April 6, 2015

The Arizona state legislature has passed a bill that would make clear aircraft used in commercial service, including aircraft operated under Part 135 of the FAA regulations, are exempt from transaction privilege and use tax. Current law in Arizona is being interpreted to only exempt aircraft used in scheduled FAR Part 121 service and the bill was introduced to address this.

The bill is now on Governor Doug Ducey’s desk for signature. The Governor has five days to act on a bill if the legislature is in session or ten days to act if the legislature has adjourned. The Governor may sign the bill or allow it to become law without signature. Members are encouraged to contact the Governor’s office to express their support for the legislation.

Review House Bill 2358

Member Action

The efforts of NBAA Members explaining that this legislation will encourage aircraft operators and aviation companies to locate in Arizona generating additional jobs and actually adding to the tax base was critical to passage. With aerospace manufacturers such as Honeywell located in Arizona, this bill will result in additional growth and encourage more companies to locate in the state.

Ultimately, these pro-business incentives will create a positive impact to the general fund through growth in aviation property utilization and development, creation of aviation and other industry jobs, and promotion and growth in many of Arizona’s key industries (travel, tourism, technology, health care).

Other key points to consider are:

  • Arizona law was originally designed to exempt all carriers of passengers and property (including Part 135 operators) from transaction privilege and use tax.
  • Many Arizona charter operators have said they will have to relocate their operations to other states with commercial aircraft exemptions that cover Part 135 operations.
  • According to a 2012 report, general aviation supports 6,890 jobs in Arizona and sustains a payroll of $261 million annually.
  • Part 135 operators in Arizona provide critical services, including air ambulance flights and fire-fighting support.

Business Aviation in Arizona

Business and general aviation provide the following economic benefits to Arizona:

  • Across Arizona, 6,890 people are employed in the general aviation industry, with wages and benefits totaling $261 million.
  • According to a 2013 Economic Impact of Aviation in Arizona Statewide Report, general aviation generates $609 million in economic activity annually.
  • The aviation industry connects communities: rural, interstate and international. There are more than 80 public use airports in Arizona, but just five that provide commercial airlines services for Arizonans.

For additional information, contact NBAA’s Stacy Howard at (480) 987-0352 or showard@nbaa.org.