Most Feel The Tax Plan Will Help, But Will It Be Enough?
President Obama's recent signing of the economic stimulus bill
a tax incentive for purchases of new aircraft during
2009 has received a somewhat mixed bag of reactions
from congressmen, pundits, and the aviation industry itself.
With his state reeling with the recent layoffs of thousands of
workers from Cessna and Hawker Beechcraft, Representative Todd
Tiahrt (R-Kansas) lauded the incentive. "This is exactly the type
of financial incentive that should be included in a stimulus bill,"
he said. "It's not a silver bullet as a stand-alone effort. (But)
this will certainly be helpful. This will sell aircraft that we
wouldn't have sold before."
Aviation consultant Richard Aboulafia of the Teal Group in
Fairfax, VA, was not so optimistic, suggesting that although the
industry needs help, he doubted whether it's the right kind of
help. "People and companies buy jets when they need new planes and
feel good about the economy," he said. "If they don't feel good
about things, a tax break isn't going to help."
Ed Bolen, CEO of the National Business Aviation Association,
feels that the President's accelerated depreciation tax plan will
be an effective stimulus. Bolen said, "It's trying to give you a
reason to act now, rather than sit on the sidelines for the next
two years," waiting until economic conditions take their forecasted
Cessna spokesman Doug Oliver, preferring Obama's plan to cutting
prices to increase sales, said, "It is a big deal. Planemakers
don't like to discount pricing because it cheapens the value of
planes they already sold. You are not going to see deep discounting
on business jets, but we still negotiate with customers."
Piper Aircraft spokesman Mark Miller said the tax plan of
accelerated depreciation of aircraft "is promising," but sales
would also be helped if banks were willing to lend more for
aircraft purchases. Some institutions are requiring down payments
of up to 20 to 30 percent for new aircraft loans, the Associated
Miller said that a down payment that large puts new aircraft
purchases out of reach for many prospective buyers. "Our customers
are small business owners and professionals like lawyers. They're
recession-resistant, but they're not recession-proof."