Business aviation is getting financial relief as part of the CARES Act, passed last week by both houses of Congress and signed by POTUS.
Business aviation in the U.S. is getting some relief under the CARES (Coronavirus Aid, Relief, and Economic Security) Act, passed last week by both houses of Congress and signed by President Donald J. Trump.
For consumers, the most noticeable impact is that Part 135 operators (and you) don’t have to pay the 7.5% Federal Excise Tax.
The levy applies to domestic flights or flights to and from the U.S. that begin or end within 225 miles of the border, with several exceptions.
Both jet cards and on-demand flights operate under Part 135, so you will see savings with both.
Locations not in Canada or Mexico, such as Nassau in the Bahamas, are not part of the 225-mile zone.
You can visualize the zone as an area 225 miles above the United States border in Canada or 225 miles below the United States border in Mexico.
READ: Your COVID-19 travel questions answered
The bill also offers Part 135 charter operators up to $25 billion in loans and loan guarantees, according to an analysis by the National Air Transport Association.
There is another $25 billion allocated for wages, salaries, and benefits for employees of Part 135 operators.
The jet fuel tax is also being waived through the end of the year.
Eligible companies can borrow up to 2.5 times their average monthly payroll for the past 12 months.
Loan forgiveness is equal to the amount spent by the borrower during eight weeks after the origination date of the loan on payroll costs, interest payment on any mortgage incurred before February 15, 2020, payment of rent on any lease in force before February 15, 2020, and payment on any utility for which service began before February 15, 2020.
The amount forgiven will be reduced proportionally by any reduction in employees retained compared to the prior year and reduced by the reduction in pay of any employee beyond 25% of their prior-year compensation.
The business aviation industry accounts for over 1.2 million jobs in the U.S.
It produces nearly $250 billion in economic output.
An analysis by Tuvoli shows that while 573 Part 135 operators in the U.S. have at least one business jet available for charter, 71% have five or fewer jets in their fleet.
Research with Private Jet Card Comparisons subscribers found that while 39% canceled private jet trips due to the pandemic, 36% scheduled extra flights, mainly for evacuations.
Over the next 90 to 120 days, respondents said most private flights will be to relocate family members, travel to second homes, or attend critical business meetings.
As airlines reduce flights, private aviation is playing a critical role in repatriation and evacuation flights.
Fixed-base operators (FBOs), private jet terminals, are also eligible for up to $3 billion in aid. Operators have expressed concerns that the drop in traffic could cause some FBOs, which provide fuel, to close, at least temporarily.
In the U.K., Harrods Aviation has closed locations.
NATA also scheduled a webinar for Wednesday, April 1, 2020, at Noon Eastern Standard Time.
Jet card users should pay extra attention to their invoices.
Ensure applicable flights are not accidentally billed for Federal Excise Tax during the period of waiver.
On-demand charter users should also ensure quotes for applicable flights through the end of the year don’t add the FET.
One insider said that, given how accounting systems work, there is always a chance of glitches.
He said to watch flights booked before the waiver took effect on Friday. The waiver is based on flight date, not booking date.
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