June 30, 2011

In a surprising move to vilify the use of a business airplane during a June 29 news conference about budget-cutting and deficit reduction, President Barack Obama again and again spoke disparagingly of the industry and demanded a repeal of accelerated depreciation for business aircraft. NBAA President and CEO Ed Bolen called that “wrong-headed” and “cynical politics.”

“Before we ask our seniors to pay more for health care, before we cut our children’s education, before we sacrifice our commitment to the research and innovation that will help create more jobs in the economy, I think it’s only fair to ask an oil company or a jet owner who’s done so well to give up a tax break that no one else enjoys,” Obama told reporters in a White House news conference. It was one of six denigrating remarks the president made about business aviation.

Bolen said the president’s remarks showed a remarkable lack of understanding when it comes to the service business aviation provides to the American economy.

“He characterized business operators as millionaires and billionaires,” Bolen said. “The fact of the matter is 85-percent of the companies that operate business aircraft are small and mid-sized companies. He just simply perpetuated a caricature of business aviation that is at odds with the reality of how this industry operates in the United States.”

Currently, companies that purchase business aircraft are allowed to deduct the entire cost of that aircraft in the first year of ownership. Experts have suggested that changing or eliminating that tax benefit could lead business owners and aviation operators to delay purchasing new aircraft, erasing a small but notable turnaround for struggling aircraft manufacturers over the past year.

“It just doesn’t make sense,” Bolen remarked. “The president of the United States said we need to shorten depreciation schedules to generate jobs. The idea that we would lengthen the depreciation schedules for business aviation operators at a time when our economy is struggling is simply absurd.”

Industry wide, executives reacted with dismay at the president’s remarks. Many pointed out that the president’s proposal to end accelerated depreciation for business aircraft would save a mere $3 billion over ten years – a veritable drop in the bucket as federal budgets go.

Bolen pledged that NBAA will fight the president’s attempt to end accelerated depreciation for business aviation assets.

NBAA members are also being encouraged to respond to the president’s remarks, Bolen said. “NBAA has a ‘Contact Congress’ icon on our website. We encourage all our members to go there. We will have a letter related to business aviation and its depreciation schedule and we’re hoping members will send that to Capitol Hill. With that in hand, members of Congress can stand up and say no to this wrong-headed idea by the president that I think is bad policy and cynical politics.”