Why Does A Cash-Paying Partner Need To Be On An Aircraft Loan? see more
NAFA member, Adam Meredith, President of AOPA Aviation Finance Company, answers your questions about cash-paying partners on aircraft loans.
Many lenders require that all partners are on the lien, even if one of those partners is paying cash. In particular it’s fairly common with lower-dollar loan amounts. And frankly, it’s a tradition that should be changed.
Lenders need a formal agreement with all parties involved in the ownership of the asset—the aircraft—stating that the lender has a first-priority interest in the aircraft in the event the loan goes into default.
Generally speaking, there are two methods to achieve that aim. The most efficient way is to have all parties to the transaction attach themselves to the loan, the lien. The second way is by drawing up an addendum document, commonly known as a subordination agreement. The subordination agreement doesn’t tie the cash-paying participant to any of the debts or other obligations assigned in the loan. It’s a stipulation of first position rights by the lender and an acknowledgment by the cash party of that stipulation.
One of these options is more customer friendly than the other. One is more traditional than the other. Our belief is in an age when loans have become as commoditized as they have become, lenders should emphasize customer service over tradition.
Lenders might argue that the extra fees generated from creating a subordination agreement is not customer friendly. For instance, for loans between $20K and $50K, that extra cost could approach 4 %. In many a lender’s mind, that additional financial burden on the borrower is more nuisance than convenience.
In more upmarket transactions, a PC-12, a TBM or a Cirrus, for example, where the loan amount is well north of half a million, lenders tend to be more willing to accommodate. That’s because the added cost as a percentage of the total loan is much smaller and therefore only minimally impacts them.
We live in a world where people are more willing to pay for convenience. It would behoove banks to offer the option of drawing up subordination agreements for lower value loans if the borrowers believe that to be in their best interest. Doing so relieves the cash partner of loan default liability and credit exposure. And the bank can rightly charge for the convenience.
This article was originally published by AOPA Finance on July 30, 2020.
2021 Trends, Trials, Triumphs - BizAv Trade Associations Working for You see more
NAFA member and Marketing Director of The National Aircraft Finance Association (NAFA), Tracey Cheek, shares the latest trends in general and business aviation.
The National Aircraft Finance Association (NAFA) recently hosted a webinar with industry leaders: Ed Bolen, President and CEO of the National Business Aviation Association (NBAA); Pete Bunce, President and CEO of the General Aviation Manufacturers Association (GAMA); Tim Obitts, President and CEO of the National Air Transportation Association (NATA); and Mark Baker, President of Aircraft Owners and Pilots Association (AOPA); moderated by Business Aviation Advisor Publisher Gil Wolin to discuss the changing state of the aviation industry.
What are some trends – both positive and negative – that business aircraft owners and users can expect to see?
- General and business aviation use increased dramatically since April, as have first-time jet card buyers and charterers. Initially, 90% of these flights were personal, while only 10% were for business. However, as the year progressed, while the percentage of flight activity for business increased, travel remains challenged because there isn’t a lot of business to be done. According to NBAA, larger international jet traffic is slow. Fortunately, these flight departments have not shut down or sold off their fleet. They are still using their aircraft for intracompany flying between and among remote facilities, while preparing to gear up to resume travel to other cities when it’s safer to do so.
- Health and safety continue to be drivers for increased charter. Ed Bolen cited a recent McKinsey study indicating that travelers flying commercially encountered more than 780 “touchpoints” with others, while those flying business aircraft had fewer than two dozen. For that reason alone most of these new business aviation flyers already say they have no intention of returning to commercial travel. This bodes well for current owners. If your aircraft is available for charter, these new entrants will book more charter hours, helping to maintain or even increase your aircraft’s asset value. History indicates that many of those new charter users will eventually buy their own aircraft, thus bolstering the resale market.
- Baker indicated that flight schools are reporting a dramatic increase in students, from both new flyers and those inactive pilots seeking a refresher. AOPA’s Flying Club initiative, launched in 2016, has to date created 161 clubs, serving more than 2,400 pilots nationwide.
- As the pandemic continues, an interesting new phenomenon has emerged: people are leaving cities for remote suburbs. While they’ve learned to work remotely, they still need mobility. Bunce indicated that the network of GA airports makes that possible, as people are using small aircraft to commute from larger city airports to their new homes.
