Home Money How The GOP Tax Plan Will Improve The Airline Industry

How The GOP Tax Plan Will Improve The Airline Industry

by Margaret Marie

In addition to several banking and telecommunications businesses that announced their excitement and investment plans after the GOP tax bill was signed into law by President Trump, the airline industry also expressed gratitude. BusinessWire reported that Airlines for America (A4A), the industry trade organization for the leading US airlines, thanked House and Senate leaders for delivering on their tax cut promises that “will spur a new era of job growth and economic development.”

A4A President and CEO Nicholas E. Calio called the reforms “historic” and believes they are monumental for such a capital-intensive business. Calio believes the dramatic corporate tax rate reduction incentivizes airlines to invest more heavily in their employees, planes, and equipment.

Southwest Airlines in particular already announced that it would use the savings from the corporate tax cut to “buy new planes and fund share buybacks,” according to Reuters. Southwest President and CEO Gary Kelly said: “We’re trying to grow and at the same time keep our costs low and manage the risks of growth, and this is very welcomed.” Kelly also told Reuters that Southwest would have “more money to invest” in airplanes, hiring, current employees, and its shareholders. Most importantly for consumers, he said the savings would also help Southwest keep its low fares.

Moreover, the tax cut would not only benefit Southwest but Boeing as well, which manufactures the majority of Southwest’s airplanes. Kelly believes the tax plan will create “more jobs with Boeing to build more airplanes.” Reuters also reported that Delta Air Lines Chief Executive Ed Bastian said Delta’s savings would go towards buying equipment.

Furthermore, in terms of general aviation, the Aircraft Owners and Pilots Association declared that the plan would “spur economic growth and create good jobs, especially in aviation and the aircraft industry.” AOPA praised the plan for including immediate expensing of new and used capital investments which would “make purchasing an aircraft even more attractive.” In addition, it “gives potential investors in assets ranging from aircraft to fuel trucks more flexibility and access to more cash with the reduced tax burden” related to such transactions.

In fact, AOPA along with Helicopter Association International, the National Air Transportation Association, and the National Business Aviation Association, sent a joint letter to Senate Finance Committee Chairman Orrin Hatch (R-UT) and House Ways and Means Committee Chairman Kevin Brady (R-TX) in support of the provision. AOPA also welcomed the clarification in the plan that excludes private aircraft management from airline ticket taxes.

Overall, as evidenced by the testimony of these airline industry experts, President Trump’s tax reform is sure to be a win for airline industry jobs and traveling consumers.

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