,  which aggregated  approximately $50,000,
are being repaid by CanAir with  interest at a rate of 11.25% per annum  through
May 1997.  The  Partnership  has received all scheduled  deferred  payments from
CanAir through September 30, 1996.


4.   Nations Air Note Receivable

As discussed in the Form 10-K, the  Partnership  and Nations Air agreed to share
in the cost of certain  maintenance work on the aircraft formerly  sub-leased by
Nations Air. The  Partnership  loaned Nations Air its portion of the maintenance
cost of $264,108 to be repaid in twelve monthly installments, with interest at a
variable rate, beginning in November 1995. As of September 30, 1996, Nations Air
was five months delinquent on its maintenance  cost-sharing note payments to the
Partnership. The balance of the note, which was due in full in October 1996, has
not currently  been paid by Nations Air as discussed in Note 7. The  Partnership
currently  classifies  this note  receivable  as  impaired  due to this  payment
delinquency.  However,  the Partnership believes that, as of September 30, 1996,
this note is  collectible  and has not recorded any  allowance for credit losses
for this note. As of September 30, 1996, the balance of the note  receivable was
$177,537 plus accrued interest.


5.   Disassembly of Aircraft

As  discussed  in the Form 10-K,  certain  of the  Partnership's  aircraft  were
disassembled  and their component parts were sold. Net proceeds  received by the
Partnership from the sale of these component parts were applied against aircraft
inventory  until 1995 when the book value of the inventory was fully  recovered.
Net proceeds of $89,738 and $346,508  received  during the three and nine months
ended  September  30,  1996,  respectively,  were  recorded  as  gain on sale of
aircraft inventory.


6.   Related Parties

Under the Limited Partnership  Agreement,  the Partnership paid or agreed to pay
the following  amounts for the current quarter to the general  partner,  Polaris
Investment  Management  Corporation,  in connection  with  services  rendered or
payments made on behalf of the Partnership:

                                          Payments for the
                                          Three Months Ended      Payable at
                                          September 30, 1996  September 30, 1996
                                          ------------------  ------------------

Aircraft Management Fees                       $ 61,161           $  1,484
Out-of-Pocket Administrative Expense
   Reimbursement                                169,855             49,450
Out-of-Pocket Operating and
   Remarketing Expense Reimbursement             28,311                972
                                               --------           --------

                                               $259,327           $ 51,906
                                               ========           ========



                                       10

<PAGE>



7.   Subsequent Events

Viscount  Stipulation and Agreement - As discussed in Note 2, Viscount  returned
the one remaining  Partnership  airframe and one installed  engine on October 1,
1996  pursuant  to the  Stipulation  and  Agreement.  On October 23,  1996,  the
Bankruptcy  Court approved the  Stipulation  and Agreement.  The  Partnership is
currently  negotiating with Nations Air the terms of a potential direct lease of
the Partnership's  aircraft Nations Air is currently operating.  The Partnership
is currently remarketing the remaining two aircraft and spare engines for sale.

Nations Air Payment  Delinquency  - As discussed in Note 4, as of September  30,
1996,  Nations Air was five months  delinquent on its  maintenance  cost-sharing
monthly note  payments to the  Partnership.  In addition,  a balloon  payment of
approximately  $82,000,  which was due on October 1, 1996 has not currently been
paid by Nations Air.

Under the prior  Nations Air sublease with  Viscount,  Nations Air paid rent and
maintenance  reserve  payments  directly  to  the  Partnership.  These  payments
continued  through  September  1996.  Nations Air has not currently  paid to the
Partnership  the  rent and  maintenance  reserve  payments  due in  October  and
November  1996  which  aggregate  approximately  $261,000.  The  Partnership  is
currently   in   discussions   with  Nations  Air  to  resolve   these   payment
delinquencies,  which  aggregate  approximately  $443,000,  and to negotiate the
terms of a potential direct lease of the Partnership's aircraft.