What are your trade associations doing to support you, and business aviation in general?
- Illegal charter continues to be an issue in the industry. Many owners still do not understand that as soon as money changes hands, that flight can be construed as a commercial flight. NATA has been on the forefront of this issue, along with the FAA, the Department of Homeland Security, and Customs and Border Patrol, educating those who use and operate business aircraft. According to Obitts, it mostly is an issue of dealing with the “clueless and careless.” AOPA is working to inform owners about how to properly share aircraft via safe and legal “dry” (aircraft only) leases.
- After many years of no increases, insurance rate hikes for both new and renewal policies are significant. Insurance underwriters also are discriminating against older pilots, charging higher rates and even denying them coverage. Neither AOPA nor the NTSB has found any correlation between age and fatalities or significant accidents. AOPA is leading industry efforts to fight this age bias by educating insurance providers on the facts, encouraging them to look at individual qualifications, and discussing options like training and level of experience.
In some instances, owners are placing planes in aircraft management companies, while in others, operators are pooling insurance companies to share risk. In all instances, parties are working to understand the real discriminators and to find alternative ways to mitigate risk to the underwriters. Despite these efforts, NATA suggests premiums will likely continue to rise over the next couple of years.
- Safe and efficient business and general aircraft travel depend on access to all airports, especially those with FAA-tower control. NBAA and AOPA work tirelessly to ensure those government-funded towers remain open and functioning, reminding authorities that they fall under the same essential regulatory requirements as interstate highways.
- The one real positive outcome to the pandemic is an increased awareness of, and improvement in, sanitization. NATA created its Safety First Clean Initiative, creating standards for cleaning both aircraft and ground facilities, covering aircraft from landing to departure. FBOs are educating travelers with billboards outlining steps they’ve taken to keep the aircraft and their passenger lounges and maintenance hangars clean. The industry is discovering new uses for ultraviolet and ionizing sanitation procedures, and examining how HEPA filters work to filter cabin air. AOPA’s website, regularly accessed by thousands, is updated daily with a list of restrictions by state. Because of these efforts, all airports remain open today, and these new standards for cleanliness will last long after the pandemic is over.
- The industry continues to invest in the future, ensuring that owners will have the flight and support personnel needed to continue flying safely and securely. Science Technology Engineering & Math (STEM) continues to be an important part of these efforts. AOPA’s donor-supported program has created 400 classes and introduced more than 8,000 children to aviation as a career, 25% of whom are girls and 40% come from diverse backgrounds. GAMA has initiated a Washington, DC program to help introduce inner city students to aviation, as well. NBAA recently conducted a Safety Week, focused on training, technology, and personal fitness.
- To counter ongoing negative public perceptions of business aviation, your trade associations are assertively promoting the usefulness of the industry, advances in sustainable aviation fuel, use of composite technology, and the adoption of GPS. New efforts will celebrate advances in electric, hybrid, and even hydrogen propulsion, as well as aviation technology, such as drones, supersonic travel, Advanced Air Mobility, and particularly Urban Air Mobility – vertical takeoff and landing (VTOL) aircraft.
- Charitable use of aircraft is increasing. In support of pandemic and disaster relief efforts, many companies are donating their aircraft and crews, moving people and supplies to areas that need it most. Bunce stated that aviation manufacturers too are responding generously, diverting their plant capabilities to making much-needed medical and safety equipment to support health care requirements.
This past year has wrought unforeseen changes, for both new and existing users of business and general aviation. We are more aware of the way we travel and conduct business. We now have an increased awareness of the value of time: the cost of time lost or wasted, and how we can travel more safely and efficiently.
That bodes well for both segments in 2021, and beyond. BAA
This article originally appeared in Business Aviation Advisor November/December 2020.
Difficulties Financing an Aircraft for Leaseback see more
NAFA member, Adam Meredith, President of AOPA Aviation Finance Company, discusses the challenges of financing aircraft leased back to a flight school or flying club due to higher-than-normal aircraft usage.
The usage equates to two things: number of hours flown annually and the type of hours flown. Aircraft leased back to flying clubs will typically accrue fewer hours than those leased to a flight school. Additionally, flight training hours will be harder on an aircraft’s engine and airframe because students and inexperienced pilots are harder on equipment than experienced pilots.
