U.S. 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 June 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 small business issuer as specified in its charter)


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

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

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

           Five Cambridge Center, 9th Floor, Cambridge, MA 02142-1493
           ----------------------------------------------------------
              (Former name, former address and former fiscal year,
                          if changed since last report)

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
<PAGE>

                         AIRCRAFT INCOME PARTNERS L.P.

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

ITEM 1.  FINANCIAL STATEMENTS.

BALANCE SHEETS (UNAUDITED)

                                                        JUNE 30,    DECEMBER 31,
                                                          2001          2000
                                                       ----------   ------------
ASSETS

Cash and cash equivalents ........................     $1,661,051     $1,885,262
Other receivables ................................           --            1,323
                                                       ----------     ----------
  Total Assets ...................................     $1,661,051     $1,886,585
                                                       ==========     ==========

Liabilities and Partners' Equity

LIABILITIES:

Accounts payable and accrued expenses ............     $   94,374     $   90,777
                                                       ----------     ----------

    Total Liabilities ............................         94,374         90,777
                                                       ----------     ----------

Commitments and Contingencies

Partners' Equity:

Limited partners' equity (385,805 units
   issued and outstanding) .......................      1,401,186      1,607,404
General partner's equity .........................        165,491        188,404
                                                       ----------     ----------

    Total Partners' Equity .......................      1,566,677      1,795,808
                                                       ----------     ----------

    Total Liabilities and Partners' Equity .......     $1,661,051     $1,886,585
                                                       ==========     ==========


                       See notes to financial statements.


                                       2
<PAGE>



                         AIRCRAFT INCOME PARTNERS L.P.

                           FORM 10-QSB JUNE 30, 2001



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

  Interest .......................................     $  42,759      $ 140,544
  Other income ...................................         6,400           --
                                                       ---------      ---------

    Total revenues ...............................        49,159        140,544
                                                       ---------      ---------

Costs and Expenses:

  General and administrative .....................       278,290        234,593
  Operating ......................................          --            8,490
                                                       ---------      ---------

    Total costs and expenses .....................       278,290        243,083
                                                       ---------      ---------

  Net loss .......................................     $(229,131)     $(102,539)
                                                       =========      =========

Net loss attributable to:

  Limited partners ...............................     $(206,218)     $ (92,285)

  General partner ................................       (22,913)       (10,254)
                                                       ---------      ---------
                                                       $(229,131)     $(102,539)
                                                       =========      =========
Net loss per unit of limited partnership
  interest (385,805 units outstanding) ...........     $   (0.53)     $   (0.24)
                                                       =========      =========

Distribution per limited partnership unit ........     $    --        $    9.33
                                                       =========      =========


                       See notes to financial statements.


                                       3


<PAGE>


                         AIRCRAFT INCOME PARTNERS L.P.

                           FORM 10-QSB JUNE 30, 2001


STATEMENTS OF OPERATIONS (UNAUDITED)

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

  Interest .......................................     $  18,021      $  56,281
                                                       ---------      ---------

    Total revenues ...............................        18,021         56,281
                                                       ---------      ---------

Costs and Expenses:

  General and administrative .....................       113,918        173,119
                                                       ---------      ---------

    Total costs and expenses .....................       113,918        173,119
                                                       ---------      ---------

  Net loss .......................................     $ (95,897)     $(116,838)
                                                       =========      =========

Net loss attributable to:

  Limited partners ...............................     $ (86,307)     $(105,154)

  General partner ................................        (9,590)       (11,684)
                                                       ---------      ---------

                                                       $ (95,897)     $(116,838)
                                                       =========      =========
Net loss per unit of limited partnership
  interest (385,805 units outstanding) ...........     $   (0.22)     $   (0.27)
                                                       =========      =========


                       See notes to financial statements.


                                       4
<PAGE>

                         AIRCRAFT INCOME PARTNERS L.P.

                           FORM 10-QSB JUNE 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 .....................       (206,218)        (22,913)       (229,131)
                                    -----------     -----------     -----------

Balance -- June 30, 2001 .......    $ 1,401,186     $   165,491     $ 1,566,677
                                    ===========     ===========     ===========


                       See notes to financial statements.


                                       5


<PAGE>

                         AIRCRAFT INCOME PARTNERS L.P.

                           FORM 10-QSB JUNE 30, 2001



STATEMENTS OF CASH FLOWS (UNAUDITED)

                                                      FOR THE SIX MONTHS ENDED
                                                      -------------------------
                                                       JUNE 30,       JUNE 30,
                                                         2001          2000
                                                      ----------    -----------
Cash Flows from Operating Activities:

Net loss .........................................   $  (229,131)   $  (102,539)

Adjustments to reconcile net loss to net cash
  used in operating activities:
  Changes in assets and liabilities:
    Other receivables ............................         1,323         34,560
    Accounts payable and accrued expenses ........         3,597        (50,355)
                                                     -----------    -----------

Net cash used in operating activities ............      (224,211)      (118,334)
                                                     -----------    -----------

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 ........      (224,211)    (3,544,352)

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

Cash and cash equivalents, end of period .........   $ 1,661,051    $ 3,866,848
                                                     ===========    ===========


                       See notes to financial statements.


                                       6



<PAGE>


                          AIRCRAFT INCOME PARTNERS L.P.

                            FORM 10-QSB JUNE 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 six and three months ended June 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 of the 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
    had 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 to IAFM with respect to the six months ended June 30, 2001. IAFM
    received $400,000 in distributions for the six months ended June 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 six months ended June 30, 2001 and 2000.

                                        7


<PAGE>


                          AIRCRAFT INCOME PARTNERS L.P.

                            FORM 10-QSB JUNE 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 six months ended June 30, 2001.

5.  COMMITMENTS AND CONTINGENCIES

    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
    aircraft 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.
    Continentals 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 aircrafts were sold during 1999 and the
    remaining aircraft was sold on January 19, 2000.


                                     8

<PAGE>


                          AIRCRAFT INCOME PARTNERS L.P.

                            FORM 10-QSB JUNE 30, 2001

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN
         OF OPERATION

         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 partners.

         The Partnership's level of liquidity based upon cash and cash
         equivalents decreased by $224,211 during the six months ended June 30,
         2001, as compared to December 31, 2000. The decrease is due to cash
         used in operations. At June 30, 2001, the Partnership had $1,661,051 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 aircrafts
         were returned in September 1998 and the third aircraft was returned in
         December 1998.

                                        9


<PAGE>


                          AIRCRAFT INCOME PARTNERS L.P.

                            FORM 10-QSB JUNE 30, 2001

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF
         OPERATION (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. The parties are currently in
         the expert discovery stage. Continentals 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 aircrafts 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.

                                       10


<PAGE>


                          AIRCRAFT INCOME PARTNERS L.P.

                            FORM 10-QSB JUNE 30, 2001

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF
         OPERATION (CONTINUED)
         ----------------------------------------------------------------------

         Results of Operations

         Net loss increased by $126,592 for the six month period ended June 30,
         2001 compared to June 30, 2000, due to a decrease in revenues and
         increase in costs and expenses. Net loss decreased by $20,941 for the
         three month period ended June 30, 2001 compared to June 30, 2000, due
         to decreases in revenues and cost and expenses.

         Revenues decreased by $91,385 for the six month period ended June 30,
         2001 compared to the corresponding period of 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 $35,207 for the six month period ended
         June 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.

ITEM 3.  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.

                                       11


<PAGE>


                          AIRCRAFT INCOME PARTNERS L.P.

                            FORM 10-QSB JUNE 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: August 14, 2001




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