“Investing in the aviation infrastructure will put people to work,” said AOPA President-elect Craig Fuller. “There are hundreds of relatively low-cost projects pending at community airports across the country, ready to go. Investing in them could immediately help local communities, and encourage additional economic investment. The group proposals included in the letter incorporate many of the ideas that AOPA discussed last week in a private meeting with President-elect Barack Obama’s transportation planning transition team.”
Included in the industry proposals were more funds for airport construction and incentives to aircraft owners and airlines to install equipment to take full advantage of the NextGen air traffic control system. The group proposed some $3 billion be spent on NextGen infrastructure, which would reduce airline delays, improve aviation safety, and reduce emissions. Included in the proposal is some $2.5 billion to support aircraft equipage, including ADS-B (automatic dependent surveillance-broadcast) transceivers. That would “accelerate many of the economic and environmental benefits.”
“Approximately 20,000 aircraft could be equipped with this investment, generating high-paying green jobs in the high-tech fields of civil aviation manufacturing, flight operations, maintenance, and environment,” the letter noted.
The aviation organizations proposed that the current Airport Improvement Program receive an additional $1 billion in funding. There are more than 5,000 public-use airports in the United States, but only about 500 have commercial service, they said. General aviation airports are the transportation life-links for the majority of America’s communities.
“There are improvement projects that would increase the utility and safety of these vital airports that could go to contract within 30 days if the money were available,” said Fuller. The aviation groups predicated that this proposed infrastructure funding could create some 35,000 jobs.
Also proposed were changes in the tax code to make airport bonds more attractive to investors, providing more money for construction. The group also wants other changes that would help keep aircraft manufacturing production lines moving and encourage new research and development in the aviation industry.
While the aviation industry is feeling the current economic pain like everyone else, “all forecasts point to robust growth in the civil aviation sector in the coming years,” the group said.
“Investment in our aviation infrastructure will pay dividends for generations,” said Fuller.

Sidebar: Federal Actions That Would Help the Industry
Include at least $1 billion for the Airport Improvement Program (AIP) - As you know, there are over 5,000 public use airports in this country. Approximately 500 have commercial airline service. In addition to commercial airline service to large communities, General Aviation and regional airline service provide an economic lifeline for thousands of communities and an essential economic generator throughout the country. Additional investment in airports of all sizes will undoubtedly provide needed stimulus to both large cities and rural communities in all 50 states. This infrastructure funding would help stimulate the economy by creating approximately 35,000 high-paying jobs. It would also expedite the construction of critical safety, security and capacity projects at airports around the country.

Fund $3 billion in NextGen Equipage to Reduce Emissions and Delays - Our aviation infrastructure includes airports, airways, aircraft, and the air traffic management system. In order to support and stimulate the U.S. economy, it is necessary to invest in the entire aviation infrastructure. To enable many of the changes envisioned in NextGen, new aircraft equipment must be purchased and installed to operate in the new system. Incentives or funding to support avionics implementation would accelerate many of the economic and environmental benefits. Key pieces of NextGen include Automated Dependent Surveillance-Broadcast (ADS-B) ($2.5 billion equipage), Required Navigation Performance (RNP/RNAV) ($500 million equipage) and GPS Wide Area Augmentation System – equipment that when deployed on commercial and general aviation aircraft increases safety in all weather conditions, the accuracy of the information used to track airplanes and will help enable reduced spacing between aircraft, will reduce emissions, and improve passenger experience. Approximately 20,000 aircraft can be equipped with this investment – generating high-paying green jobs in the high-tech fields of civil aviation manufacturing, flight operations, maintenance and environment.

Eliminate the Alternative Minimum Tax (AMT) penalty on airport private activity bonds - Federal tax law unfairly classifies the vast majority of bonds that airports use as private activity – even though they are used to finance runways, taxiways and other facilities that benefit the public. Since private activity bonds are subject to the AMT, airport bond issuers are charged higher interest rates on their borrowing. Consequently, airports are being forced to either postpone key infrastructure projects or find other sources of short-term financing. Eliminating the AMT penalty would allow airports to find buyers for their bonds so they can fund infrastructure projects that will create jobs and stimulate the economy.

Extend the current bonus depreciation provision for aircraft purchases through December 31, 2009 and the placed-in-service date through December 31, 2011 - New general aviation aircraft orders are freezing up. Deliveries of piston engine airplanes have fallen by 11 percent and sales are stagnant. We need to keep aircraft production lines moving and machinists and engineers employed. Bonus depreciation changes the timing of the standard depreciation schedule to give more depreciation in year one but less depreciation in all future years (the total amount of depreciation remains unchanged). Additionally, the in-service placement date should be extended to December 31, 2011 to allow manufacturers to maintain their backlog and production schedules more effectively. By extending bonus depreciation and the in-service placement date, we will be better able to preserve the good jobs our industry offers. Finally, since bonus depreciation relates only to timing and does not change the total amount that can be ultimately depreciated, its cost to the federal government is close to zero.

Accelerate Increase in Domestic Manufacturing Deduction - Under present law, in 2010, the Internal Revenue Code, Section 199 deduction for domestic manufacturing activities is scheduled to increase by 50 percent – from six percent of U.S. manufacturing income to nine percent. When enacted in 2004, the purpose of Section 199 was to encourage manufacturing activities and job creation in the U.S., but it was phased in over a six-year period for budgetary reasons. To maximize this incentive for U.S. manufacturing activities, Congress should now accelerate the effective date of the last scheduled increase in the tax deduction to January 1, 2009.

Make the R&D tax credit permanent - An increasing amount of research funding is being committed in countries – such as Ireland, Canada and China – because more attractive Research and Development (R&D) tax incentives are available outside the United States. Thus, the U.S. has already fallen out of the top rank of Organization for Economic Cooperation and Development countries offering tax incentives for private sector R&D. The R&D tax credit provides a critical and effective incentive for companies to increase their investment in U.S.-based research and development. The credit is a positive stimulus to U.S. investment, innovation, wage growth, consumption, and exports -- all contributing to a stronger economy and a higher standard of living for American workers. Making the R&D tax credit permanent will help reduce uncertainty for companies making tough R&D investment decisions in the U.S.