2016 Aviation Business Conference | Gathering in Washington During Interesting Times

June 20, 2016

NATA members attending the association’s second annual Aviation Business Conference are arriving in Washington, D.C. at an interesting time. Congress will still be in session but can already see on its horizon July 15th, the date it will adjourn for the two national political conventions and its annual summer recess. Returning shortly after Labor Day, Congress will meet for only a few short weeks before adjourning to campaign in advance of the November 8th general election.

Not by coincidence, July 15th is also the date of the expiration of the FAA’s current authorization. On the House side, Chairman Shuster’s (R-PA) proposal to create an air traffic corporation continues to languish due to objections from other congressional committees, conservative Republicans, and virtually the entire House Democratic Caucus. NATA continues to voice its strong objections to the corporation concept at any and all venues that provide us the opportunity to discuss the dangers it poses to general aviation. Like presidential candidates, NATA has been on the road, updating the aviation business community in Florida, Wisconsin, Illinois, South Carolina, Indiana and Texas on the status of the Shuster proposal. We also continue to work the issue at the national level, educating the press and appearing at public policy forums here in Washington, D.C., to rebut the outrageous claims of the airline interests campaigning for ATC corporatization.

I am also pleased to report that in April the United States Senate took a different, more hopeful path than the House, approving by a vote of 95-3 a bipartisan FAA bill that does not include provisions to create an ATC corporation. The legislation instead embraces NATA’s long-stated belief that Congress should build upon its previous work and continue to improve the consistency of FAA decisions across its offices and regions, streamline the FAA certification process to better reflect today’s pace of innovation, and assist the agency in operating as efficiently as possible.

The Senate’s action now puts the impetus for further action in the hands of House Transportation Committee Chairman Shuster to decide whether or not to continue to press forward on his proposal to create a user fee-funded, air traffic control corporation, accept the Senate proposal, or simply extend the FAA’s authorization beyond its current expiration on July 15th. Senator John Thune (R-SD), Chairman of the Senate Commerce Committee, who steered the legislation through the Senate, has publically expressed his hope there will be no more extensions and that the House will give serious consideration to the bipartisan approach taken by the Senate.

This puts NATA members in Washington, D.C. this June smack dab in the middle of it all. Our annual fly-in on June 9th will once again feature key aviation policymakers sharing their perspectives on the FAA reauthorization debate. We are also fortunate that once again Tom Hendricks and the leaders of the other general aviation associations will brief you in advance of your trip to the Capitol Building. And, of course, we will also gather informally that evening on Capitol Hill with aviation policymakers and their staffs for our annual industry reception.

However, the Aviation Business Conference is more than about politics. For that reason, we will be joined by TSA Administrator Peter Neffenger, who will discuss the security challenges facing our nation. FAA Associate Administrator for Aviation Safety Peggy Gilligan will be on hand to answer your questions about the FAA’s regulatory agenda. Finally, the conference will be packed with sessions providing insights on the state of the industry and the latest in effective business and safety practices.

So bring some good walking shoes (we can never guarantee the operating state of our subway), your questions and your insights. We look forward to seeing you in our nation’s capital!

By Bill Deere, Senior Vice President for Government and External Affairs (republished from Q2 2016 Aviation Business Journal)


Airlines…..Unplugged

April 1, 2016

I had the opportunity last week to attend the U.S. Chamber’s annual Aviation Summit. “Aviation” in the title is really a misnomer. Despite the fact the Chamber has member companies with corporate flight departments, and even a wide array of other aviation businesses, make no mistake about it — this was an airline conference. The summit’s lack of balance was startling; this was a vehicle for airlines to get their message out and other viewpoints need not apply. Comfortable in what was clearly an enabling setting, airline executives felt empowered to say what they really think.

The leaders of the so-called low cost carriers were in lockstep about the dangers posed by four airlines with 80-percent domestic market share. Through their dialogue, they invited us to peak behind the curtain for a look at the impact of global joint ventures, noting for example three mega-alliances controlling 87 percent of the transatlantic market. They called upon the Department of Transportation to revisit these anti-trust waivers and immunized joint ventures…..and in the next breath they called upon Congress to adopt the Shuster proposal to create an airline dominated air traffic control corporation.

