SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-QSB

(Mark One)

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

                For the quarterly period ended September 30, 2001

                                       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 number 0-17785

                          Aircraft Income Partners L.P.
              -----------------------------------------------------
             (Exact name of Registrant as specified in its charter)


                       Delaware                            13-3430508
          ----------------------------------      ------------------------------
            (State or other jurisdiction of             (I.R.S. Employer
             incorporation or organization)            Identification No.)


             7 Bulfinch Place, Boston, MA                     02114
         -------------------------------------   -------------------------------
        (Address of principal executive office)             (Zip Code)


        Registrant's telephone number, including area code (617) 570-4600
                                                           ---------------


Indicate by check mark whether 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 (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X   No
                                      ---    ---


                                     1 of 13
<PAGE>


                          AIRCRAFT INCOME PARTNERS L.P.

                         FORM 10-QSB SEPTEMBER 30, 2001
                         PART I - FINANCIAL INFORMATION


ITEM 1.  FINANCIAL STATEMENTS.

BALANCE SHEETS (UNAUDITED)

                                                      SEPTEMBER 30, DECEMBER 31,
                                                          2001         2000
                                                       ----------     ----------
Assets

Cash and cash equivalents ........................     $1,662,804     $1,885,262
Other receivables ................................           --            1,323
                                                       ----------     ----------
     Total Assets ................................     $1,662,804     $1,886,585
                                                       ==========     ==========

LIABILITIES AND PARTNERS' EQUITY

Liabilities:

Accounts payable and accrued expenses ............     $  132,041     $   90,777
                                                       ----------     ----------
       Total Liabilities .........................        132,041         90,777
                                                       ----------     ----------

Commitments and Contingencies

Partners' Equity:

Limited partners' equity (385,805 units
   issued and outstanding) .......................      1,368,863      1,607,404
General partner's equity .........................        161,900        188,404
                                                       ----------     ----------
       Total Partners' Equity ....................      1,530,763      1,795,808
                                                       ----------     ----------
       Total Liabilities and Partners' Equity ....     $1,662,804     $1,886,585
                                                       ==========     ==========


                       See notes to financial statements.

                                     2 of 13
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                          AIRCRAFT INCOME PARTNERS L.P.

                         FORM 10-QSB SEPTEMBER 30, 2001

STATEMENTS OF OPERATIONS (UNAUDITED)
                                                     FOR THE NINE MONTHS ENDED
                                                    ----------------------------
                                                    SEPTEMBER 30,  SEPTEMBER 30,
                                                        2001            2000
                                                     ---------        ---------
Revenues:

     Interest ....................................   $  56,685        $ 199,740
     Other income ................................       8,700             --
                                                     ---------        ---------
       Total revenues ............................      65,385          199,740
                                                     ---------        ---------

Costs and Expenses:

     General and administrative ..................     330,430          291,080
     Operating ...................................        --              8,490
                                                     ---------        ---------
       Total costs and expenses ..................     330,430          299,570
                                                     ---------        ---------

       Net loss ..................................   $(265,045)       $ (99,830)
                                                     =========        =========

Net loss attributable to:

       Limited partners ..........................   $(238,541)       $ (89,847)

       General partner ...........................     (26,504)          (9,983)
                                                     ---------        ---------
                                                     $(265,045)       $ (99,830)
                                                     =========        =========

Net loss per unit of limited partnership
     interest (385,805 units outstanding) ........   $   (0.62)       $   (0.23)
                                                     =========        =========


                       See notes to financial statements.

                                     3 of 13
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                          AIRCRAFT INCOME PARTNERS L.P.

                         FORM 10-QSB SEPTEMBER 30, 2001

STATEMENTS OF OPERATIONS (UNAUDITED)

                                                    FOR THE THREE MONTHS ENDED
                                                    ----------------------------
                                                    SEPTEMBER 30,  SEPTEMBER 30,
                                                       2001            2000
                                                    ---------       ---------
Revenues:

     Interest ....................................  $ 13,926         $ 59,196
     Other income ................................     2,300             --
                                                    --------         --------
       Total revenues ............................    16,226           59,196
                                                    --------         --------
Costs and Expenses:

     General and administrative ..................    52,140           56,487
                                                    --------         --------
       Total costs and expenses ..................    52,140           56,487
                                                    --------         --------
       Net (loss) income .........................  $(35,914)        $  2,709
                                                    ========         ========
Net (loss) income attributable to:

       Limited partners ..........................  $(32,323)        $  2,438
       General partner ...........................    (3,591)             271
                                                    --------         --------
                                                    $(35,914)        $  2,709
                                                    ========         ========
Net (loss) income per unit of limited partnership
     interest (385,805 units outstanding) ........  $  (0.09)        $   0.01
                                                    ========         ========


                       See notes to financial statements.

