Georgia May End AvFuel Tax Breaks, DL Dismayed

bjorn14 · Mon Mar 02, 2015 1:39 pm

The Georgia legislature has introduced a bill to end the AvFuel tax breaks for all airlines. Obviously, DL is most affected by this. How will DL respond?

http://fuelfix.com/blog/2015/03/01/l...reak-on-jet-fuel-to-deltas-dismay/

jfklganyc · Mon Mar 02, 2015 1:44 pm

By moving their largest hub and headquarters to a cheaper facility with more favorable tax rates!!!

Oh wait...that will never happen and Georgia lawmakers know it. So tax away.

moo · Mon Mar 02, 2015 1:46 pm

I thought only the ME3 received subsidies and tax breaks? How can this news possibly be true? DL can't possibly be receiving tax breaks or subsidies, can it?

deltal1011man · Mon Mar 02, 2015 1:51 pm

Quoting bjorn14 (Thread starter):

FWIW the bill hasn't even been sent to the house floor for a vote.

This has happened at least once before if not twice and it didn't even make it to the floor.

IMO it makes it to the floor only to get voted down. (and i really don't think Deal is going to sign it anyways)

Quoting moo (Reply 2):

yeah I don't believe Delta has ever said such a thing......

scbriml · Mon Mar 02, 2015 2:02 pm

And they say Americans don't do irony!

blueflyer · Mon Mar 02, 2015 4:40 pm

The last line of the article made me laugh out loud.
"The bill’s sponsor says Delta’s CEO is pushing for tax increases for transportation but opposes losing the airline’s benefit."
Richard Anderson is a true capitalist! Everyone should pay more taxes, except Delta!

enilria · Mon Mar 02, 2015 5:16 pm

Quoting blueflyer (Reply 6):

It's ironic that they feel foreign carriers that operate in areas where there are no taxes constitute an illegal government subsidy, while the same exact day they fight for their own taxes to be waived.

northwestEWR · Mon Mar 02, 2015 5:23 pm

Delta is strongly encouraging it's employees to speak to our representatives opposing the bill. Business as usual.

Richard opposes taxes on DL but is in favor of those on other transportation. Why is that surprising? Sounds like typical business and politics to me.

thekorean · Mon Mar 02, 2015 5:37 pm

Quoting Enilria (Reply 7):

Except this tax break applies to all airlines...

UALWN · Mon Mar 02, 2015 5:46 pm

Quoting blueflyer (Reply 6):
Richard Anderson is a true capitalist! Everyone should pay more taxes, except Delta!

Reminds me of the beginning of a delicious passage from Catch-22: "[Major Major's father] was a longlimbed farmer, a God-fearing, freedom-loving, law-abiding rugged individualist who held that federal aid to anyone but farmers was creeping socialism."

larshjort · Mon Mar 02, 2015 5:51 pm

How much are these tax breaks? 5-10-15% or more? Does other states with Airline hubs alse have tax breas for aviation furel, such as Colorado, New York, New Jersey or California?

Quoting thekorean (Reply 9):

Except this tax break applies to all airlines...

Just like the low fees at DXB benefits all Airlines.

United787 · Mon Mar 02, 2015 5:53 pm

Quoting thekorean (Reply 9):
Except this tax break applies to all airlines...

Yes, but with their megahub at ATL, they benefit most. Does AA/US have that benefit at their competing hubs MIA and CLT? How about UA at IAD?

727LOVER · Mon Mar 02, 2015 5:58 pm

Quoting jfklganyc (Reply 1):
By moving their largest hub and headquarters to a cheaper facility with more favorable tax rates!!!

Oh wait...that will never happen and Georgia lawmakers know it. So tax away.

The hub, no...but as far as HQ, don't they have the same infrastructure @ MSP?

factsonly · Mon Mar 02, 2015 5:59 pm

Quoting bjorn14 (Thread starter):
he Georgia legislature has introduced a bill to end the AvFuel tax breaks for all airlines. Obviously, DL is most affected by this. How will DL respond?

Let's get our facts straight.

- Aviation fuel is NOT taxed anywhere in the world when the fuel is taken on for a commercial international flight.

- Only in very few countries is aviation fuel taxed for domestic flights. These are mostly 'green' nations found in Europe.

- In the USA, as of 2011, aviation gasoline (used to fuel General Aviation) is taxed at 19.4¢/gallon.

- Also in the USA, "kerosene for aviation" is taxed at 21.9¢/gal, unless it is used for commercial aviation. As commercial aviation is subject to federal transportation tax, airlines are subject to a reduced fuel tax of 4.4¢/gallon.