This is a demonstration of the old political adage, “where you are is where you sit.” Market concentration, it appears, is dangerous….unless of course you are part of it. This inability to either see or understand other perspectives is disappointing from people who are seemingly aware of the dangers created by market concentration. Even if we all saw creating an air traffic control corporation as a good idea, which we don’t, why would aviation businesses willingly sign up for a proposal that leaves their future costs to be determined by airlines?

However, the low cost carriers were just the warmup act, next came the airline association and a representative CEO from the big carriers. These speeches were carefully orchestrated and honed to two messages. First, congressional policymakers who offer pro-consumer proposals related to airline seats or pricing of various airline fees are intent on nothing less than re-regulating the airline industry. The airlines’ view of consumer legislation was best summarized by the head of their trade association who told the crowd, “Members of Congress, with all due respect, if you want to run an airline, buy some planes, hire some employees and sell some tickets.” Well, to paraphrase Ricky Bobby, he did say, “with all due respect.”

The wrath of these airline leaders was especially reserved for those who dare oppose their plan to create an air traffic control corporation. Those in opposition to the corporation are nothing more than “entrenched interests fighting to maintain their advantage.” Their response to the bipartisan work of Senate Commerce Committee Chairman John Thune and Ranking Member Bill Nelson that did not include a proposal to corporatize air traffic control, “The Senate took the easy way out.”

Worse are the half-statements that come along with addresses of these sort. For example, we were told airlines believe in a user fee-funded corporation so much they are willing to write their own checks to the corporation for the air traffic services they use. How altruistic. Except of course the real cost will be borne by the customer and the corporation proposal neatly removes accountability for those costs from a consumer’s direct scrutiny — let alone the costs the airlines will attempt to shift to general aviation. Other whoppers rehashed in front of a largely adoring crowd included the suggestion that air traffic controllers are using 1950’s technology, or that 60 countries currently operating corporatized systems are in some way more efficient or safer than ours.

Airlines also tried to dispel the notion they don’t want to run the corporation by noting the composition of the air traffic control board was changed late in the House committee process with the addition of two more seats for general aviation, bringing GA to the same number of seats as the airlines. While no doubt equal in number, it’s arguable those seats are not equal in weight. The corporation CEO, who also holds a board vote, will undoubtedly feel the pressure of the four votes that represent the overwhelming amount of corporation funding. In addition, this is not a proposal that is yet set in stone.   Neatly forgotten by these airline leaders during the conference, their complaint to Congress that the original proposal already lacked a sufficient number of airline stakeholders, particularly given the representation from general aviation — stakeholders that in their view pay next to nothing. We should not expect the airlines to give up on their attempts to “perfect” the board’s composition.

I report all this to remind you that despite some press reports, the airline industry is not giving up. Between now and July 15th (when the current FAA reauthorization again expires) we must be vigilant and engaged with our elected lawmakers if we are to withstand the imposition of the airline worldview on consumers and general aviation.

By Bill Deere, Senior Vice President for Government and External Affairs


NATA 75: An Industry Voice Is More Important Than Ever

December 28, 2015

 

As we launch into our anniversary year, reading the excellent history of the association written by Paul Seidenman and David J. Spanovich (page 18) underscores just how important it is for aviation businesses to have a voice to represent them in the public policy arena. As the article demonstrates, NATA’s birth was directly linked to the future of civil aviation, when the association’s founders had the vision to join together and intervene at a critical juncture, not letting the military in effect—take over—American aviation. In fact, the article is replete with examples, large and small, of how the association’s intervention made a difference in supporting aviation businesses’ contin­ued growth in this vital, and uniquely American, part of our economy.

It is easy to understand the advantages of membership when viewed from a purely business perspective. Many NATA members, for example, take advantage of the association’s industry leading workers’ compensa­tion insurance program or perhaps its Safety 1st training. However, the need for a public policy presence is not something that is always readily apparent nor easily quantified.

Perhaps because of our history, NATA members see that need. In our recent membership survey, advocacy was rated as one of the most important aspects of membership. It is also borne out by the fact that when the call for help goes out to aviation businesses, NATA members respond.