                                     4 of 13
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                          AIRCRAFT INCOME PARTNERS L.P.

                         FORM 10-QSB SEPTEMBER 30, 2001


STATEMENT OF PARTNERS' EQUITY (UNAUDITED)

                                              LIMITED      GENERAL     TOTAL
                                             PARTNERS'    PARTNER'S   PARTNERS'
                                              EQUITY       EQUITY      EQUITY
                                            ----------    --------   ----------

Balance - January 1, 2001 ...............   $1,607,404    $188,404   $1,795,808

    Net loss ............................     (238,541)    (26,504)    (265,045)
                                            ----------    --------   ----------

Balance - September 30, 2001 ............   $1,368,863    $161,900   $1,530,763
                                            ==========    ========   ==========


                       See notes to financial statements.

                                     5 of 13
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                          AIRCRAFT INCOME PARTNERS L.P.

                         FORM 10-QSB SEPTEMBER 30, 2001
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS (UNAUDITED)
                                                                               FOR THE NINE MONTHS ENDED
                                                                              ----------------------------
                                                                              SEPTEMBER 30,   SEPTEMBER 30,
                                                                                  2001           2000
                                                                              -----------    -----------
<S>                                                                           <C>            <C>
Cash Flows from Operating Activities:

Net loss ..................................................................   $  (265,045)   $   (99,830)

Adjustments to reconcile net loss to net cash used in operating activities:
       Other receivables ..................................................         1,323         34,560
       Accounts payable and accrued expenses ..............................        41,264        (15,535)
                                                                              -----------    -----------

Net cash used in operating activities .....................................      (222,458)       (80,805)
                                                                              -----------    -----------

Cash Flows from Investing Activities:

     Proceeds from sale of aircraft, net ..................................          --          573,982
                                                                              -----------    -----------

Cash provided by investing activities .....................................          --          573,982
                                                                              -----------    -----------

Cash Flows from Financing Activities:

     Distribution to Partners .............................................          --       (4,000,000)
                                                                              -----------    -----------

Cash used in financing activities .........................................          --       (4,000,000)
                                                                              -----------    -----------

Net decrease in cash and cash equivalents .................................      (222,458)    (3,506,823)

Cash and cash equivalents, beginning of period ............................     1,885,262      7,411,200
                                                                              -----------    -----------

Cash and cash equivalents, end of period ..................................   $ 1,662,804    $ 3,904,377
                                                                              ===========    ===========
</TABLE>

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                          AIRCRAFT INCOME PARTNERS L.P.

                         FORM 10-QSB SEPTEMBER 30, 2001

                          NOTES TO FINANCIAL STATEMENTS

1.    INTERIM FINANCIAL INFORMATION

      The accompanying financial statements, footnotes and discussions should be
      read in conjunction with the financial statements, related footnotes and
      discussions contained in the Aircraft Income Partners L.P. (the
      "Partnership") Annual Report on Form 10-K for the year ended December 31,
      2000. The financial information contained herein is unaudited. In the
      opinion of management, all adjustments necessary for a fair presentation
      of such financial information have been included. All adjustments are of a
      normal recurring nature. The balance sheet at December 31, 2000 was
      derived from audited financial statements at such date.

      The results of operations for the three and nine months ended September
      30, 2001 and 2000 are not necessarily indicative of the results to be
      expected for the full year.

2.    CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES

      The general partner of the Partnership, Integrated Aircraft Fund
      Management Corp. ("IAFM"), is indirectly a wholly owned subsidiary of
      Presidio Capital Corp. ("Presidio"). Presidio is indirectly owned by
      NorthStar Capital Investment Corp. ("NorthStar"), a Maryland Corporation,
      subject to the rights of the partners under the Agreement of the Limited
      Partnership ("Partnership Agreement"), Presidio controls the Partnership
      through its indirect ownership of all shares of IAFM.

