specifically for the aviation industry, includ- ing direct grants, loans, loan guarantees, and tax relief. The legislation also provided relief for small businesses by creating new programs such as the PPP and by expand- ing existing programs such as EIDL.
Targeted Relief to Passenger and Cargo Air Carriers (Air Carrier and Critical Businesses Relief) One of the key provisions of Title IV of the CARES Act provides $500 billion to support “eligible businesses.” The legislation defines eligible businesses as both passen- ger and cargo air carriers and businesses that have not otherwise received adequate economic relief in the form of loans or loan guarantees under the act. The $500 billion is allocated in the fol-
lowing manner: ■ $25 billion in loans and loan guarantees
for passenger air carriers, including gen- eral aviation operators that conduct flights under Part 135 and eligible busi- nesses that are certified under Part 145 to perform inspection, repair, replace- ment, or overhaul services
■ $4 billion in loans and loan guarantees for cargo air carriers
■ $17 billion in loans and loan guarantees for businesses critical to maintaining national security
■ $454 billion for loans, loan guarantees, and investments in support of facilities established by the Federal Reserve to support lending to eligible businesses, states, and municipalities.
Targeted Relief to Aviation Employees (Air Carrier Payroll Support Program) In addition to relief for air carriers, the
Figure 2. PPP Changes from the CARES Act to the Flexibility Act
CARES Act (enacted Mar. 27, 2020)
Term
Loan Forgiveness, Covered Period
Payment Deferral 2 years
PPP Flexibility Act (enacted Jun. 5, 2020)
5 years
Loan, Covered Period Feb. 15, 2020 – Jun. 30, 2020 Feb. 15, 2020 – Dec. 31, 2020 8 weeks from origination
24 weeks from origination or Dec. 31, 2020
6 months from end of covered period
Rehire Deadline
Deferment of Payroll Tax Payment
Deadline to Apply for PPP Loan
Deadline for Use of PPP Funds
Jun. 30, 2020
Payroll Requirements Minimum 75% on payroll costs
Not entitled to deferment
Must submit loan forgiveness application within 10 months after last day of covered period
Dec. 31, 2020
Minimum 60% on payroll costs
Borrowers are eligible to defer payment of payroll taxes (6.2% employer portion of Social Security payroll taxes)
Jun. 30, 2020 Jun. 30, 2020 Jun. 30, 2020 Dec. 31, 2020
CARES Act also provides financial assis- tance targeted to air carrier and aviation industry workers. More specifically, the act allocates funds to air carriers and certain contractors on the condition that the money be used to continue wages, sala- ries, and benefits for air carrier and aviation industry employees (excluding corporate officers). The funds are allocated in the fol-
lowing amounts: ■ $25 billion for passenger air carriers ■ $4 billion for cargo air carriers ■ $3 billion for certain contractors and
subcontractors. HAI strongly advocated for general avia- tion air carriers as the Treasury Department implemented the payroll support program. On Apr. 20, Treasury made the first payroll support program payments to approved applicants, among them many Part 135 charter operators.
Air Transportation Tax Relief The act suspends all federal air transporta- tion excise taxes that apply to commercial operations (Part 135 flights) effective Mar. 27, 2020, through Jan. 1, 2021. The suspen- sion includes all taxes that a commercial operator normally pays, including the 7.5% tax on amounts paid, applicable domestic and international segment fees, and the 4.3-cents-per-gallon portion of the fuel tax.
Airport Grants The CARES Act includes $10 billion in funds to be awarded as economic relief to eligible US airports affected by the preven- tion of, preparation for, and response to the COVID-19 pandemic. The law provides funds to increase the federal share to 100% for the Airport Improvement Program and supplemental discretionary grants already planned for fiscal year 2020. Of the $10 billion in grants, $100 million is designated for general aviation airports.
➤ 2020 Q2 ROTOR 13
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