Looking ahead to 2016 we, like our founders, continue to see challenges and opportunities for aviation busi­nesses. On our immediate horizon is the upcoming FAA reauthorization bill. While events in 2015, the leadership crisis that resulted in a new Speaker of the House, Paul Ryan, and the difficul­ties of financing a multi-year surface transportation bill, slowed down the FAA bill in Congress—make no mis­take about it—the airlines still want the keys to the air traffic control system.

In early December, Airlines for America (the trade group representing the major carriers) and the CEOs of the nation’s six major airlines were in Washington, D.C., talking to lawmak­ers about their desire to create an independent, user-fee funded air traffic control organization. Don’t think they are serious? When the world’s largest airline, Delta, announced it was leav­ing the trade group in a disagreement over this and other policies the airlines are pursuing, the remaining members waived the association’s required de­parture notice allowing Delta to leave immediately.

The idea of privatizing air traffic control has been one pursued by others as well, some frustrated by the pace of modernization, others concerned the congressional budget process has bro­ken down to the point where funding for the agency may no longer be able to keep up with the future needs of the system.

While NATA agrees the FAA could certainly stand the injection of more private sector practices, we view the unknowns associated with corporati­zation as simply too great to risk. Can such a proposal be safely implemented in a system many times larger and far more complex than any other in the world? Will its implementation set back the cause of modernization rather than enhance it? And what happens to general aviation, a uniquely American user not really a large factor elsewhere in the world? Will new costs and fees in effect deny your businesses and cus­tomers access to airports and airways necessary to your operating a viable business?

While a huge concern, I don’t want to leave you with the impression this is the sole issue confronting avia­tion businesses. We are still working to unwind a 2012 IRS opinion that concluded that aircraft management fees are “transportation” and therefore management service providers should be assessing the 7.5 percent commer­cial ticket tax on amounts paid for those services. We are also working as part of a broad national coalition to bring certainty to investment policy by making permanent bonus depreciation and Section 179 expensing. Finally, the NATA regulatory team is working across a myriad of issues, before the FAA, the TSA, and Customs, among others, looking to bring common-sense and your real world perspective to the issues under consideration by the exec­utive branch.

Our issues are not always defen­sive. Our committee members were instrumental in developing a positive agenda for the FAA reauthorization bill. In fact one agenda item, requiring the investigative arm of Congress, the Government Accountability Office, to conduct a study of diversions of non-commercial jet fuel tax revenues to the Highway Trust Fund, was just incorporated into the recently enacted surface transportation bill. We are also particularly proud of the ongoing effort by NATA and AAAE members to identify and address the issues that divide and can unite airports and their tenants.

So as Tom Hendricks says, our future is bright and getting brighter by the day. As we move into what could be a watershed year in aviation, stay involved, and stay engaged. In the end, you are aviation businesses best advocates!

By Bill Deere, Senior Vice President for Government and External Affairs


Speaker Boehner’s Parting Gift

November 2, 2015

No one could have predicted the circumstances under which Congress and the Administration were able to bring about last week’s long-term budget agreements.

The resignation announcement by House Speaker John Boehner immediately cleared the way for a bill funding the government through December 11th.  It also allowed the outgoing Speaker to “clean up the barn” and resolve potentially debilitating issues for incoming Speaker Paul D. Ryan.  In a move worthy of the climactic scene in The Godfather, outgoing Speaker Boehner settled political scores by successfully negotiating a two-year adjustment to federal discretionary spending levels and raising the nation’s debt ceiling through March, 2017.

This is good news for aviation.  As NATA’s President Tom Hendricks observed earlier in the week, the legislation addresses two threats to our industry – the ramifications of defaulting on our nation’s debts and a potential shutdown of the Federal Aviation Administration. Let’s look at the numbers behind the agreement and talk about what happens next.

The Deal

The Bipartisan Budget Act of 2015 amends the discretionary spending caps (the 30% of federal spending directly appropriated by Congress on an annual basis) for fiscal years 2016 and 2017 as seen below:

Discretionary Spending Caps (in billions)
Old Cap FY16 Revised FY16 Old Cap FY17 Revised FY17
Defense $523 $548 $536 $551
Non-defense $493 $518 $503 $518
Total $1,016 $1,066 $1,039 $1,069

One interesting question is whether all parties involved will consider this a two-year spending deal.  After all, the agreement includes virtually no increase in spending between FY2016 and FY2017.  However, veteran appropriators have observed the 2013 Ryan-Murray deal had a similar tight spending level in year two and all parties involved lived within it.As you see, these levels represent increases of $50 billion and $30 billion respectively over the FY16 and FY17 spending levels established in 2011.  Recall that in his February budget request, President Obama proposed a $75 billion discretionary spending increase above the FY2016 caps.

