December 2012 - Page 3 Aviation Articles

Delta Plots Takeover Of Virgin Atlantic

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Delta offered to buy Singapore Airlines' 49 percent stake in Virgin, and later, Delta's European partner, Air France-KLM, may buy part of Branson's 51 percent stake

Delta Air Lines, the largest US carrier, is planning to take over Sir Richard Branson's Virgin Atlantic, The Sunday Times yesterday reported without citing any sources.

Delta offered to buy Singapore Airlines' 49-per cent stake in Virgin, and later, Delta's European partner, Air France-KLM, may buy part of Branson's 51-0per cent stake, which would see the British flamboyant business magnate lose control of his carrier that he launched in 1984.
But the acquisition will to comply with European Union ownership rules, which states that a non-European company cannot own majority stake in a European carrier.

To comply with this rule, Branson may retain a stake, and would, together with the Air France-KLM, hold more than 50 per cent of Virgin Atlantic, the report said.

Branson, the fourth-richest man in the UK, has been mulling the airline's future for years and had in 2010 hired Deutsche Bank to explore offers.

Delta and Air France-KLM is reported to have come close to a deal in February with Virgin Atlantic, but the transaction was called off over price and Branson's rights over the Virgin brand, the paper said.

Crawley, West Sussex-based Virgin Atlantic operates Airbus and Boeing wide-bodied jets between the UK and North America, the Caribbean, Africa, the Middle East, Asia, and Australia.

In 2011, it carried 5.3 million passengers,and reported an annual operating loss of 80.2 million on a turnover of 2.74 billion.

Atlanta, Georgia-based Delta Air Lines is the world's largest airline in terms of fleet size, revenue passenger-kms flown, and scheduled passenger traffic.

With a fleet of more than 700 aircraft comprising of Airbus, Boeing, and McDonnell Douglas, Delta Air Lines operates over 5,000 flights every day through eight domestic and three international hubs and flies to all six inhabited continents.

Business Aviation: A Survival Guide for the Next Four Years

This is not a Democrat-bashing article, so if you are one of the 50% who chose to re-elect President Obama, I promise you that it is safe for you to read this article.

If you, like me derive 100% of your income from the Business Aviation Industry, then it is likely that you are worried about the next four years living under a re-elected President that appears to detest our industry. To prevent insanity I suggest that we then must all adapt both our mindsets and also the way that we approach our lives. Here follows the adaptations that I am working into my daily routine to retain my sanity and to keep everything on an even keel; I am calling this my Survival Guide for the next four-years.

Be a much better Advocate for Biz-Av
There is no one who works within this industry that is not 100% sold on the distinct advantage that the use of a Business Aircraft provides. We all know that Corporate jets are business tools with varied uses. About 74 percent of corporate jets carry sales, technical and middle-management employees to more airports domestically, none of which have airline service. It is a fact that corporations that use Business Aircraft, and are members of the National Business Aviation Association, earn annual revenues equal to one half of the $14.7 trillion dollar economy of the United States while they employ more than 19 million people worldwide, thus making Business Aviation users the single largest economic driving force within this country. Consider the previous passage to be a suitable elevator speech that you might start using.

Unfortunately we continually preach this message to each other, as well as to the people that work on Capital Hill, but not to many others outside of this limited group. For the next four years, I challenge us all to promote and advocate this message to everyone that we come into contact with away from the airports where we work. There are over 1.25 million of us who work in this industry. Let’s say that we actually manage to give our ‘elevator speech’ similar to the passage that I underlined above, to 60 people a-year for the next 4-years (that’s about 10 people a-week), then by the fall of 2016 we would have promoted Biz-Av to every man, woman and child in this country (312,000,000 people), then the term “Fat-Cat” that both our President and the media loves to bandy around, will become totally passé as it simply is not true statement!

Get more involved in the NBAA and your local Biz-Av Association
Close to 50,000 of us attend at least one NBAA function a-year whether it is the Annual Meeting and Convention, a Regional Meeting and Forum, or one of the many Professional Development Programs held all-through-out the year. Fortunately for many of us, if it is technically or financially impossible for us to attend any of the NBAA events, it is still possible to participate by joining and attending the meetings and events offered by your local Biz-Av association. At the last count, there are 62 Regional Aviation Associations that are Biz-Av centric.

Here is the list:

