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The Aviation Council of Pennsylvania (ACP) consists of airports, fixed-base operators, flight schools, business aircraft operators, aerospace manufacturers and suppliers, air charter operators, and other aviation organizations and suppliers all working together to improve and promote aviation and aerospace throughout the Commonwealth of Pennsylvania.

The purpose of the ACP is to represent the Pennsylvania aviation and aerospace community in matters involving government and private sector interests; to improve and promote aviation in partnership with local, state and federal government; and to increase and enhance public awareness of aviation and aerospace.

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ACT 52 IMPACT

 

In 2013, then Governor Tom Corbett signed into law Act 52.  Among other business environment improvements the Act created, it provided sales tax relief for aircraft parts and maintenance in Pennsylvania.   

Job Description and Analysis

Exempting the tax on aircraft parts impacts two specific occupations as outlined by the US Department of Labor:

1. Aircraft Mechanics

2. Avionics Technicians

According to the US DoL, Bureau of Labor Statistics, Aircraft and avionics equipment mechanics and technicians repair and perform scheduled maintenance on aircraft. They also may perform aircraft inspections as required by the Federal Aviation Administration (FAA).

The Bureau of Labor Statistics specifically defines this occupation as, An Aircraft Mechanic:

* Services, repairs, and overhauls aircraft and aircraft engines to ensure airworthiness.

* Repairs, replaces, and rebuilds aircraft structures, such as wings and fuselage, and functional components including rigging, surface controls, and plumbing and hydraulic units, using hand tools, power tools, machines, and equipment such as shears, sheet metal brake, welding equipment, rivet gun, and drills.

* Examines engines for cracked cylinders and oil leaks, and listens to operating engine to detect and diagnose malfunctions, such as sticking or burnt valves. Inspects turbine blades to detect cracks or breaks.

* Tests engine operation, using testing equipment, such as ignition analyzer, compression checker, distributor timer, and ammeter, to locate source of malfunction. Replaces or repairs worn or damaged components, such as carburetors, alternators, and magnetos, using hand tools, gauges, and testing equipment.

* Removes engine from aircraft, using hoist or forklift truck.

* Disassembles and inspects parts for wear, warping, or other defects. Repairs or replaces defective engine parts and reassembles and installs engine in aircraft.

* Adjusts, repairs, or replaces electrical wiring system and aircraft accessories.

* Performs miscellaneous duties to service aircraft, including flushing crankcase, cleaning screens, greasing moving parts, and checking brakes. May be required to be licensed by Federal Aviation Administration.

Pay

The national median annual wage for aircraft and avionics equipment mechanics and technicians was $58,390 in May 2015. Pennsylvania's rate is $55,950.

Where does PA stand? 

4,237 Total Aviation Maintenance Industry Employment

$400,835,000 - Maintenance Repair & Overhaul

  $38,838,000 - Parts Manufacturing Distribution

$439,674,000 - Total Economic Impact for 2016

In 2014 Pennsylvania was ranked 21st  - behind NJ (17th), VA (15th), OH (11th), NY (10th)

In 2016 Pennsylvania was ranked 19th -  behind NJ (17th), VA (18th), OH (10th), NY (11th)

Source: ARSA - Aeronautical Repair Station Association

Since Act 52 was passed, it is safe to say that we have taken business from the neighboring states of VA and NY as well as stagnated growth in NJ. 

Growth in Based Aircraft

Similarities can be drawn to the conclusions based upon available Federal Aviation Administration data on based aircraft for the State of Pennsylvania. The following chart illustrates historic based aircraft in the state since 2004.  Each year the state experienced a decline or level number of based aircraft until the passage of Act 52 in 2013.  In 2013 and each of the following years that data is available for, the state has made strong gains in the number of planes based in the Commonwealth. These aircraft along with the jobs and recurring tax revenue they represent are now contributing to the Pennsylvania economy.

Fiscal

Based

 

Fiscal

Based

Year

Aircraft

 

Year

Aircraft

2004

4,194

 

2011

3,311

2005

4,156

 

2012

3,312

2006

4,132

 

2013

3,455

2007

4,102

 

2014

3,517

2008

3,799

 

2015

3,543

2009

3,651

 

2016

4,539

2010

3,423

 

 

 

Tax Comparison

By the time the 2017 sessions have concluded, Virginia (VA HB 1738) and Maryland (MD HB 67 / SB 159)  will be added to the list of states with the same maintenance exemptions including the possibility of WV (which is currently drafting a bill).  That means every state north and south of Pennsylvania provides the same exemption from Maine all the way down to South Carolina

Implication of loss of Act 52

The implication of removing this tax exemption on aircraft maintenance in PA is the equivalent of creating an up to 8%  penalty (6% state sales tax locality tax in certain areas) on any person or business who wants to acquire maintenance services in PA.  Examples:

                                                                                                                                                                                

An engine overhaul on a small business jet can be as much as $200,000 per engine.  As operators try to combine required maintenance services to minimize an aircraft’s down time, a single maintenance bill can and often does exceed $500,000 x PA Tax rate up to 8% would be an additional $40,000 cost for doing business in PA—that’s as much as most First Officer (co-pilot) salaries.  A Flight Department choosing to go elsewhere would have already saved enough to justify an employee’s salary expense. 

Average cost of engine overhaul on small GA aircraft is $25,000 using the rural 6% tax rate equates to a savings of $1500 by going out of state—Frederick Municipal Airport (AOPA's Headquarters) is only a 30 minute flight from Harrisburg area airports and a little over an hour’s drive—most pilots, would go a lot further for a lot less savings as they are notoriously frugal.

The hard truth is PA is in fact not a leader in the aircraft maintenance industry when compared to its regional neighbors.  Eliminating this targeted exemption will only result in sending the business it had gained, elsewhere.  As our businesses struggle to compete it will quickly become much harder to turn a profit which means loss of jobs as well as the loss of lease revenues that host airports depend on—most of which are municipally owned.   

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