Aviation Legislation: the CARES Act

As the country reels from the COVID-19 Pandemic the effects continue to create havoc on an economy which was pounding forward on all cylinders just a few months ago. Perhaps nowhere has the economic damage been felt more than the aviation industry. United Airlines management gave a startlingly honest review of the situation in a letter to employees, describing a 97% decrease in passengers for the first two weeks of April compared to the same period in 2019. United expects a 90% drop in passenger count this May compared to May of last (United, 2020).
 (Dozens of United Aircraft sit parked at Denver International as demand plummets)

In response to the turmoil of the commercial and corporate business aviation world, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act in late March, almost unanimously (NBAA, 2020). The CARES Act provides unprecedented support to airlines and business aircraft operators to help pay employees through grants and loans, as well offering tax benefits for the purchase of new aircraft.
Key Provisions of CARES

  • $5.8 Billion dollars in aid to American Airlines, 4.1 billion as a grant and 1.7 billion as a low-interest loan (AA Newsroom, 2020).
  • Approximately $5 Billion to United Airlines, meant to cover the majority of employee pay (United, 2020)
  • Differed payments of employee-paid Social Security payroll tax through the end of 2020 (NBAA, 2020)
  • Refundable tax credit of 50% of up to $10,000 in wages paid by employers affected by COVID-19 (NBAA 2020). 
  • $25 Billion dollar fund for loans to affected air carriers and Part 145 aviation repair stations.
  • $350 billion set aside for low to zero-interest loans to small businesses affected by COVID-19, with up to 8 weeks of salary protection forgiven if the employer does not reduce staffing (NBAA, 2020). 
  • 100% Depreciation Tax benefit on newly acquired aircraft can be applied to tax liability back to 2015 (Banglesdorf, 2020)
In short, an unprecedented amount of money has been opened up to the airlines, corporate aviation operators, and small businesses to get through what we hope is a short term economic standstill. It's impressive to think that in our day of partisan politics this massive stimulus was passed with almost universal bipartisan support. For small businesses and corporate aviation operators, in my opinion the key to getting our economy on the road to recovery, the ability to accept loans with little to no requirement to pay them back in many cases is crucial to kick starting the economy as the world begins to open up again. As the airlines reel from the tumble from economic high to standstill in less than 6 weeks, many people will flock to corporate aviation if they have the means just to avoid the massive reduction in airline flights, as well as the ability to fly separately from the public. Corporate aviation and small business stands to be a huge winner economically, while the airlines face a long road to recovery despite the help, in large part because of how busy they were just a few months ago. 
(Corporate aviation stands to see huge success as the world begins to reopen)

In my opinion, the CARES Act will be the determining factor in the recovery of this nation from what could be the beginning of a huge economic slump. It's the biggest investment in the airlines the government has made since deregulation, and an acknowledgment of how important aviation has become to our society. 

References

American Airlines Newsroom (2020, April 14th) American Airlines To Receive $5.8 Billion in Payroll Support From U.S. Department of the Treasury. Retrieved from:  http://news.aa.com/news/news-details/2020/American-Airlines-To-Receive-58-Billion-in-Payroll-Support-From-US-Department-of-the-Treasury-OPS-DIS-04/default.aspx

Banglesdorf, R. (2020) CARES Act & Aircraft Acquisition: What You Need to Know. Charlie Bravo Aviation. Retrieved from: https://blog.wepushtin.com/blog/cares-act-aircraft-acquisition-what-you-need-to-know/

National Business Aviation Association (2020) Key Provisions for General Aviation Businesses in the CARES Act. NBAA. Retrieved from: https://nbaa.org/aircraft-operations/safety/coronavirus/key-provisions-for-general-aviation-businesses-in-the-cares-act/

United Cares (2020, April 15th) A Message from Oscar Munoz and Scott Kirby - United Hub. Retrieved from: https://hub.united.com/united-message-munoz-kirby-2645729257.html

Word Count: 573 





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