Addison Business Aviation Association
Arizona Business Aviation Association
Aviation Council of Pennsylvania
Aviation Professionals Sharing Information (New-York, New-Jersey and Pennsylvania)
Business Aviation Professionals of New England
Centennial Airport Business Pilot's Alliance
Chicago Area Business Aviation Association
Colorado Aviation Business Association
Connecticut Business Aviation Group
Eastern Region Helicopter Council
FNL Pilot Association (Northern Colorado)
Friends of Meacham International Airport Association
Georgia Business Aviation Association
Greater St Louis Business Aviation Association
Greater Waco Aviation Alliance
Greater Washington Business Aviation Association
Houston Regional Aviation Professionals
Idaho Business Aviation Association
Kansas City Business Aviation Association
Las Vegas Schedulers & Dispatchers Association
Little Rock Business Aviation Association
Long Island Business Aviation Association
Love Field Pilots Association
Maine Business Aviation Association
Massachusetts Airport Management Association
Massachusetts Business Aviation Association
Michigan Business Aviation Association
Minnesota Business Aviation Association
Morristown Aviation Association
Nebraska Business Aviation Association
New England and Eastern New York Schedulers and Dispatchers Group
New England Helicopter Council
New Jersey Aviation Association
New York Aviation Managers Association
NorCal Business Aviation Association
North Dakota Business Aviation Association
North Florida Business Aviation Association
North Texas Business Aviation Association
North Texas Commission
Ohio Regional Business Aviation Association
Pacific Northwest Aviation Association
Pacific Rim Schedulers & Dispatchers Association
PAMA Houston Chapter
Rocky Mountain Metro Airport Business Aviation Group
San Antonio Area Business Aviation Alliance
South Florida Business Aviation Association
Southern California Aviation Association
Southern Colorado Business Aviation Group
Southern/Northern California Dispatchers Group
Tampa Bay Aviation Association
Teterboro User's Group
Texas Aviation Association
Texas Corporate Aviation Schedulers & Dispatchers Group
The Partnership for Corporate Aviation Training
The Wichita Aero Club
Tri-State Area Dispatchers Group
Utah Business Aviation Association
Westchester Aircraft Maintenance Association
Westchester Aviation Association
Western Michigan Business Aircraft Association
Wisconsin Business Aircraft Association
Women in Aviation, Intl. - Space City Chapter

If you want more information on any the Associations that are listed above, I suggest that you contact NBAA’s Director of Regional Programs: Mr. Steve Hadley, tel. +, or email. [email protected]

Reach out to everyone that are also Biz-Av Industry Members, especially locally
Maybe it time that you became a better ‘Ambassador’ towards your fellow industry folk. For too long (since before the First World War) there has been the Officer & Gentleman thing running through our industry; you know – like the adage: “You can take a Pilot and make him into a Mechanic, but you can’t take a Mechanic and make him into a Pilot”; which as we all know is complete crap! Then there is the believe by many that “Ground-Crew are neither to be seen or heard, unless they are standing in-front of the aircraft to clear the start of my engines, and to pull my chocks”, etc. What a total pile of steaming rubbish, but unfortunately our industry has suffered from these bizarre attitudes for way-to-many years in my opinion.

It takes a massive amount of people to make our national aviation system work. The pilots often take most, if not all of the spotlight and glory; but think of the number of aviation maintenance technicians, line service personnel, engineers, designers, detailers, sales people, air traffic controllers, handlers, administrators, painters, upholsterers, inspectors, regulators, and entrepreneurs that are right behind the pilot, thus making his role possible within this marvellous system. Please have Alexandre Dumas’ inspiring phrase used by his fictional characters: ‘The Three Musketeers”...”All For One, One For All” should be your newly adopted phrase.

Pay better attention to what our Elected Representatives in Washington are doing
Prior to election-2012 there were 57 members that sat on the Transportation and Infrastructure Committee chaired by Congressman John Mica. These folks make up only about 11% of the 535 Senators and Representatives that collect a pay-check from the Federal Government. If you are not watching what they say and do about Biz-Av, I suggest that you start now and regularly take them to task and protest. You will find the following links helpful in getting your elevator speech and your beliefs across to these donuts:

The Alphabet Groups use a large slice of your membership dues to lobby and cajole these folks with our collective message, which is all to the good. I can tell you though, that a personal letter, email or telephone call received by a representative in Washington, from one of their constituents (You) has a lot more power than you could imagine. Lobbyists’ buy them dinners and cocktails; Votes (yours and mine) buys them two-to-six years of free dinners, and life-long healthcare. Trust me, we individuals have more pull than the Alphabets so do your-self a favour and start making your voice heard in Washington and your States Capitol.

Write more Letters and Get Noticed
Generally speaking, the Media can be either our friend, or our enemy. The natural reaction by most of us in Business Aviation to a call from a reporter to ask questions about our industry, is to shy away and duck the questioning because we don’t want to be caught ‘telling any tales out of court.’ By its nature, Business Aviation is also ‘Private Aviation’ and therefore we all feel the need to keep our activities and operations ‘private’ as well. Well this is my call to action for this shyness to be suppressed and a new openness to be adopted. No, I don’t want you to divulge anything that you and the folks that ride our jets would not be comfortable with. Instead, I suggest that you keep your elevator speech close to your telephone and computer so you can start educating the press on what Biz-Av is really all about. If you read a ‘Fat-Cat’ statement or assertion in your local newspaper, internet blog, or on T.V. or radio, please get out your pen and write a fact-based protest against the remarks. As soon as you do this regularly you will get noticed by the media (in a good way) and they will start to call or email you for your side of the story rather than printing or broadcasting the pap that they believe to be right.

Be a Mentor
The future of aviation lay’s in the hands of today’s youth, and unless you work at an aviation school, you have probably noticed that there are not too many young people hanging out at your airport, like they did when you were first bitten by the love of aviation bug. This is a gathering storm that will eventually turn into a cataclysm that will consume the industry that we all love, if none of us make the time to give a leg-up to youngsters that are our future. Now is the time for you to start sharing your love of aviation with the younger generation. How can you do this?