Any additions to this info anyone?

Ncfc99 · Mon Mar 02, 2015 6:11 pm

Quoting thekorean (Reply 9):
Quoting Enilria (Reply 7):

Except this tax break applies to all airlines...

But not EK as they don't fly to Georgia.........................that can't be fair, can it?

Oh wait, my mistake, its a competative advantage so thats ok.

PlanesNTrains · Mon Mar 02, 2015 6:37 pm

Quoting 727LOVER (Reply 12):
The hub, no...but as far as HQ, don't they have the same infrastructure @ MSP?

Delta = Atlanta. The day they move their HQ to MSP is the day it snows in hell, imho.

-Dave

CV880 · Mon Mar 02, 2015 7:18 pm

Quoting United787 (Reply 11):
Yes, but with their megahub at ATL, they benefit most. Does AA/US have that benefit at their competing hubs MIA and CLT? How about UA at IAD?

Yes, NC currently has the same exemption and is also up for a vote in the legislature. Of course, AA & CLT are lobbying to keep the exemption.

http://www.newsobserver.com/2015/02/...can-airlines-pushes-for-sales.html

trex8 · Mon Mar 02, 2015 9:20 pm

Didn't UA just get around this by setting up a sham fuel purchasing office in some Chicago suburb where there were no such taxes?

thekorean · Mon Mar 02, 2015 9:25 pm

Quoting ncfc99 (Reply 14):

Makes no sense as EK choose not to fly to ATL, it is not like they can't.

DL does not get tax breaks elsewhere in their other hubs. What they get in ATL makes no difference.

LAXintl · Mon Mar 02, 2015 9:25 pm

Considering the tax waiver was introduced in 2005 to help Delta during time of difficult economic period, I think its well beyond its intended purpose as the company generates billions in profits today.

32andBelow · Mon Mar 02, 2015 9:34 pm

Ending a tax break isn't raising taxes. One day people will understand this.

jetblastdubai · Mon Mar 02, 2015 9:45 pm

Quoting trex8 (Reply 17):
Didn't UA just get around this by setting up a sham fuel purchasing office in some Chicago suburb where there were no such taxes?

It was United and American that set up fuel purchasing offices in an Illinois county with lower tax rates than Cook County (Chicago). They were still paying tax on jet fuel but not at the higher rate they would have paid in Chicago. The practice was permitted under Illinois Law according to the airlines.

"Besides saving the differential between Chicago's 9.5 percent sales tax rate and Sycamore's 8 percent, the airlines receive a combined rebate of nearly $14 million annually from Sycamore on sales taxes collected on fuel purchases, the RTA said. Sycamore retains about $500,000 annually, according to the RTA."

http://www.chicagobusiness.com/artic...merican-airlines-of-fuel-tax-dodge

747megatop · Mon Mar 02, 2015 11:49 pm

Quoting moo (Reply 2):
I thought only the ME3 received subsidies and tax breaks? How can this news possibly be true? DL can't possibly be receiving tax breaks or subsidies, can it?

You stirred a hornets nest with this question

747megatop · Mon Mar 02, 2015 11:53 pm

Quoting thekorean (Reply 18):
What they get in ATL makes no difference.

Really? And when another competing Airline gets the same tax breaks at their hub then it makes a difference and is unfair competition? LoL.

mercure1 · Mon Mar 02, 2015 11:56 pm

On one side, Delta cries foul about government subsidy of ME3, and now here is cries foul about loosing a special government tax advantage created for it.

Which one is it Mr. Anderson

thekorean · Tue Mar 03, 2015 2:00 am

Quoting 747megatop (Reply 23):

DL has other hubs which does not have tax breaks hence it is irrelevant in big picture DXB is the only hub for EK. Plus DL pays federal tax. DL still pays taxes.

IndianicWorld · Tue Mar 03, 2015 2:17 am

Quoting thekorean (Reply 25):
DL has other hubs which does not have tax breaks hence it is irrelevant in big picture DXB is the only hub for EK. Plus DL pays federal tax. DL still pays taxes.

That might be the case, but to try and argue that other carriers are getting unfair advantages elsewhere and yet they are receiving some significant ones too, it smacks of arrogance.

Its not a good look for their cause.

N1120A · Tue Mar 03, 2015 2:18 am

Quoting 727LOVER (Reply 12):
The hub, no...but as far as HQ, don't they have the same infrastructure @ MSP?