      On October 21, 1999, Presidio entered into a new Services Agreement with
      AP-PCC III, L.P (the "Agent") pursuant to which the Agent was retained and
      is compensated by Presidio to provide asset management and investor
      relation services to the Partnership and other entities affiliated with
      the Partnership.

      As a result of this agreement, the Agent has the duty to direct the day to
      day affairs of the Partnership, including, without limitation, reviewing
      and analyzing potential sale, financing or restructuring proposals
      regarding the Partnership's assets, preparation of all Partnership
      reports, maintaining Partnership records and maintaining bank accounts of
      the Partnership. The Agent is not permitted, however, without the consent
      of Presidio, or as otherwise required under the terms of the Partnership
      Agreement to, among other things, cause the Partnership to acquire an
      asset or file for bankruptcy. The General Partner does not believe that
      this relationship has or will have a material effect on the operations of
      the Partnership

      IAFM is entitled to a 10 percent interest in the net income, loss and
      distributions from operations and cash from sales. No distributions were
      paid with respect to the nine months ended September 30, 2001.

      IAFM received $400,000 in distributions for the nine months ended
      September 30, 2000.

      In addition, IAFM receives the management fee provided for in the
      Partnership Agreement which is equal to 4% of Distributions of Cash from
      Operations from Operating Leases and 2% of Distributions of Cash from
      Operations from Full Payout Leases, as such terms are defined in the
      Limited Partnership Agreement. In conjunction with such services, IAFM did
      not earn any management fees for the nine months ended September 30, 2001
      and 2000.


                                     7 of 13
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                          AIRCRAFT INCOME PARTNERS L.P.

                         FORM 10-QSB SEPTEMBER 30, 2001

                          NOTES TO FINANCIAL STATEMENTS

3.    AIRCRAFT SALES

      On January 19, 2000, the Partnership sold to an unaffiliated third party
      its sole remaining aircraft, a McDonnell Douglas DC9-30, for gross
      proceeds of $650,000. Costs associated with the sale amounted to
      approximately $77,000. At the time of the sale, the aircraft had a net
      carrying value of approximately $574,000.

4.    DISTRIBUTION TO PARTNERS

      During February 2000, the Partnership declared and paid a $4,000,000
      distribution to partners of record as of January 1, 2000. Of this amount,
      the limited partners collectively received $3,600,000 or $9.33 per Unit.
      No distributions were made for the nine months ended September 30, 2001.

5.    COMMITMENTS AND CONTINGENCIES

      Continental Airlines, Inc.

      During 1997, the leases of three McDonnell Douglas Model DC9-32 aircraft
      owned by the Partnership and leased to Continental Airlines, Inc.
      ("Continental") were extended to September 1998 (2 aircraft) and December
      1998 (1 aircraft) at a rental of $52,500 per month, per aircraft. Two of
      the aircrafts were returned in September 1998 and the third aircraft was
      returned in December 1998.

      At the end of the lease, the Partnership conducted inspections of the
      aircraft to ascertain whether the return conditions of the lease were
      satisfied. On May 5, 1999, First Security Bank, N.A., acting not in its
      individual capacity, but solely as trustee under a trust agreement in
      which the Partnership is beneficiary, filed a complaint against
      Continental in the United States District Court, Southern District of New
      York.

      The complaint seeks damages in an amount to be determined at trial but
      believed to be in excess of $3,000,000 arising out of Continental's i)
      failure to return the three DC9-32 aircraft in the return condition
      required by the lease and ii) failure to make a rent payment provided for
      in the lease. Continental has filed an answer denying the allegations in
      the complaint. The parties are currently in the expert discovery stage.
      Continental's motion for summary judgment on a substantial portion of the
      Registrant's claims was recently denied by the court.

      Two of the Partnership's DC9-32 aircraft were sold during 1999 and the
      remaining aircraft was sold on January 19, 2000.


                                     8 of 13
<PAGE>


                          AIRCRAFT INCOME PARTNERS L.P.