To start with, why don’t you talk to your neighbours where you live and ask if any of the children in the neighbourhood would like to come to the airport with you to look around and get up-close to some aircraft? I promise you that the first time that you make a move in this effort; your heart shall be gripped with an overwhelming sense of good. If your own passion for aviation might have been flagging of late, the joy of aviation that the young people find thanks to this, your first effort shall, I am certain, encourage you to do more of this aviation experience sharing. If you fly, take the youngsters up. Maybe later you will become so enamoured by the way that this benevolent new side of you makes you feel, you might start speaking at local schools in your area? You will also have the undivided attention of the parents. Now you can give your elevator speech to them too, and open their eyes to what our industry is really all-about.

Turn Off the T.V.
In my opinion and that of many others, much of radio and all of television has evolved into an advertising delivery system where the content is squeezed in merely to fill in the gaps between the paid messages that constantly invade our ears and eyes. You might consider this to be a depressing point of view, but it is not far-off the truth. Thanks to the human condition that we all share, hate, anguish, and anger grips attention better than other types of message, except for maybe sex. I would be willing to wager that the whole ‘fat-cat’ characterization sells more product than if ‘good news and successes’ were reported instead. Don’t get discouraged by Hyperbole, just turn off the box when the hate starts flowing.

Be Grateful for We Have Got and Believe That You Do Make a Difference
You can personally fill in the blank space here. Just remember this: It is fact number one that...

“....the liquid that flows through the economic veins of this country is Jet fuel, and the roots of the Global Aviation Industry is 100% All-American; and Aviation is absolutely Vital to the Economic Prosperity of all American Citizens.”

Let’s reconvene four years from now to see what we have all accomplished after following this Survival Guide. I am willing to say that we will have a better lot of it, if we do follow my suggestions. Thanks for reading.

Tax Season Is Almost Here!

Ben Franklin supposedly said that in life, there are only two certainties - death and taxes. The former I'll leave alone, but do want to touch on the latter. Fiscal Cliff, fiscal road-bump, whatever it is called, may have an effect on both personal and corporate tax rates for 2013. I’m not offering tax advice, but just some food for thought.

An important note: while aviation taxes should not be a driving reason for an aircraft acquisition decision, the amounts can be substantial. Advance planning can potentially save thousands of dollars.

Here in the US, we essentially have two major taxing groups, the fifty states and the Federal Government. There are also a number of county and city tax authorities; some of these local taxes do apply to aircraft.

At the Federal level, the tax laws come via the Internal Revenue Service. The IRS separates aviation into two groups - commercial and non commercial. Don’t make the mistake that the IRS definition is in any way required to match that of the FAA Federal Aviation Regulations (FAR's) for commercial and non commercial operations. The IRS and FAA use different standards to define commercial operations and they have agreed to disagree.

The FAA uses regulatory definitions for a commercial operator. It involves the "intent" to hold one's aircraft out for hire. The IRS looks primarily at whether there is "transportation of persons or property for compensation or hire by air." Whether a profit is intended is not the IRS' concern. As Nel has stated ( click here for article), there are many times an operator is FAA Part 91 private but can be subject to IRS "commercial" taxes.

Many operators run afoul of the IRS in incorrectly figuring out how or whether to apply the Federal Excise Taxes (FET). Many local IRS offices are re-interpreting the FET law and are going after management companies. Add in the election year carriage of elected officials, transporting guests on corporate aircraft and international operations, and it can get confusing fast. 

Next are the 50 US States Departments of Revenue and local county/city tax authorities. They are all slightly different. Some apply sales taxes. The seller of an aircraft may be required to collect and remit sales taxes on the sale of an aircraft. Many states offer some exemptions or exceptions. Property taxes can be applied to aircraft - some being based on the percentage of time the aircraft spends in the state and others flat rated for aircraft based in their state.

There are use taxes and fuel taxes applied at the state and county level. Some of those taxes get applied to the state's aviation fund and other just go into the general fund. Again, there may be exemptions for commercial operators.

All these government entities are having trouble with getting revenue. Even if the Governor pledged no new taxes, that doesn’t mean that the state cannot get very tough on enforcing the statutes already in place. 

There are two words to the wise here.

  1. Paperwork is your friend, not your enemy. To prove that you do not owe certain taxes, you need to have the paper trail showing why. It can be tax receipts, aircraft registrations, hangar rent for the aircraft’s home base, whatever. Proper documentation is  your friend as a "paper trail" can provide proof of the taxable/non-taxable activity and or its intent.
  2. Plan Ahead for the aircraft transaction. Before taking action, find out what the options are and their costs. Just because you have a Delaware LLC does not mean that your tax planning is complete! Work with your tax accountant/CPA to gover over the tax implications (and FAA regulations don’t forget). Trying to do this after the fact often proves costly.

Taxes are not a reason to acquire an aircraft, nor are they a reason to dispose of one. But, taxes, when properly planner for and accounted for, can make the total cost of operating the aircraft lower than ignoring them and hoping for the best!


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