                                       11

<PAGE>



Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations

Polaris Aircraft Income Fund I (the  Partnership) owns a portfolio of three used
Boeing  737-200  commercial  jet  aircraft,   five  spare  engines  and  certain
inventoried aircraft parts out of its original portfolio of eleven aircraft. The
three aircraft were returned to the  Partnership by Viscount Air Services,  Inc.
(Viscount),  as  discussed  below.  One of these  aircraft  is  currently  being
operated by Nations Air Express, Inc. (Nations Air), its former sub-lessee.  The
Partnership  is  negotiating a potential  direct lease with Nations Air for this
aircraft.  The two additional  aircraft returned by Viscount are currently being
remarketed for sale. The Partnership  leased three spare engines to CanAir Cargo
Ltd.  (CanAir).  In  addition,  the  Partnership  transferred  four  aircraft to
aircraft  inventory during 1992 and 1993. These aircraft have been  disassembled
for sale of their component  parts.  Two engines,  which were formerly leased to
Viscount,  were  returned to the  Partnership  in May and  October  1996 and are
currently being  remarketed for sale. One additional  engine from these aircraft
was sold to Viscount during 1995. Viscounts affiliates,  Rock-It Cargo USA, Inc.
(Rock-It  Cargo)  and  Riverhorse  Investments,  Inc.  (Riverhorse  Investments)
assumed the note for this engine sale. The  Partnership  has sold three aircraft
and one  airframe  from  its  original  aircraft  portfolio:  a  Boeing  737-200
Convertible  Freighter  in 1990, a McDonnell  Douglas  DC-9-10 in 1992, a Boeing
737-200 in 1993 and the airframe from a Boeing 737-200 aircraft in April 1995.


Remarketing Update

As discussed in Note 2 to the  financial  statements,  in September  and October
1996,  Viscount returned or surrendered  possession of the  Partnership's  three
aircraft and two spare engines.  The Partnership is currently  negotiating  with
Nations Air the terms of a potential direct lease of the Partnership's  aircraft
Nations Air is currently operating. The Partnership estimates that a sale of the
remaining  two  aircraft  and spare  engines on an "as is, where is" basis would
maximize the economic return on this equipment to the Partnership.  As a result,
the Partnership is currently remarketing this equipment for sale.


Partnership Operations

The Partnership recorded a net loss of $140,670 or $0.83 per limited partnership
unit, for the three months ended  September 30, 1996,  compared to net income of
$339,061 or $1.99 per unit for the same period in 1995. The Partnership recorded
net income of $28,253, or an allocated net loss of $1.33 per limited partnership
unit,  for the nine months ended  September 30, 1996,  compared to net income of
$1,052,471  or  $5.33  per unit for the same  period  in 1995.  The  significant
decline in operating  results  during the three and nine months ended  September
30, 1996,  as compared to the same periods in 1995,  is primarily  the result of
higher  revenues in 1995,  combined with provisions for credit losses which were
recorded by the  Partnership  during 1996 for certain  rent,  loan and  interest
receivables  from Viscount,  and legal expenses  incurred during the first three
quarters of 1996  related to the  Viscount  defaults  and Chapter 11  bankruptcy
filing.

During the third quarter of 1995, the Partnership recognized as revenue $400,000
that it received from the insurers of the  Partnership's  former lessee American
Air Lease for payment of insurance proceeds.

The  Partnership  recorded an allowance for credit losses of $309,581 during the
first quarter of 1996 for certain unpaid rent and accrued  interest  receivables
from Viscount as a result of Viscount's  default on certain  obligations due the

                                       12

<PAGE>



Partnership  and  Viscount's   subsequent  bankruptcy  filing.  The  Partnership
recorded an allowance for credit losses of $354,019  during the third quarter of
1996 for  Viscount's  outstanding  balance  of the line of  credit  and  accrued
interest.   In  addition,   the   Partnership   recognized   legal  expenses  of
approximately   $375,000  related  to  the  Viscount  defaults  and  Chapter  11
bankruptcy  filing.  These legal costs are included in operating  expense in the
Partnership's  statement of operations  for the nine months ended  September 30,
1996.


Liquidity and Cash Distributions

Liquidity - As discussed in Note 2 to the financial  statements  and in Part II,
Item 1, the Viscount  Stipulation and Agreement  specifies,  among other things,
that the Partnership  waive its pre- and  post-petition  claims against Viscount
for amounts due and unpaid. As a result, the Partnership  recorded an additional
allowance  for  credit  losses of  $354,019  during  the third  quarter of 1996,
representing  Viscount's  outstanding  balance of the line of credit and accrued
interest. In addition,  the Partnership currently considers all receivables from
Viscount to be uncollectible  and has  written-off,  during the third quarter of
1996, all notes, rents and interest receivable balances from Viscount. Viscounts
affiliates, Rock-It Cargo and Riverhorse Investments, assumed the engine finance
sale note from Viscount.  Rock-It Cargo and Riverhorse Investments agreed to pay
the note balance,  including past due interest, in 45 installments  beginning on
October 31, 1996.