                         FORM 10-QSB SEPTEMBER 30, 2001

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS

      The matters discussed in this Form 10-QSB contain certain forward-looking
      statements and involve risks and uncertainties (including changing market
      conditions, competitive and regulatory matters, etc.) detailed in the
      disclosure contained in this Form 10-QSB and the other filings with the
      Securities and Exchange Commission made by the Partnership from time to
      time. The discussion of the Partnership's liquidity, capital resources and
      results of operations, including forward-looking statements pertaining to
      such matters, does not take into account the effects of any changes to the
      Partnership's operations. Accordingly, actual results could differ
      materially from those projected in the forward-looking statements as a
      result of a number of factors, including those identified herein.

      This item should be read in conjunction with the financial statements and
      other items contained elsewhere in the report.

      Liquidity and Capital Resources

      The Partnership sold its remaining aircraft on January 19, 2000. In this
      regard, once the outstanding legal issue against Continental Airlines,
      Inc. is settled (see below), it is anticipated that the general partner
      will prepare a final accounting, commence the dissolution and termination
      of the Partnership, and make a final distribution to the partners.

      The Partnership's level of liquidity based upon cash and cash equivalents
      decreased by $222,458 during the nine months ended September 30, 2001, as
      compared to December 31, 2000. The decrease is due to cash used in
      operations. At September 30, 2001, the Partnership had $1,662,804 in cash
      and cash equivalents which had been invested primarily in money market
      mutual funds.

      In November 1991, in connection with its reorganization under the United
      States Bankruptcy Code, Continental Airlines, Inc. ("Continental")
      rejected the leases of the three Boeing 727-100 aircraft owned by the
      Partnership, which had been out of service since 1991. Due to the
      condition and the related market for such aircraft, the Partnership
      provided aggregate allowances for equipment impairment of approximately
      $6,483,000. During 1993, the Partnership sold all three Boeing 727-100
      aircrafts. The Partnership had retained its rights pursuant to a proof of
      claim and an administrative claim filed in the Continental Bankruptcy case
      with respect to such aircraft.

      During 1997, the leases of three McDonnell Douglas Model DC9-32 aircrafts
      owned by the Partnership and leased to Continental were extended to
      September 1998 (2 aircrafts) and December 1998 (1 aircraft) at a rental of
      $52,500 per month, per aircraft. Two of the aircraft were returned in
      September 1998 and the third aircraft was returned in December 1998.


                                     9 of 13
<PAGE>

                          AIRCRAFT INCOME PARTNERS L.P.

                         FORM 10-QSB SEPTEMBER 30, 2001

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS (CONTINUED)

      Liquidity and Capital Resources (Continued)

      At the end of the lease, the Partnership conducted inspections of the
      aircraft to ascertain whether the return conditions of the lease were
      satisfied. On May 5, 1999, First Security Bank, N.A., acting not in its
      individual capacity, but solely as trustee under a trust agreement in
      which the Partnership is beneficiary, filed a complaint against
      Continental in the United States District Court, Southern District of New
      York. The complaint seeks damages in an amount to be determined at trial,
      but believed to be in excess of $3,000,000, arising out of Continental's
      i) failure to return the three DC9-32 aircraft in the return condition
      required by the lease and ii) failure to make a rent payment provided for
      in the lease. Continental has filed an answer denying the allegations in
      the complaint. Discovery in the matter including depositions is ongoing.

      Two of the Partnership's DC9-32 aircraft were sold during 1999 and the
      remaining aircraft was sold on January 19, 2000.

      Recently Issued Accounting Standards

      The Financial Accounting Standards Board issued SFAS No. 137, "Accounting
      for Derivative Instruments and Hedging Activities - Deferral of the
      Effective Date of SFAS No. 133." The Statement deferred for one year the
      effective date of SFAS No. 133, "Accounting for Derivative Instruments and
      Hedging Activities". The Statement requires companies to recognize all
      derivatives on the balance sheet as assets or liabilities, measured at
      fair value. Gains or losses resulting from changes in the values of those
      derivatives would be accounted for depending on the use of the derivative
      and whether they qualify for hedge accounting. This Statement is effective
      for fiscal years beginning after June 15, 2000. The Partnership believes
      that the effect of SFAS 133 on its financial statements will be
      immaterial.