Why would they bother moving their HQ?

thekorean · Tue Mar 03, 2015 2:26 am

Quoting IndianicWorld (Reply 26):

Crumbs they get is nothing compared to EK. Nothing arrogant about pointing out the facts.

IndianicWorld · Tue Mar 03, 2015 2:28 am

Quoting thekorean (Reply 28):
Crumbs they get is nothing compared to EK. Nothing arrogant about pointing out the facts.

That's your perception though. It just raises questions around just what else they get.

I certainly don't see it as a good look when one is trying to point out any unfair advantages others receive.

thekorean · Tue Mar 03, 2015 2:53 am

Quoting IndianicWorld (Reply 29):

Every major airlines probably do get incentives, but not on the scale of EK. That is what DL was trying to say.

I don't care about DL making money or not, its not my money.

MVAair · Tue Mar 03, 2015 3:01 am

Quoting jfklganyc (Reply 1):
By moving their largest hub and headquarters to a cheaper facility with more favorable tax rates!!!

You mean in 1940 from MLU to ATL?

Quoting blueflyer (Reply 5):
Richard Anderson is a true capitalist! Everyone should pay more taxes, except Delta!

You forgot crony at the beginning of capitalist.

Quoting 32andBelow (Reply 20):
Ending a tax break isn't raising taxes. One day people will understand this.

Bingo. And it is a break for a certain industry only. The best tax code is low rates no loopholes.

YYZAMS · Tue Mar 03, 2015 3:08 am

They can take their pick to move to MEM or CVG!

threeifbyair · Tue Mar 03, 2015 3:11 am

Quoting LAXintl (Reply 19):
Considering the tax waiver was introduced in 2005 to help Delta during time of difficult economic period, I think its well beyond its intended purpose as the company generates billions in profits today.

Thanks for the historical perspective. Those "temporary" tax breaks do have a nasty habit of becoming permanent.

This is how big business operates nowadays. Blackmail your local government into as many subsidies as possible. Why outcompete your rivals when you can have the government help do it for you?

bgm · Tue Mar 03, 2015 3:12 am

Quoting thekorean (Reply 30):
Every major airlines probably do get incentives, but not on the scale of EK.

So what's the cutoff for acceptable subsidies?

commavia · Tue Mar 03, 2015 4:54 am

Quoting threeifbyair (Reply 33):
This is how big business operates nowadays. Blackmail your local government into as many subsidies as possible. Why outcompete your rivals when you can have the government help do it for you?

... except that, as already mentioned, Delta really has very little leverage with which to "blackmail" anybody since Georgia politicians know - or should know - that the realistic probability of Delta actually moving its headquarters, let alone its largest and most important hub, somewhere else is essentially zero. It ain't gonna happen - fuel tax break or no fuel tax break.

IndianicWorld · Tue Mar 03, 2015 5:27 am

Quoting bgm (Reply 34):
So what's the cutoff for acceptable subsidies?

That a great question.

How long is a piece of string? Its always the issue about where the line is.

zeke · Tue Mar 03, 2015 5:38 am

Quoting factsonly (Reply 13):
Let's get our facts straight.

- Aviation fuel is NOT taxed anywhere in the world when the fuel is taken on for a commercial international flight.

Any additions to this info anyone?

The Chicago Convention governs the treatment of fuel already on board an aircraft. The treatment of fuel loaded on to an aircraft is governed by a large number of bilateral Air Service Agreements (ASA's) which exist between countries, and also between countries and third countries. These usually contain a clause to the effect that both fuel in transit and fuel supplied in the territory of the contracting parties are exempt from fuel taxes. It is, of course, possible that the existing ASA's be renegotiated to remove the exemption for fuel supplied on the territory of the contracting parties.

I dont have every single ASA committed to memory, so I cannot say with absolute certainty that your statement is correct. The problem with taxing the fuel uplift is that airlines can simply tanker fuel in, and bypass paying tax or reduce it. It will distort the tax burden to long haul flights.

747megatop · Tue Mar 03, 2015 5:21 pm

Quoting bgm (Reply 34):
So what's the cutoff for acceptable subsidies?

Since subisdies are difficult to police in the first place and even more difficult to prove/disprove; having an "acceptable cutoff" is even more complicated to enforce. So, why even bother with whining about subsidies? I would say make subisidies acceptable accross the board; let the airlines who want subisidies take it and those who don't want let them not take it. Let the airlines compete and survive with good management, route network etc. Even with subsidies lousy airlines will be lousy airlines.