As  discussed  in  Notes 4 and 7 to the  financial  statements,  Nations  Air is
currently   delinquent  on  its   maintenance   cost-sharing   payments  to  the
Partnership.  In addition,  under the prior Nations Air sublease with  Viscount,
Nations  Air  paid  rent  and  maintenance  reserve  payments  directly  to  the
Partnership.  These payments  continued through September 1996.  Nations Air has
not currently paid to the Partnership the rent and maintenance  reserve payments
due in October and November  1996.  The  Partnership is currently in discussions
with  Nations  Air to  resolve  these  payment  delinquencies,  which  aggregate
approximately  $443,000,  and to negotiate the terms of a potential direct lease
of the Partnership's aircraft.

The Partnership  receives maintenance reserve payments from its lessees that may
be reimbursed  to the lessee or applied  against  certain costs  incurred by the
Partnership  for  maintenance  work performed on the  Partnership's  aircraft or
engines,  as specified in the leases.  Maintenance reserve balances remaining at
the  termination of the lease,  if any, may be used by the Partnership to offset
future  maintenance  expenses  or  recognized  as revenue.  The net  maintenance
reserves balances aggregate $3,294,841 as of September 30, 1996.

The Partnership's cash reserve balance is being retained to cover the costs that
the  Partnership  may incur as a result of the Viscount  default and bankruptcy,
including potential aircraft maintenance, remarketing and transition costs.

Cash Distributions - Cash distributions to limited partners were $2,530,935,  or
$15.00 per limited  partnership  unit and $1,434,196,  or $8.50 per unit for the
first quarters of 1996 and 1995,  respectively.  The timing and amount of future
cash  distributions  to  partners  are not yet  known and will  depend  upon the
Partnership's future cash requirements, including the costs that may be incurred
to remarket the former  Viscount  aircraft and spare  engines and the receipt of
rental payments from CanAir.

                                       13

<PAGE>




                           Part II. Other Information
                           --------------------------


Item 1.   Legal Proceedings

As  discussed  in Item 3 of Part I of  Polaris  Aircraft  Income  Fund  I's (the
Partnership) 1995 Annual Report to the Securities and Exchange  Commission (SEC)
on Form 10-K (Form 10-K) and in Item 1 of Part II of the Partnership's Quarterly
Report to the SEC on Form 10-Q (Form 10-Q) for the periods  ended March 31, 1996
and June 30, 1996,  there are a number of pending legal  actions or  proceedings
involving  the  Partnership.  Except  as  described  below,  there  have been no
material developments with respect to any such actions or proceedings during the
period covered by this report.

Viscount Air Services,  Inc. (Viscount)  Bankruptcy - As previously reported, GE
Capital  Aviation  Services  (GECAS),  on  behalf of the  Partnership  and other
entities, and Viscount and its affiliates, executed an agreement (Compromise and
Stipulation)  regarding,  among other things,  resumption of payments  under the
leases. The Compromise and Stipulation,  which was subsequently  approved by the
Bankruptcy  Court,  also provided  that if Viscount  failed to meet its monetary
obligations,  the Partnership  would be entitled to immediate  possession of the
aircraft for which  Viscount  failed to perform,  and Viscount  would deliver to
GECAS all records  related  thereto,  without  further  order of the  Bankruptcy
Court.

GECAS agreed to a rescheduling  of Viscount's  September rent  obligations,  but
Viscount was  ultimately  unable to meet its cure  obligations  on or before the
agreed-upon  cure date of September 13, 1996.  On September 18, 1996,  GECAS (on
behalf of the  Partnership  and other  entities)  and  Viscount  entered  into a
Stipulation and Agreement by which Viscount agreed to voluntarily  return all of
the Partnership's  aircraft and engines, turn over possession of the majority of
its aircraft  parts  inventory,  and cooperate  with GECAS in the  transition of
aircraft equipment and maintenance, in exchange for which, upon Bankruptcy Court
approval of the Stipulation and Agreement, the Partnership would waive its right
to pre- and  post-petition  claims  against  Viscount for amounts due and unpaid
(approximately $1.6 million).

As of  September  13,  1996,  Viscount  surrendered  possession  of  two  of the
Partnership's  aircraft and two spare engines, and on October 1, 1996, the third
aircraft was returned to the Partnership. One of the three aircraft is currently
in the possession of, and is being operated by, Nations Air Express,  Inc., with
whom the Partnership is negotiating a potential direct lease.

