As part of the CARES Act, the 7.5% Federal Excise Tax applied to domestic charter flights and select destinations in Canada and Mexico was retired until Dec. 31, 2020. However, early on it wasn’t clear if flights paid for this year but taken once it is reinstated would be charged the tax or not. The IRS has only pointed jet companies to a 2015 internal memo that it says is non-binding.
However, companies have each been studying the situation. Very quickly, NetJets said any cards purchased after the COVID-19 recovery program went into effect would be tax-free during the life of its cards, up to 24 months. Now a number of other operators and brokers are joining in. Nicholas Air, Jets.com, Airstream Jets, Magellan Jets, and Sentient Jet have confirmed a similar approach, either for the life of card or in some cases funds.
For North-Carolina-based flyExclusive, which launched its jet card program earlier this year, it offers two options based on its Fly Club and Exclusive Club.
Both require a non-refundable deposit of $150,000. However, Exclusive Club offers lower rates with an annual payment of $20,000. For Exclusive tier members, they can deposit as much as they want by Dec. 31, 2020. So long as they pay the annual fee, their funds will remain active and their flights will be sans the 7.5% tax.
For Fly Club members, they will have the standard 24 months from the date of purchase to use their funds on a FET-free basis.
The tax holiday, which was designed to help the badly battered travel industry, has been cited as a boost for jet card sellers and business aviation.