ThReaTeN · Tue Mar 03, 2015 5:27 pm

Quoting factsonly (Reply 13):
- Aviation fuel is NOT taxed anywhere in the world when the fuel is taken on for a commercial international flight.

Quoting factsonly (Reply 13):
- Also in the USA, "kerosene for aviation" is taxed at 21.9¢/gal, unless it is used for commercial aviation. As commercial aviation is subject to federal transportation tax, airlines are subject to a reduced fuel tax of 4.4¢/gallon.

How do you reconcile those two statements? No tax or "reduced tax of 4.4 cents/gallon"?

747megatop · Tue Mar 03, 2015 5:30 pm

Quoting thekorean (Reply 30):
very major airlines probably do get incentives, but not on the scale of EK.

My friend, the funny thing about subsidies is that it is black or white; either the person's hand is in the cookie jar trying to steal cookies or the hand isn't. Once the person is caught with a hand in the cookie jar the number of cookies the person is trying to steal (scale of subsidies) doesn't matter. All the people with their hands in the cookie jar are equally guilty. Right not Mr Anderson is in a very sticky spot if you ask me since Mr Anderson and Mr TC are both with their hands in the cookie jar LoL.

airbazar · Tue Mar 03, 2015 5:49 pm

Quoting PlanesNTrains (Reply 15):
Delta = Atlanta. The day they move their HQ to MSP is the day it snows in hell, imho.

People used to say the same thing about Boeing leaving Seattle, or AA buying Airbus, or DL buying new A330's

727LOVER · Tue Mar 03, 2015 5:55 pm

Quoting 727LOVER (Reply 12):
The hub, no...but as far as HQ, don't they have the same infrastructure @ MSP?

Quoting PlanesNTrains (Reply 15):
Delta = Atlanta. The day they move their HQ to MSP is the day it snows in hell, imho.

Quoting N1120A (Reply 27):
Why would they bother moving their HQ?

I didn't say they would.....I said that they have the infrastructure @ MSP, therefore, they could certainly threaten to move. As long as the city of Atlanta kisses their a$$, they'll stay. AFAIK, the a$$ki$$ing continues.

catiii · Thu Mar 05, 2015 3:52 pm

Interesting column in the AJC here. Richard, clearly, isn't well liked in the legislature from the comments in the column. Guess all that political activism is coming back to bite him...

State Rep. Earl Ehrhart of Powder Springs, the Republican behind the push, insists that conservative policy is his only motivation. “A tax exemption should not be permanent. And right now, Delta can’t make a case to have an exemption,” Ehrhart said, pointing to the airline’s $2.8 billion profit in 2014.

Oh, but there’s so much more to this rarest of moves – an overt assault on a state’s largest private employer. And much of it has to do with Delta’s recent history, under CEO Richard Anderson, of weighing in on public affairs – on both a state and national level.

“Every time he opens his mouth, he makes my job easy,” Ehrhart contends.

http://politics.blog.ajc.com/2015/03...o-a-1-billion-transportation-bill/

mayor · Thu Mar 05, 2015 5:02 pm

Quoting ncfc99 (Reply 14):
But not EK as they don't fly to Georgia.........................that can't be fair, can it?

I believe, if you read the post, you'll surmise that this particular tax break applies to the state of Georgia.

Quoting thekorean (Reply 18):
DL does not get tax breaks elsewhere in their other hubs.

I believe that they do at SLC, also.

Quoting mercure1 (Reply 24):
and now here is cries foul about loosing a special government tax advantage created for it.

Applies to anyone operating in Georgia.

Quoting MVAair (Reply 31):
You mean in 1940 from MLU to ATL?

Really not all that much of a move AND there was no actual "hub" until the 50s.

enilria · Thu Mar 05, 2015 6:40 pm

Quoting thekorean (Reply 8):
Quoting Enilria (Reply 7):

Except this tax break applies to all airlines...

Just as UAE's tax free status does.

Quoting Larshjort (Reply 10):
Quoting thekorean (Reply 9):

Except this tax break applies to all airlines...

Just like the low fees at DXB benefits all Airlines.

That too...

Quoting factsonly (Reply 13):
- Aviation fuel is NOT taxed anywhere in the world when the fuel is taken on for a commercial international flight.

I don't think that's true. The fuel has to be tied to a free trade zone or it has to be trucked from one in the USA.

PlanesNTrains · Thu Mar 05, 2015 6:50 pm

Quoting airbazar (Reply 41):
People used to say the same thing about Boeing leaving Seattle, or AA buying Airbus, or DL buying new A330's

True.

Never say never - I broke my own rule. lol

-Dave

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