General Aviation Manufacturers Association president and CEO Pete Bunce says recent general aviation rallies held following disparaging remarks about business aviation by President Obama actually go back to the end of 2008 when the CEOs from the Big Three automakers took separate company airplanes to testify before Congress.
“When the auto execs came to town and we had the debacle of them when they failed to answer questions posed to them by Congress about the use of corporate jets,” he recalled, “that snowballed. And then we had a lot of politicians, the President [Obama] included as he took office, who started bashing corporate jets.”
To counteract that, the GAMA board of directors in February 2009 authorized a program called “grass-tops” to reach out to policymakers at the state and local level to try to make them understand the impact of general aviation on the economy, and that it really was a jobs message.
The first rally in Little Rock, Ark., that year attracted both U.S. senators and the governor, and GAMA saw the value of the gathering. “It went extremely well,” Bunce said, “and we see the value of these rallies still pays off today.” It gets political leaders in front of constituents that are in this industry as a profession, and with cameras rolling, it sends a very powerful message, he said. “So we followed that with a rally in Ohio…then we had one in Savannah, Georgia, where we basically got everybody. I think we had the entire congressional delegation and the governor.”
These were followed this year by a similar event in Wichita that attracted transportation secretary Ray LaHood and others in Iowa and South Dakota. The message hasn’t changed, Bunce said, and the message is jobs. “We’re very unhappy with this administration, that they are just unable to connect the dots and able to see that their negative rhetoric toward the industry is hurting jobs and hurting our ability to sell airplanes,” he asserted. “And yes, we will continue [holding rallies] because it is extremely valuable.”
On another front, Bunce said bonus depreciation was used as way to jump start sales during the recession that followed 9/11, and it proved successful. “Obviously, we didn’t need bonus depreciation during the heyday years leading up to 2008,” he explained. “But then the collapse happened in the economy. We started asking for bonus depreciation again and we able to get it approved. And it wasn’t just for aviation; it was for a lot of manufacturing.”
Last year, during the tax compromise, there was a one-time depreciation, which he characterized as “bonus depreciation on steroids.” Instead of being able to just accelerate the depreciation schedule, which is what bonus depreciation is, “we got what’s called 100 percent expensing, so you’re able to depreciate everything up front in a single year if that works well for a company in their tax range.”
According to Bunce, one of GAMA’s member companies attributed 40 percent of its sales last year to bonus depreciation. “We likewise are hearing that the orders being placed right now are from people who want to take advantage of this bonus depreciation/100 percent expensing that’s available to them,” he added. “And they also can do it for engines and avionics, as well, if they put in the order by the end of the year.
“So that’s why it’s somewhat schizophrenic that . . . the President, who all of a sudden is calling what he agreed to–which is stimulating manufacturing with bonus depreciation–an egregious tax loophole,” Bunce said. “You can’t reconcile it logically.
“On one hand, you think it’s smart in 2010 to give it, but in 2011 you want to call it egregious. That’s why everyone knows, on both sides of the [political fence], that it’s just politics; it’s just talking points. Everyone knows that depreciation works for manufacturing, and that’s why people can depreciate for their businesses computers and cars and everything else.” Calling it a long and complicated story, Bunce emphasized that it ultimately goes back to stimulating jobs.
ARC: Shot in the Arm
On another topic, AIN asked Bunce whether the formation of the FAA Part 23 reorganization Aviation Rulemaking Committee (ARC) will be a shot in the arm for general aviation manufacturers and how long a new regulation it might take.
“We’re hoping that the process will move quickly through the different wickets that have to happen, so we’re very happy with the creation of the ARC,” he responded. “It looks like we’re going to be able to man it with representatives from the manufacturers across the spectrum of products, and that will give us a very good basis to work with the FAA on this.”
But he said he is “extremely excited” about the FAA apparently being willing to allow other aviation authorities to participate as official observers in the process. “So we obviously would have EASA at the table, and Transport Canada, [and] our Brazilian authorities and our Chinese authorities, and . . . if we do this right, we’ll have a framework for a global, common regulation for these types of aircraft, which will absolutely be a shot in the arm,” Bunce asserted.