The flying club may go so far as to stipulate that members can’t join without a certain level of experience. A privately-owned airplane is flying a lot at 100 hours per year. An airplane on leaseback to a flying club could fly 200-300 hours per year. A popular flight school might see double that. More hours on the engine mean more hours on the airframe, lowering the airplane’s value. When it comes to the engine, that accelerated use could force an overhaul before typically anticipated in an amortization schedule, significantly eroding an airplane’s market value. This is what makes lenders nervous.
For example, let’s take a 1980 Cessna 182 worth $100K with a mid-time engine and decent avionics and interior. The prospective buyer wants to lease back to a flying club. Let’s say the lender values the same aircraft at TBO at $85K but also expects you to reach TBO in a certain number of years under normal usage. For a leaseback to a flying club, the lender might typically expect to see 150-250 hours a year. A lender can tolerate 300 hours or maybe even 350 hours, but higher than that and depreciation accelerates. Additionally, instead of an overhaul in five to seven years, you’ll need one in two or three.
For these reasons, lenders have a minimum loan of $100K and require a 30% down payment to finance a plane destined for flight school or flying club leaseback. So $30K down and then a $30K overhaul in two-three years means an owner essentially has put $60K cash into a plane that’s worth $105K with the overhauled engine.
Some aircraft are more likely leaseback candidates than others. A $400K or $500K SR22 is a good example. This could be ideal for a flying club or for a flight school that also rents aircraft. It’s also worth noting there are some options for leaseback to flying clubs with only 25% down and a $25K minimum loan amount, but the aircraft must be owned personally, not in an LLC. Give AOPA Aviation Finance a call if this is a situation you’d like to explore. Depending upon the current residual value in your aircraft, there might be room for a deal.
This article was originally published by AOPA Finance on July 9, 2020.
NAFA member, Adam Meredith, discusses the hidden or unexpected costs of aircraft ownership. see more
NAFA member, Adam Meredith, President of AOPA Aviation Finance Company, discusses the hidden or unexpected costs of aircraft ownership.
Major hidden costs, for example, can result when a previous owner has deferred maintenance. You’re better off buying an airplane that’s been regularly used because the owner will typically address issues as they arise in order to continue using the plane regularly.
It’s a myth that it’s smart to look for an aircraft that’s had low flying time. Less wear and tear on the engine and the airframe? While those are important considerations, they should not be the only ones. After all, these are machines and machines are made to be run. When an aircraft sits, its problems remain hidden.
Low flying time could mean high maintenance when it’s your time to own the airplane. That’s one reason the first annual inspection can be unusually expensive — another hidden cost. So be prepared.
Here is a list of other hidden costs associated with aircraft ownership:
- Expenses incurred when an airplane is tied down outside (as opposed to protected in a hangar), including repainting and reskinning the exterior and replacing or repairing instrument panels, aircraft seats, interiors or even sun-crazed windows.
- Contaminated fuel, or more likely, a lineman who accidentally fills your gas tanks with the wrong fuel.
- Unforeseen mechanical failures or mishaps, such as a blown tire, a gear door jamming, a baggage door opening in flight and ejecting an object that damages an elevator or tail surface, etc.
- Compliance with unforeseen airworthiness directives (ADs).
- Animal strikes, bird strikes, lightning strikes, prop strikes, strikes by another aircraft taxiing into you.
- Mud daubers corrupting your pitot-static system or rodents chewing through electrical cables or nesting in your push-pull tubes.
- Sudden failure of one or more instruments, navigation radios or engine monitors.
- Even a pandemic.
The list is extensive but not exhaustive. Hence our advice to add 10% to 15% on top of your projected operations budget, so when those hidden costs reveal themselves, you aren’t surprised.
This article was originally published by AOPA Aviation Finance Company on June 10, 2020.
NAFA member, Adam Meredith, President of AOPA Finance, answers your aircraft purchase questions. see more
NAFA member, Adam Meredith, President of AOPA Aviation Finance Company, answers your aircraft purchasing questions.