Next Steps

So the chances of a government shutdown have been dramatically reduced but we are not completely out of the woods yet.

Remember, the current continuing resolution (CR) temporarily funds the government by continuing funding levels from the prior year, but it expires on December 11th.  The increases in overall discretionary spending provided in the agreement will allow congressional appropriators the budget ceiling needed to complete work on the FY2016 federal budget –including funding for the FAA.  However one issue still remains, will policy riders, typically in the form of prohibitions against certain types of spending, derail concluding work on the FY2016 budget?

Reports indicate that work on the spending bills has already begun and will likely result in the dreaded “omnibus” appropriation bill where the twelve separate spending bills will be rolled into one mega spending bill.

By Bill Deere, Senior Vice President for Government and External Affairs


Aviation and the Lame Duck Session

November 14, 2014

By Bill Deere, NATA Senior Vice President for Government and External Affairs

The mid-term elections are concluded, the people have spoken, and Congress returned on Wednesday from two months of campaigning for a lame duck session that is expected to end in mid-December.  For those of you unfamiliar with the term, “lame duck session” is the nickname for a session of Congress that follows an election and includes lawmakers who will not be members of the next Congress, having decided to retire or were defeated.

Initially, it was thought that should control of the Senate change hands as a result of the election, very little legislative activity would occur in the lame duck.  However, even with Republicans winning control of the Senate, an effort is being made to act on at least two fronts, appropriations and taxes.

FAA Appropriations

Before adjourning, lawmakers approved legislation funding the government through December 11th. The legislation also contained other provisions including a nine month extension of the Export-Import Bank.  As a result, the FAA has been operating since October 1st at funding levels below the increases recommended for the agency by the House and Senate Appropriations Committees.

The expiration of government funding on December 11th was deliberately chosen by House and Senate appropriators to give them time to develop an “omnibus” spending package for the balance of the fiscal year.  This omnibus bill would literally wrap all twelve spending bills into one massive piece of legislation.  Should that occur, we expect the FAA will secure a funding increase that will also include bill language requiring funding of contract towers and prohibiting the development of unauthorized user fees.

Of course, the biggest decision is whether or not to move such a package.  At this writing it appears House Republicans are divided about whether to take up a full year spending package or extend government funding for a few months and revisit the issue in the new Congress.

Tax Extenders

NATA has been serving as one of the leading members of a multi-industry coalition of supporters that includes the U.S. Chamber and the National Association of Manufacturers, in support of renewing a package of approximately 55 tax provisions that expired at the end of 2013.

The “extenders” of particular interest to our industry are the immediate expensing of 50% of new investments in equipment and software commonly referred to as “bonus depreciation” and its small business counterpart known as Section 179 expensing.

The House and Senate have approached the issue in different manners.  The Senate Finance Committee approved a two-year extenders package that included bonus depreciation and Section 179.  The full House approved a series of bills making certain extenders permanent changes in tax law, including both Bonus and Section 179.

Similar to the appropriations situation, the fate of extenders remains fluid.  While it is doubtful that the House approach will be fully accepted by the Senate Finance Committee, its chairman, Senator Ron Wyden (D-OR), has indicated his willingness to explore a mix of permanent and multi-year extenders.  While a failure to act this year could make filing season very problematic, there is nevertheless an ongoing discussion about the advantages of acting on extenders retroactively in the new Congress.

NATA and other coalition members are meeting with key members of the tax writing committees and the congressional leadership to coordinate efforts toward adoption of a permanent or multi-year extenders package.

Other Aviation Issues

The House Transportation and Infrastructure Committee is taking advantage of the lame duck session to jump start its work on the FAA reauthorization.  On Tuesday the 18th the full committee will hold a hearing entitled: “FAA Reauthorization: Issues in Modernizing and Operating the Nation’s Airspace.”  In addition, the Senate Commerce Committee approved the nomination of Christopher Hart to serve as Chairman of the National Transportation Safety Board.  Action by the full Senate is still required before adjournment.


