U.S. airlines and airports fell into opposing camps over the Obama administration’s Fiscal Year 2015 budget request for the Federal Aviation Administration, which would raise the cap on the passenger facility charge (PFC) airports are entitled to collect for every boarded passenger from $4.50 to $8.
American Recovery and Reinvestment Act
Exeter, UK-based Flybe plans to slash another 500 jobs as part of a continuing cost-cutting exercise centered on removing excess capacity and improving worker productivity. The announcement follows an earlier round of cuts that saw Flybe shed 590 jobs this year. The company employed some 2,700 people at the end of September.
The effects of the U.S. government budget cuts that started on March 1 will not likely be felt until April but they could be significant for airlines and their passengers. The Federal Aviation Administration, the Transportation Security Administration (TSA) and the Customs and Border Protection (CBP) agency will absorb the mandated spending cuts known as the “sequester” in part by furloughing employees, or requiring them to take several days of unpaid leave.
In a February 1 letter to American Airlines employees, company chairman and CEO Thomas Horton identified $1.25 billion in annual employee-related cost reductions—estimated to involve between 12,000 and 14,000 job cuts—among a list of some $2 billion worth of annual cost-savings initiatives that include restructuring debt and leases, grounding of older airplanes and improving supplier contracts.
In mid-December the U.S. Congress authorized $662 billion in defense spending for fiscal 2012, trimming $27 billion from President Obama’s request in probably the last budget before deeper, more painful, cuts are required by the Budget Control Act passed in August.
Although support for accelerated depreciation for major equipment purchases is growing, Congress left for its summer recess without making it so. Last month, NBAA senior vice president for government affairs Lisa Piccione told the Greater Washington Business Aviation Association (GWBAA) that NBAA has joined 80 other business organizations in pushing to see accelerated depre ciation renewed in pending legislation in the Senate.
With the rancor over business jet use now receding in Congress’s rear-view mirror, House and Senate lawmakers are jumping in line to extend accelerated depreciation for major equipment purchases– including general aviation aircraft–in 2010.
Two congressmen have sent a letter to the House Ways and Means Committee asking the tax-writing body to extend the bonus depreciation incentive for noncommercial aircraft purchases.
Under bonus depreciation, companies and individuals were allowed to claim an additional depreciation of up to 50 percent during the first year after purchase on capital equipment used primarily for business and placed in service by the end of last year.
The U.S. Department of Transportation’s Office of Inspector General (OIG) issued a report in August warning that the FAA’s process for awarding airport project grants is not meeting requirements of the American Recovery and Reinvestment Act (ARRA). The act was signed into law in February and provided $1.1 billion for Airport Improvement Plan (AIP) projects.
For business aviation, the latest $787 billion economic stimulus bill–H.R.1, the “American Recovery and Reinvestment Act”–giveth with one hand and taketh away with the other.
- Page 1