The IRS audit process can be challenging for any business aircraft owner or operator, so NBAA has created resources to help Members prepare for audits and understand how the process functions. Developing a record-keeping system that maintains the information commonly requested by IRS auditors is one of the most important steps in preparing for a potential audit. In general, taxpayers have the burden of proving they are entitled to a specific tax deduction or credit, which makes having the necessary records for substantiation very important.
In NBAA’s Member resource, Record-Keeping Rules for Business Aircraft (300 KB, PDF), the history of IRS substantiation and record-keeping rules is reviewed, and specific best practices are provided regarding the types of records that an aircraft owner or operator should keep. For example, the resource provides details on how to substantiate the business purpose of a flight, which is a common audit topic.
NBAA also created a Navigational Guide for Audits (225 KB, PDF), which describes the IRS audit process from start to finish and includes details on appeal options for taxpayers. Starting with the initial contact by the auditor and moving through the information document request process to the audit findings, the guide provides business aircraft owners and operators with resources to manage IRS audits.
The U.S. Department of Transportation (DOT) will conduct a pilot program to evaluate how state and local governments might participate in regulating drone traffic at low altitudes—a role the FAA now serves. The department expects to select at least five industry-government partnerships to test the proposition.
According to the October 25 announcement, President Donald Trump issued a memorandum directing Transportation Secretary Elaine Chao to begin the Unmanned Aircraft Systems Integration Pilot Program. The DOT will issue an official public notice in the Federal Register in the coming days with details about the application process. Selections will be made within 180 days of the notice for what is planned as a three-year program.
Participating local governments and drone operators will have “regulatory certainty and stability” to conduct various operations, including night flights, flights over people, flights beyond the pilot’s visual line of sight and package delivery, the DOT said. The program also will serve as a testbed for detect-and-avoid and counter-UAStechnologies.
Importantly, the partnerships will evaluate the issue of federal preemption as applied to drones—testing where and when a community should regulate low-flying aircraft relative to the FAA. The federal government has claimed sovereignty of the airspace since 1926, but drones have complicated that understanding.
The pilot program will draw on the findings of a “roles and responsibilities” work group of the FAA’s Drone Advisory Committee (DAC) called Task Group 1. In July, AIN reported that state and local governments largely were not participating on the work group, apparently due to concerns that industry was over-represented. More recently, The Washington Post, citing internal documents and emails, reported that the process “has been riven by suspicion and dysfunction.” One of the newspaper’s sources complained that a representative of Shenzhen, China-based DJI, the world’s leading small-drone manufacturer, co-chairs the task group.
Plans call for Task Group 1 and other work groups to summarize their findings at the next full DAC meeting, which is scheduled for November 8 at Amazon headquarters in Seattle. Pre-registration is required to attend the meeting, according to federal advisory organization RTCA, which manages the committee.
Aerospace and defense market intelligence and analysis firm Teal Group, in its latest industry forecast, is calling for business aircraft deliveries to return to 2008 peak levels in 2021. However, it predicts deliveries will be down 2.3 percent this year, followed by “modest” market growth through the end of this decade.
Overall, Teal is forecasting production of 11,434 business aircraft worth $272.1 billion over the next 10 years. This includes 8,253 business jets worth $236.3 billion; 213 bizliners, $18.3 billion; and 2,968 business turboprops, $17.5 billion. For comparison, 11,247 business aircraft worth $260.1 billion were delivered over the last 10 years—7,800 business jets, $211.5 billion; 447 bizliners, $31.8 billion; and 3,000 turboprops, $16.8 billion.
Teal expects Gulfstream and Bombardier to be the market leaders for business jets, commanding 31.5 percent and 28.3 percent, respectively, by value of deliveries, followed by Dassault Falcon (17.4 percent) and Cessna (13.8 percent). Next in line is Embraer Executive Jets, with a 6.6 percent share by value, which Teal said is a “very significant increase” and particularly affects Cessna, which had 21 percent market share a decade ago. Honda Aircraft, Eclipse and Pilatus would share the remaining 2.4 percent, according to Teal’s forecast.
Even if sales of new business aircraft are forecast to be relatively flat over the next few years, demand for financing and operating leases is projected to grow, according to new research from Global Jet Capital. Much of the growth will come from upward trends in operators’ reluctance to use their own capital for aircraft acquisition in the current economic climate. The projections stem from surveys among a panel of 144 business aviation professionals conducted by the company in September.
Results from Global Jet’s research indicate that more than 77 percent of business aviation professionals surveyed expect demand for business aviation finance to increase over the next five years, with more than one in six of those expecting the increase to be “dramatic.” Sixty-two percent of the professionals interviewed identified what the company called “a growing trend” for potential buyers to use less of their own capital. Meanwhile, 21 percent also pointed to operating leases as being attractively priced.
In fact, rates on operating leases are now so competitive that 46 percent of business aviation professionals surveyed expect to use them for private jet acquisitions increase over the next 12 months, with one in twelve (8 percent) also expecting a “dramatic” increase. Offsetting the risk of pre-owned aircraft residual values is expected to lead to greater use of operating leases by 43 percent of those surveyed.
by AINalerts 10/12/2017
|In its annual 10-year business jet market forecast released October 4, Jetcraft (SD01) predicted an upward trend for new business jet sales. Jetcraft acquires, trades and brokers both new and preowned executive and VIP jets.
Jetcraft’s 2017 forecast calls for 8,349 business jet deliveries by 2026, representing $252 billion in revenues (based on 2017 pricing). North America leads the way with 62 percent of deliveries (5,176 aircraft), followed by Europe with 17 percent and Asia with 12 percent (1,420 and 1,002 aircraft, respectively).
Over the past decade the average aircraft list price increased by 56 percent. The forecast sees that number growing by an additional 16 percent by 2026. How might that happen? Jetcraft predicts that 98 percent of the forecasted revenues from new programs will be for widebody or large business jets such as the Citation Hemisphere, Global 7000 and Gulfstream G500 and G600.
“Pinpointing the transition into a new business cycle is challenging,” said Jetcraft chairman Jahid Fazal-Karim. “Our forecast indicates we are finally exiting the post-2008 recession period, entering several years of steadier, healthier growth and expanding revenues.”
by AINalerts 10/9/2017
The latest UBS Business Jet Market Index jumped 10 percent from the August survey as respondents noted healthier pre-owned business jet inventories and improved pricing, as well as higher customer interest. Now at 53, the index score returns to its post-U.S. election high and denotes an improving market.
By cabin size, midsize jets took the lead with an index score of 54, up 7 percent sequentially. This was followed by light jets at 53, a 15 percent increase, and large-cabin jets at 51, which climbed 12 percent from August. UBS Global Research said the straight-up measure of absolute business conditions came in at 5.4, up 5 percent from the previous survey and the highest since before the financial crisis.
According to UBS aerospace analysts David Strauss and Darryl Genovesi, the overall index reflects an improved view of pre-owned aircraft pricing and inventory, with those scores soaring 24 percent and 22 percent, respectively, along with higher customer interest, which rose 11 percent. North American customer interest increased 11 percent and remains strongest at a score of 70, followed by an “improving” Europe (56), while Asia (51), Latin America (48) and the Middle East (47) “appear stable to slightly improving.”
by AINalerts October 5, 2017