More Gridlock in the FAA Budget Process

July 31, 2014

By Bill Deere, NATA Senior Vice President for Government and External Affairs

Congress will shortly adjourn for its annual summer recess and return after Labor Day for a short session before adjourning again in advance of the November general elections.  As a result, it is likely that commencing October 1st the FAA will once again be forced to operate — for at least some period of time — through another stop-gap funding bill.  How did this come to pass?

It wasn’t supposed to. The Bipartisan Budget Act of 2013, the agreement that ended the government shutdown, was supposed to pave the way for the first regular appropriations to fund the government since FY2010.  By establishing the overall discretionary budget ceiling for FY2015, the legislation was intended to provide for at least one year of relative budget peace.

At first that’s what we saw, a return, for at least one year, of regular order in the federal budget process.  As we reported to you in May and June, the House and Senate Appropriations Committees held their budget review hearings and developed the annual spending bills, including the one that funds the FAA.  You may recall there was a lot in those bills about which to be excited.  Both the House and Senate versions provided overall FAA spending levels above the Administration request, funded contract towers, included prohibitions against the development of new user fees, and provided guidance to the agency on important issues including streamlining the certification process and improving the consistency of regulatory interpretation.

While the appropriations process moved along in the House of Representatives, the process has hit a wall in the United States Senate.  Spending bills have been reported out of the Senate Appropriations Committee with bipartisan support.  However the battle for control of the Senate has devolved into a fight over amendments to be made in order during floor consideration of legislation.  The result, only critical “must pass” legislation to fix the problems at the Veterans Administration and prevent a cessation of highway funding are considered, in other words — more gridlock.

Where do we go from here? After November’s general election Congress is expected to return for a “lame duck” session.  We can only hope that post-election the Senate will be able to take up these bills so general aviation does not lose the benefits of the funding and guidance contained in these FAA spending bills.

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An American Success Story

April 19, 2010

One of the best parts of my job is getting to meet many of NATA’s members and other general aviation professionals as I travel to the various aviation conferences, seminars and educational events around the country. There is something special about general aviation and those who choose to work in this field. My love of aviation began when I was 10. I was having trouble in school with my weekly spelling tests, and my father made a deal with me: every A I earned on a spelling test would get me an hour or so on Saturday morning out on the observation deck at Washington Dulles International Airport watching the planes take off. Needless to say, my spelling grades improved dramatically. My career in aviation began 17 years later when I enrolled in a Part 147 A&P School in Manassas, VA. Having grown up always looking to the sky every time an airplane flew over, I decided that even though my college major had been chemistry I wanted to work with airplanes. As I began working towards my A&P license, I was lucky enough to get hired at a local FBO as line technician on the evening shift. The hours were horrible, school from 7 a.m. to 2 p.m., then work from 2 p.m. to 10 p.m. The pay wasn’t great. But I had never done anything in my life so exciting. I remember standing sometimes when the workload was low and watching a G-II take off (actually with a G-II you sort of feel it, don’t you!) and feeling like a little kid again.

Last year at NATA’s Day on the Hill, I heard NATA President James K. Coyne describe general aviation as an American success story while talking with a Member of Congress. That phrase stuck with me, an American success story is exactly what general aviation is. It began right here in America, and no other country in the world can match our utilization of aircraft for the growth of business, humanitarian causes and personal freedom. I think about that phrase often and why it is true. Every time I meet an NATA member, the reason is again evident. Whether a business owner, manager, customer service representative, pilot or just the guy fueling the airplanes, most of us are here for one reason: we love aviation! That is power that should not be underestimated. Just look at what we have built! I am currently reading Spirit of St. Louis by Charles Lindbergh, and am amazed at how similar the passion, dedication and attention to detail is between the first man to fly solo across the Atlantic and the NATA members I meet every day.

In my job, and in yours, I know, it is easy to get bogged down in the obligations and troubles of each day. The point of this blog today is to help remind everyone of what you are a part: an American success story, built in fewer than 100 years by people like yourself, people who love aviation!

By Michael France, NATA Director o f Regulatory Affairs
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