Question: I am a healthy 60 year old, retired student pilot with aspirations to purchase a used Cessna 182 for recreational travel after successfully passing my private pilot check ride. My intention at this point is to pay cash /not finance, but that decision is not based on considerations other than a personal aversion to debt. My expected budget for the purchase is $100-$175K, including any ancillary expenses associated with the purchase (inspections, taxes, fees, etc.) I am ignorant of the various considerations involved in choosing / buying an airplane and am curious about any services AOPA may offer to assist new pilots in purchasing their first airplane.
Are there benefits to financing? Is there a “playbook” on buying an airplane that AOPA provides for its members? Is there a financial advantage to waiting, i.e., is the current market in used GA aircraft likely to soften into a “buyers market?” Is it typically more cost effective to acquire a low tech platform and update avionics or look for a plane with glass panel already installed? Other considerations not mentioned?
Answer: The biggest benefit to financing is for folks with cash flow that want to preserve liquidity. Right now, especially, we are seeing people preserve capital either for investing in the market or for a safety margin if things start to get tight, cash flow-wise, down the road. In terms of a “play book”, we have a great resource page on our website for members trying to navigate the purchasing and financing process: https://finance.aopa.org/aviation-finance/first-time-buyers
At this point, it seems unlikely for the used GA aircraft market to soften. Inventory levels of good 182s was limited prior to the COVID-19 outbreak. What we’ve seen since the COVID-19 outbreak is very few new listings of aircraft for sale, making it just as hard to find deals. Could it change down the road? Possibly, but at the rate things are going it won’t likely be for a while longer. In terms of acquiring a low tech platform and updating the avionics vs. looking for an airplane with glass panel already installed, you are almost always better off (economically) buying an airplane someone else has done upgrades on. They put the money in but won’t get it back out. We always recommend that members get pre-approved so that when you find the airplane you like you’re not going to lose out to a cash buyer. Please reach out to us by calling 800.627.5263 so we can answer any other questions you may have.
This article was originally published by AOPA Finance on May 29, 2020.
With Rates Still Falling, Am I Better Off With a Floating Rate? see more
NAFA member, Adam Meredith, President of AOPA Aviation Finance Company, discusses adjustable rates and your aircraft purchase.
The classic answer is, "It depends." The answer lies in what your time horizon is for holding onto the aircraft you are buying.
Most lenders offering adjustable rates will have an interest rate floor. And for most of them, that floor is only slight lower than where rates are currently. Remember, lenders have floors because they incur real costs in lending money and also seen rates go negative. Interest rate floors allow them to cover their costs and remain solvent. Therefore, while anyone with an adjustable rate could benefit if rates drop slightly and/or stay flat, borrowers with longer-term hold time horizon risk paying more when interest rates start eventually going back up.
That said, the latest economic projections indicate the current economic situation we find ourselves in is likely to last between 18 months and two years. Given that the average hold time is somewhere around four years, that means there are a number of people who are holding their aircraft for only a couple of years or less. So, if your time horizon to own an aircraft is less than a couple of years, then yes, absolutely, this is a great time to look at floating rates.
If your hold time is greater than two to three years, you risk becoming exposed to interest rates floating higher when the economy starts picking up steam. It's not unlikely that the Fed may increase rates in order to stave off inflation. That'll increase the cost of your loan.
This article was originally published by AOPA Finance on April 30, 2020.
Adam Meredith, of AOPA Finance, addresses commonly asked questions on aircraft ownership. see more
NAFA member, Adam Meredith, President of AOPA Finance, addresses commonly asked questions on aircraft ownership during this difficult time. Purchasing an aircraft can be a challenging process under normal circumstances, but can be even more difficult to navigate during market volatility.
Question: With the current market volatility, do you find that lenders are tightening or loosening their credit requirements?
Answer: We have definitely seen some that are tightening credit. Specifically, some lenders are requesting copies of bank/investment statements that are within the last couple of days (vs. 30 days, under regular times). Given stock market volatility this isn’t too surprising. Also, we’ve seen some lenders that are being more cautious lending to individuals with direct financial exposure to COVID-19 (i.e. service industry companies not deemed essential).
Question: What advice are you giving to members who were currently looking to purchase before all of the shelter in place orders? Should we continue our search or place our search on hold until all of this blows over?
