Tony Velocci FORBES
Proposed Policy Changes Will Delay, Thwart Business Aviation Recovery
March 19, 2014
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  • What happens in Washington can have a tremendous impact on the vitality of an industry. Business aviation is no exception, and the Obama administration obviously still hasn’t gotten the memo that the sector has a long way to go to fully recover from the devastating recession of 2008-2009.

    Imbedded in the fiscal year 2015 budget proposal is a plan to impose a $100-per-flight user fee. Just two weeks ago, bipartisan leaders of the House Aviation Subcommittee and the House General Aviation Caucus asked the President not to include the proposal in this year’s budget. To add insult to injury, the administration also singled out general aviation (GA) in proposing an increase in the depreciation period for general aviation aircraft—not exactly an incentive for encouraging would-be buyers of business aircraft wanting to improve productivity to acquire such capital equipment.

    The question of which measure is more onerous is debatable. However, the proposed user fee that would be attached to flight plans or to aircraft operations is particularly disheartening. The House of Representatives repeatedly has rejected the idea, and opposition remains strong in both parties. A $100-per-flight fee has been a regular feature of President Obama’s annual budget proposals in each of the past four spending plans.

    While the fee would apply to turbine-powered aircraft, which comprise the vast majority of business aviation, chances are the “surcharge,” as the administration calls it, on any portion of the general aviation fleet would soon extend to other segments as well. The rationale behind the user fee is to “more equitably distribute the cost of air traffic services across the aviation user community,” beginning after Sept. 30 2014.

    Europe tried user fees—with disastrous results to its GA community, according to Craig Fuller, president of the Washington-based Aircraft Owners and Pilots Association.

    As for proposed changes pertaining to the depreciation of non-commercial aircraft, the schedule would go from five to seven years. The current one was established decades ago by the Treasury and adopted by Congress in 1986. This is no “loophole;” neither a company nor an individual can depreciate more for a GA aircraft than any other capital asset.

    Prior to the Obama presidency, administrations generally supported policies designed to accelerate depreciation in order to stimulate capital investment. What the administration is proposing for GA just doesn’t add up—unless higher-ups in the Obama camp simply have a disdain for the sector, the source of some $150 billion in economic activity. Draw your own conclusions.