      In July 2001, the FASB issued SFAS No. 141 "Business Combinations". SFAS
      No. 141 requires that all business combinations be accounted for under the
      purchase method of accounting. SFAS No. 141 also changes the criteria for
      the separate recognition of intangible assets acquired in a business
      combination. SFAS No. 141 is effective for all business combinations
      initiated after June 30, 2001. This statement will not affect the
      Partnership's financial statements.

      In July 2001, the FASB issued SFAS No. 142 "Goodwill and Other Intangible
      Assets". SFAS No. 142 addresses accounting and reporting for intangible
      assets acquired, except for those acquired in a business combination. SFAS
      No. 142 presumes that goodwill and certain intangible assets have
      indefinite useful lives. Accordingly, goodwill and certain intangibles
      will not be amortized but rather will be tested at least annually for
      impairment. SFAS No. 142 also addresses accounting and reporting for
      goodwill and other intangible assets subsequent to their acquisition. SFAS
      No. 142 is effective for fiscal years beginning after December 15, 2001.
      This statement will not have a material effect on the Partnership's
      financial statements.


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<PAGE>


                          AIRCRAFT INCOME PARTNERS L.P.

                         FORM 10-QSB SEPTEMBER 30, 2001

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS (CONTINUED)

      Recently Issued Accounting Standards (Continued)

      In August 2001, the FASB issued SFAS No. 144, "Accounting for the
      Impairment or Disposal of Long-Lived Assets," which addresses financial
      accounting and reporting for the impairment or disposal of long-lived
      assets. This statement supersedes SFAS No. 121, "Accounting for the
      Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
      Of" and the accounting and reporting provisions of APB Opinion No. 30,
      "Reporting the Results of Operations -Reporting the Effects of a Disposal
      of a Business and Extraordinary, Unusual and Infrequently Occurring Events
      and Transactions," for the disposal of a segment of a business. This
      Statement also amends ARB No. 51, "Consolidated Financial Statements," to
      eliminate the exception to consolidation for a subsidiary for which
      control is likely to be temporary. SFAS No. 144 is effective for fiscal
      years beginning after December 15, 2001, and interim periods within those
      fiscal years. The provisions of this Statement generally are to be applied
      prospectively. The Partnership has not evaluated the effect of this
      statement, however, it is not expected that this statement will have a
      material effect on the Partnership's results of operations.

      Results of Operations

      Net loss increased by $165,215 for the nine month period ended September
      30, 2001 compared with the same period in the prior year, due to a
      decrease in revenues and increase in costs and expenses. Net loss
      increased by $38,623 for the three month period ended September 30, 2001,
      as compared with the same period in the prior year, due to a decrease in
      revenues that more than offset a decrease in costs and expenses.

      Revenues decreased by $134,355 for the nine month period ended September
      30, 2001 compared with the same period in the prior year principally due
      to a decrease in interest income as a result of lower reserves available
      for investment due to the distributions made to partners during 2000.
      Other income increased due to an increase in transfer fees.

      Costs and expenses increased by $30,860 for the nine month period ended
      September 30, 2001 compared to the corresponding period of the prior year
      principally due to an increase in legal fees associated with the
      Continental Airlines matter, which is included in general and
      administrative expenses. Operating expense declined due to the sale of the
      remaining asset in January 2000.

      QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

      The Partnership is not subject to market risk as its cash and cash
      equivalents are invested in short term money market mutual funds. The
      Partnership has no loans outstanding.


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                          AIRCRAFT INCOME PARTNERS L.P.

                         FORM 10-QSB SEPTEMBER 30, 2001

PART II - OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

         (a) Reports on Form 8-K:

             No reports on Form 8-K were filed during the period ended September
             30, 2001.


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                          AIRCRAFT INCOME PARTNERS L.P.

                         FORM 10-QSB SEPTEMBER 30, 2001

                                   SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                        AIRCRAFT INCOME PARTNERS L.P.

                        BY:  Integrated Aircraft Fund Management Corp.
                             -----------------------------------------
                              General Partner

                           BY: /s/ Michael L. Ashner
                               ---------------------------
                                Michael L. Ashner
                                President and Director
                                (Principal Executive Officer)

                           BY: /s/ Carolyn B. Tiffany
                               ---------------------------
                                Carolyn B. Tiffany
                                Vice President and Treasurer
                                (Principal Financial and Accounting Officer)

                                 Dated: November 14, 2001


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