Tax relief on commercial aviation is good news for private jet operators

Private travel is set to benefit from a tax relief provided through a stimulus package. AFP

The US government’s $2.2 trillion (Dh8tn) stimulus package comes with a perk for high fliers: flights are getting cheaper for some private-jet customers.

The legislation, known as the CARES Act, suspended a 7.5 per cent federal excise tax on commercial air transportation through year-end, a move that would help big US carriers. But it will also benefit some customers of private-jet operators such as Berkshire Hathaway’s NetJets and broker PrivateFly.

“While this temporary tax relief will benefit anyone who purchases commercial transportation, including our private jet card purchasers, the primary beneficiaries will be the millions of Americans who purchase airline tickets,” a NetJets spokesperson said in an emailed statement. The company doesn’t plan on applying for funding through the CARES Act.

US lawmakers passed the stimulus package in March, seeking to stem a slowdown in air travel resulting from the coronavirus pandemic. The legislation included about $61 billion in aid, including loans and grants for the airline industry as carriers from Southwest Airlines to American Airlines Group struggle to cope with the steep drop-off.

An industry group representing larger carriers had pushed for relief from the taxes while seeking more financial aid for the industry. The levy generally applied to domestic on-demand charters within the US, and some short-haul international flights.

“PrivateFly flights that fall into this category are now reflecting this exemption in the price paid by the customer,” said chief executive Adam Twidell. “On-demand private-jet charter and jet card services will benefit from the move, which will hopefully help to stimulate demand, during what is set to be an exceptionally challenging few months ahead.”

Some private-jet operators were early beneficiaries of the pandemic’s initial disruption, which resulted in a surge in inquiries from wealthy travelers seeking a way around busy airport terminals and crowded jetliners. But after the initial surge, much of that business has declined along with the rest of the aviation industry, Mr Twidell said.

“The increased demand we saw in March for repatriation and other urgent flights has now fallen away,” Mr Twidell said. “So the FET exemption until the end of the year is welcome news.”