Owners of corporate aircraft are breathing a little easier this week after the Senate dropped a proposal to add a $100-per-flight fee on business planes that had been part of President Barack Obama's American Jobs Act tax plan targeting the wealthy.
The proposal generated buzz at last week's National Business Aircraft Association conference in Las Vegas, where aviation industry leaders said the fee in Obama's bill would have destroyed the economics of operating some models of corporate jets with low costs.
"It's clear that the bully pulpit is being used to bully an industry," said Dan Hubbard, a spokesman for the organization, during the association's gathering. "Do we think we've been singled out and selected for punitive treatment? Yes."
But after the Senate stripped the provision by the end of the three-day conference Wednesday -- and Senate Republicans followed by blocking the entire bill and submitting their own legislation for consideration -- industry officials and aircraft owners said rejection of the additional fee couldn't have come at a better time for the industry.
Although the economy and roller-coaster ride of fluctuating fuel prices have buffeted aviation companies and limited growth, some segments have seen improvement over last year. What's more, supporters of business aircraft said the industry would continue to pay its fair share of taxes through federal excise taxes on either fuel or the transportation of persons or property. For commercial transportation, passengers and jet owners pay a 7.5 percent tax, a domestic segment fee of $3.70 or $16.30 on international departures and arrivals and $8.20 on flights to and from Hawaii or Alaska. The latter two are up 20 cents and 10 cents, respectively, from 2010.
For noncommercial transportation, the fuel tax varies on aviation gasoline and jet fuel.
"The Senate appears to have been consistent in its position on user fees," Hubbard said after the conference concluded. "We learned about it when it was proposed, heard about it in hearings and it was debated on the House and Senate floors and dismissed as a bad policy idea."
Analysts said the proposal, which would have applied to both jets and turboprop aircraft, would effectively have put a 20 percent cost increase on the operation of some small jets, particularly the recently introduced Eclipse 500, Cessna Mustang and Embraer Phenom 100.
The move in the Senate came around the time the National Business Aircraft Association and the 26,000 people who attended its conference were beginning to shut down the trade show, which next year will move to Orlando, Fla. Dozens of corporate jets were on display at Henderson Executive Airport during the show and, for the first time, some small jets, planes and helicopters were shuttled to the Las Vegas Convention Center for display. The association maintained a bus shuttle between the Convention Center and the Henderson airport all week.
Those who stood to gain from the Senate's actions included Cleveland-based Flight Options LLC, one of the companies that exhibited at last week's conference. Flight Option, which operates a fleet of more than 100 jets and more than 1,300 owners and program members, reported a 33 percent increase in sales for the first nine months of 2011 over the previous year.
One of the company's five maintenance centers is based in Las Vegas.