If you’re personally at high risk (financially or otherwise) to COVID-19, you’d be well advised to pause the purchase process. However, for everyone else, I’d encourage you to keep looking and work with sellers to create a plan for how to push through the closing process. For advice on guidance with shelter in place requirements, reach out to our trusted legal staff if you’re a legal services plan participant. If not, reach out to our Pilot Information Center to get the latest guidance.
This article was originally published by AOPA Finance on April 23, 2020.
How is the Coronavirus Affecting Used Aircraft Prices? see more
NAFA member, Adam Meredith, President of AOPA Aviation Finance Company, discusses how the coronavirus pandemic has affected pricing of used aircraft.
As of this writing, the coronavirus pandemic has not resulted in any measurable decline in used aircraft prices. That's not to say it won't over time, but in the near term, prices are holding steady.
Why aren’t we seeing values lower? Despite being blindsided by the consequences surrounding the coronavirus pandemic, the aviation market was already in a unique situation because inventory was pretty thin. Traditionally, when supply is constrained, market pricing will stay roughly the same. That holds true now, despite any drop-in demand that we may be witnessing.
Another reason prices have remained steady is because fewer owners are listing planes right now. There is so much uncertainty surrounding the ability to close deals (financing, the logistics of inspections and aircraft delivery) that folks are more comfortable sitting on the sidelines than taking the risk of losing out on a deal.
While the coronavirus pandemic might spur some people to sell, as of yet, there’s been no noticeable uptick in these situations. AOPA Aviation Finance, (“AAF”) is working on a deal right now with a pilot-owner who’s trying to close on a TBM turboprop single. He's buying from an 80-year-old gentleman, but such transactions are rarer than they are regular.
The bottom line is if you're thinking this might be a good time to pick up something cheap, our answer is, it’s always worth looking, but the markets are efficient and the professionals in the industry help to keep it way, so you’ll have to look hard for those gems.
This article was originally published by AOPA Finance on April 30, 2020.
How is the Coronavirus Affecting the Closing Process for Aircraft? see more
NAFA member, Adam Meredith, President of AOPA Aviation Finance Company, discusses the challenges of aircraft closings during the Coronavirus pandemic.
Unlike real estate, where the exchanged property does not move, the challenge with closing on an aircraft is that eventually it must be flown to its new home. It’s a rare transaction where buyers purchase an airplane from their home airfield. Therefore, how to legally move the aircraft is one major concern for buyers during the coronavirus pandemic. Another is how to get a pre-buy inspection done.
First, there is the sticky problem of getting an aircraft inspected. It’s not clear whether maintenance and repair shops are currently open to perform pre-buy inspections, or whether their employees can even report to work. Some states have not deemed aviation techs “essential.” What jobs are deemed “essential,” how, and by whom such job designations will be enforced remains up in the air. Even if aviation techs are, parts suppliers might not be. That means needed parts may not get delivered. In normal times, a closing might take 30 days. In these abnormal times, plan on the process stretching to 45 days or more.
Beyond that, is it legal for a ferry pilot or the new owner to fly an airplane from the airport where it is hangared to its new home base? State laws vary on the subject. How complicated it will be to transport the aircraft may depend on factors like the route of flight and the number of states involved. Is the airplane going from California to Maine? Or from Wisconsin to Indiana? One has to ask oneself, “Am I going to have a challenge from this state?” Other questions follow, including, “Which governing body would enforce such a challenge — state or federal?” “Is it within FAA or state jurisdiction?” None of that is easy to navigate.
If you can imagine the difficulty of flying from one European country to another and having to deal with the balkanized ATC system there, then you have some idea of the current complexity surrounding moving an aircraft across state lines during this pandemic. At AOPA Aviation Finance, (“AAF”), our advice is to call AOPA’s Legal Services to get better clarity on your specific situation.
That is a great benefit of AOPA, having multiple resources all in one place. This complex situation is the perfect time to tap into them.
Great advice. Great rates. From helpful and responsive reps you can trust. Three good reasons to turn to AOPA Aviation Finance when you are buying an airplane. If you need a dependable source of financing with people who are on your side, just call 800.62.PLANE (800.627.5263), or click here to request a quote.
This article was originally published by AOPA Aviation Finance Company on April 30, 2020.