Viscount's affiliates, Rock-It Cargo USA, Inc. and Riverhorse Investments, Inc.,
assumed Viscount's obligations under the finance sale note for the spare engine,
and payments began October 31, 1996.

The  Partnership  estimates  that a sale of the remaining two aircraft and spare
engines on an "as is, where is" basis would maximize the economic return on this
equipment  to  the  Partnership.  As a  result,  the  Partnership  is  currently
remarketing this equipment for sale.

Other Proceedings - Item 10 in Part III of the Partnership's  1995 Form 10-K and
Item 1 in Part II of the Partnership's Form 10-Q for the periods ended March 31,
1996 and June 30, 1996 discuss  certain  actions  which have been filed  against
Polaris Investment Management Corporation and others in connection with the sale
of interests in the Partnership and the management of the Partnership.  With the
exception of Novak,  et al v. Polaris  Holding  Company,  et al, (which has been
dismissed,  as discussed in Item 10 of the  Partnership's  1995 Form 10-K) where
the  Partnership  was  named  as  a  defendant  for  procedural  purposes,   the
Partnership is not a party to these actions.  Except as discussed  below,  there

                                       14

<PAGE>


have been no material developments during the period covered by this report with
respect  to  any  of  the  actions  described  in  Item  10 in  Part  III of the
Partnership's  1995  Form 10-K and Item 1 in Part II of the  Partnership's  Form
10-Q for the periods ended March 31, 1996 and June 30, 1996.

Wilson  et al. v.  Polaris  Holding  Company  et al. - On  October  1,  1996,  a
complaint  was filed in the Superior  Court of the State of  California  for the
County of Sacramento by over 500  individual  plaintiffs  who purchased  limited
partnership  units in one or more of Polaris Aircraft Income Funds I through VI.
The  complaint  names  Polaris  Holding   Company,   Polaris   Aircraft  Leasing
Corporation,  Polaris  Investment  Management  Corporation,  Polaris  Securities
Corporation,  Polaris Jet  Leasing,  Inc.,  Polaris  Technical  Services,  Inc.,
General  Electric  Company,  General Electric Capital  Services,  Inc.,  General
Electric Capital Corporation,  GE Capital Aviation Services, Inc. and DOES 1-100
as defendants.  The Partnership has not been named as a defendant. The complaint
alleges   violations   of  state   common  law,   including   fraud,   negligent
misrepresentation, negligence, breach of contract, and breach of fiduciary duty.
The complaint seeks to recover  compensatory  damages and punitive damages in an
unspecified amount, interest and rescission with respect to the Polaris Aircraft
Income Funds sold to plaintiffs.  Defendants time to answer or otherwise respond
to the complaint is November 18, 1996.

B&L  Industries,  Inc. et al. v. Polaris  Holding Company et al. - On August 16,
1996,  defendants filed a motion to dismiss plaintiffs'  amended complaint.  The
motion is returnable on January 16, 1997.

In re Prudential  Securities Inc. Limited  Partnerships  Litigation - The trial,
which was  scheduled  for November 11, 1996,  has not proceeded and no new trial
date has been set.



Item 5.   Other Information

James W.  Linnan  resigned  as  Director  and  President  of Polaris  Investment
Management Corporation effective December 31, 1996. Mr. Linnan's replacement has
not presently been named.  Mr. Linnan will continue to serve in those capacities
through the effective date of his resignation.



Item 6.   Exhibits and Reports on Form 8-K

a)   Exhibits (numbered in accordance with Item 601 of Regulation S-K)

     27. Financial Data Schedule

b)   Reports on Form 8-K

     One report,  dated  September 18, 1996 on Form 8-K, was filed on October 4,
     1996,  pursuant to Item 5 of that form. No financial  statements were filed
     as a part of that report.

                                       15

<PAGE>



                                    SIGNATURE



Pursuant to the  requirements of section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the undersigned thereunto duly authorized.

                                         POLARIS AIRCRAFT INCOME FUND I
                                         (Registrant)
                                         By: Polaris Investment
                                             Management Corporation,
                                             General Partner




        November 12, 1996                By:    /S/Marc A. Meiches
----------------------------------              ------------------
                                                Marc A. Meiches
                                                Chief Financial Officer
                                                (principal financial officer and
                                                principal accounting officer of
                                                Polaris Investment Management
                                                Corporation, General Partner of
                                                the Registrant)

                                       16