State of general aviation with AOPA President Mark Baker see more
NAFA member, Mark Baker, President of AOPA, discusses the latest on AOPA's advocacy efforts to protect general aviation pilots and community airports during the coronavirus pandemic.
AOPA President Mark Baker hosted a recent livestream on YouTube to bring you the latest updates on our efforts to obtain relief for pilots on several certification deadlines, secure funding for airports, maintain access to airspace, and more.
Mark took questions and answered them during the live discussion moderated by AOPA Senior Vice President of Marketing Jiri Marousek.
In case you missed it, listen to the livestream now: State of general aviation with AOPA President Mark Baker.
This livestream was posted by AOPA on April 22, 2020.
GA Fights for Public Benefit Exemptions, Accommodations see more
NAFA member, AOPA, fights for the general aviation industry public benefit exemptions and accommodations.
As the coronavirus pandemic alters every facet of life and how industries around the globe operate, the aviation sector is trying to find its new normal. The FAA has taken steps to address the heavily impacted operations of commercial carriers amid the COVID-19 pandemic, and now, general aviation continues to ask for the same treatment as it provides vital services to the public and economy while fighting a worldwide crisis.
General aviation is providing vital services to the public and economy during the coronavirus pandemic, as exemplified by Michigan Seaplane flight school instructors Nick Hall and Mike Mato, who have been flying medical face shields to a Michigan hospital in a Cessna 206. AOPA and other aviation groups are requesting exemptions for GA because it is serving a critical role. Photo courtesy of Nick Hall and Mike Mato.
In an April 1 letter to FAA Associate Administrator for Aviation Safety Ali Bahrami, AOPA and seven other industry groups urged the agency to empower the continued health of the multibillion-dollar GA industry through extensions to examinations, certifications, maintenance, and filings. GA has stepped up in many ways to help the nation deal with the COVID-19 crisis through its more than 5,000 public airports across the country, providing transportation and logistical support for needed supplies and personnel.
While the commercial aviation sector has taken center stage as being hard hit throughout the pandemic, the vital contributions of GA often go unrecognized.
General aviation has long been vital to the nation’s transportation and economic infrastructure,” said Christopher Cooper, AOPA director of regulatory affairs. “From providing medical resources to remote locations to supporting millions of jobs and economic activity across the United States, the benefit general aviation provides to the public, especially in times of national crisis, is enormous. Having these exemptions and deviations approved by the FAA will ensure general aviation has limited delay in operations to help the fight against the COVID-19 pandemic.”
The letter also cited a recent PricewaterhouseCoopers LLP study showing that GA contributes 1.2 million jobs and $247 billion in economic activity to the United States. The Cybersecurity and Infrastructure Security Agency (CISA), which falls under the Department of Homeland Security, has designated transportation, which includes GA, as a critical infrastructure sector. Air medical is specifically named by CISA as a critical workforce, and air medical aircraft continue to provide lifesaving missions for those in need whether stricken by COVID-19 or other health emergencies.
“This letter builds upon an earlier request sent to the FAA on March 17, further explaining why these extensions are justified since general aviation is, indeed, a public good. Regulations and exemptions must be found to be for the public good, and this is the rationale the FAA used to provide exemptions for air carriers and commercial operations. We believe general aviation should also be provided exemptions based on the same rationale,” said Cooper.
Similar regulatory activity has already been enacted by the European Union Aviation Safety Agency in Europe and the Civil Aviation Authority in the United Kingdom, where comparable exemptions have been granted to both commercial and noncommercial operations in their respective countries.
Along with AOPA, the Air Medical Operators Association, the Experimental Aircraft Association, the General Aviation Manufacturers Association, Helicopter Association International, the National Agricultural Aviation Association, the National Air Transportation Association, and the National Business Aviation Association signed the April 1 letter.
AOPA and seven other GA organizations signed an April 1 letter to the FAA requesting a wide range of exemptions and deviations:
- Extension of FAR Part 61 pilot currency requirements, including the flight review and instrument proficiency check.
- Guidance that 709 reexaminations or paperwork inspections in person (such as logbook inspections under FAR 61.51, or maintenance record inspections under FAR 91.417) be deferred or at least be conducted electronically during the current social distancing safety protocols and directives regarding nonessential activities.
- Extensions for certificated flight instructor certificate renewal, expiration, and endorsement periods.
- Extension of knowledge exam expiration period.
- Extensions for applicants on the ability to complete practical examinations.
- Extension for filing documents under FAR Part 13 (Subparts C, D, and G).
- Extensions for aircraft maintenance and continuing airworthiness requirements with necessary mitigation procedures.
This article was originally published by AOPA on April 2, 2020.
Stimulus Package Includes $100 Million for GA Airports see more
NAFA member, AOPA works to support GA Airports across the country.
A $2 trillion stimulus package passed unanimously by the Senate to support the economy during the coronavirus pandemic includes $100 million to protect general aviation airports and maintain small and rural communities’ access to aviation services.
The funding for GA airports—which the Aircraft Owners and Pilots Association (AOPA) made a top advocacy priority for fighting the pandemic’s impact—is part of a $10 billion emergency appropriation for airports in the stimulus plan that passed the Senate by a vote of 96 to zero on March 25. The package is expected to be approved by the House and sent to President Donald Trump on March 27 for signing.
Of the more than 3,300 airports in the federal system, 2,815 airports that have no scheduled air service or have fewer than 2,500 passengers per year on scheduled routes will be eligible for the $100 million in grant awards—roughly $36,000 per airport.
The money will come from the general fund, not the Airport and Airway Trust Fund, and may be used for any purpose on which airport revenue may lawfully be spent.
No local match will be required as the federal government’s share of the grants will be 100 percent. Non-hub and small airports were exempted from a condition requiring airports receiving the grant funding to retain at least 90-percent of their workforce through the end of the year.
“We need these airports and I just want to thank those in Congress who understand the importance of them, especially the thousands of small airports across the country. I appreciate the fact that they ensured this emergency funding is a priority as the nation works to meet the challenges caused by this pandemic,” said AOPA President Mark Baker. “These airports provide critical services to many communities and account for millions of operations each year, while also doing distinguished service during emergencies including natural disasters.”
Other provisions of the stimulus package related to aviation require the Department of Transportation to take into consideration the air transportation needs of small and remote communities.
The legislation suspends certain aviation excise taxes through the end of 2020 including the passenger ticket tax, cargo tax, and fuel taxes on kerosene used in commercial aviation, including Part 135 operations.
AOPA is continuously updating its coverage of the coronavirus pandemic’s impact on general aviation. For more information please visit this page.
This article was originally published by AOPA on March 26, 2020.
AOPA Backs Emergency Airport Funding to Fight Coronavirus Impact see more
NAFA member, AOPA, urges Congress to support emergency airport funding.
AOPA and six other aviation groups are urging Congress to support needed funding for airports across the country while ensuring that small and general aviation airports also receive a portion of any funds made available to help cope with the coronavirus pandemic.
Assistance to airports should include funding “exclusively for small and general aviation airports that serve thousands of communities across the country and which have also been impacted by this situation,” the groups said in a letter delivered to the bipartisan leadership of the House and Senate appropriations committees on March 23.
“We need a strong and vibrant airport ecosystem in this nation and we want to do everything we can to ensure they get help to meet the operational challenges caused by this pandemic and ultimately continue to accommodate the millions of general aviation operations each year,” said AOPA President Mark Baker. “These airports will remain a priority for us.”
The letter noted that volunteer pilots fly from airports that are the lifeline of many small and rural communities to deliver goods and services during times of natural disasters and emergencies. The diverse general and business aviation aircraft fleet is “capable of rapidly responding to needs in every part of the country and transporting time sensitive supplies, medical and testing equipment, organs for transplants, and key personnel and patients on demand,” it said, adding that “now more than ever, the country will rely on our airport ecosystem.”
As the pandemic has continued, AOPA has been reporting on the coronavirus’s increasing impact on GA airports, events, and activities.
The organizations that joined AOPA in signing the letter include the Experimental Aircraft Association, the General Aviation Manufacturers Association, Helicopter Association International, the National Air Transportation Association, the National Business Aviation Association, and the National Association of State Aviation Officials.
This article was originally published by AOPA on March 23, 2020.
Aircraft Purchases During Stock Market Swings see more
NAFA member, Adam Meredith, President of AOPA Aviation Finance Company, discusses aircraft purchases during stock market swings.
Q: Given the current volatility of the market, what advice are you giving to members contemplating an aircraft purchase?
A: In times of volatility, in particular with wild stock market swings, you want to maintain as much cash as possible. Taking a methodical approach of buying into markets that are depressed is arguably more important than having the proverbial crystal ball that helps you get out of the market before a crash. That said, there has probably been no better time to obtain financing, whether it be for your house or airplane, or any other relatively stable asset then now. With interest rates for excellent credits on loans over $2M in the 2.5 to 3.0% range, this is truly an unheard-of period of time. Knowing what options are available is what AOPA Finance does best because of the strength and depth of our membership. Don’t wait to find out what your specific situation looks like, call us and find out how we can help you take advantage of this rare time.
This article was originally published by AOPA Aviation Finance Company on March 11, 2020.
Congress Introduces Legislation for a National Aviation Center see more
NAFA member, AOPA, shares the latest on legislation for a national aviation center.
Known as the National Center for the Advancement of Aviation (NCAA), the bill has already garnered overwhelming support from AOPA and organizations representing all segments of aviation across the country.
The proposal will open the door for all stakeholders to come together in support of a long-overdue, national industry forum. It will help ensure science, technology, engineering, and math (STEM)-based aviation curriculum reaches the 25,000-plus high schools across the country, assist in apprenticeships, and help military veterans and others transition to good paying technical jobs in the aviation industry.
The NCAA would be a private entity and no general fund taxpayer dollars would be used to support it. The legislation calls for funding the initiative by using a small percentage of the interest that is accrued annually on the taxes and fees collected from users and deposited into the aviation trust fund. Today, users of our aviation system pay for nearly all the costs associated with the operations of the FAA including air traffic control modernization. Moreover, the proposed center would be prohibited from involvement in any political or legislative activity.
Spearheaded by U.S. Sens. James Inhofe (R-Okla.) and Tammy Duckworth (D-Ill.), the NCAA would focus on four key initiatives: aviation workforce development, including the facilitation of STEM-based aviation curriculum for high school students; a repository for aviation research; safety and economic data analysis; and the fostering of needed collaboration among the entire aviation industry.
“The widespread support for this center is very encouraging. This center would do more to promote needed cooperation in the aviation community including efforts to address the workforce challenges our industry is facing now and into the future. Whether it be pilots starting in general aviation, military or commercial pilots, technicians, maintenance workers, or others, we need to ensure that our industry remains competitive and can meet these challenges,” said AOPA President Mark Baker. “AOPA is proud to work alongside allies in Congress and respected aviation leaders to make this center a reality.”
Demand for air travel, a sizeable cohort of commercial pilots nearing the mandated retirement age, and the high cost of training have all led to a shortage of qualified professionals in the industry. Boeing’s 2019 Pilot and Technician Outlook predicts the need for 804,000 new civil aviation pilots, 769,000 new maintenance technicians, and 914,000 new cabin crew over the next 20 years to fly and maintain the global aircraft fleet. In North America alone, Boeing suggests 212,000 new pilots and 193,000 new technicians will be needed over the next two decades.
According to the Aeronautical Repair Station Association the technician shortage is costing the U.S. aviation maintenance industry an estimated $118 million per month ($1.421 billion per year) in lost economic opportunity. Additionally, the Aviation Technician Education Council predicts that the mechanic population will decrease 5 percent in the next 15 years. New entrants make up just 2 percent of the technician workforce annually, while 30 percent is at or near retirement age.
The U.S. Air Force is short thousands of fighter pilots but has taken significant steps to reduce that gap and seek initiatives to retain more airmen. Using 3D virtual reality, the Air Force is looking to speed up pilot training—a technique that could also benefit the civilian pilot training sector. The NCAA would be an avenue for the Air Force to share its experience, allowing for cross-industry collaboration and potentially reducing the cost of civilian flight training.
The future of the entire aviation ecosystem depends on effective training, resources, and innovative ideas, which can be accomplished through the establishment of the NCAA.
Additionally, this center would allow the FAA to focus on safety and certification while the industry invests in the collaboration of promoting aviation through education, training, research, and awareness of the many job opportunities in the aviation industry.
This article was originally published by AOPA on February 27, 2020.