The controversial American Recovery and Reinvestment Act of 2009 (P.L. 111-5) (ARRA), gives the aviation industry an infusion of more than $2 billion of available funds to support security technologies, airport development and aeronautics research.
ARRA giveth a great deal and ARRA taketh away a little bit. The legislation as signed did not contain draconian limits on corporate aircraft operations, but it did include the following:
The board of directors of any TARP recipient shall have in place a companywide policy regarding excessive or luxury expenditures, as identified by the Secretary [of the Treasury], which may include excessive expenditures on . . . aviation or other transportation services. . . .
Time will tell what the secretary determines to be excessive or luxury expenditures, and one must assume that the National Business Aviation Association (NBAA) will visit the Treasury Department to weigh in on this process. The Treasury should be mindful of the impact of its decisions on some of America's most dynamic and modern manufacturing and services industries.
Aviation Security ($1,000,000,000)
Funds are available for the purchase of baggage screening systems and checkpoint detection systems and will be paid to companies that are awarded contracts offered and administered by the Transportation Security Administration (TSA). As with other funds, priority will be given to contracts implemented soonest and/or that have the most immediate impact. The TSA estimated that this tranche of funding will create more than 3,500 jobs. The TSA is tasked with providing the House and Senate Committees on Appropriations with a plan for spending these funds.
Facilities and Equipment ($200,000,000)
Funds will go to airport and air-traffic management for improvements to power systems, air route traffic control centers, air-traffic control towers, terminal radar approach control facilities and navigation and landing equipment. The FAA will award these funds through a federal grant process, and priority will be given to projects that can be completed quickly (within two years). This spring, the FAA will announce programs to administer the release and use of these funds.
Airport-Specific Grants ($1,100,000,000)
This amount will go to airports for repair and improvement of critical infrastructure in the form of grants-in-aid. The grants will be made and administered by the Secretary of the Department of Transportation (DOT), and the first half of the authorized funds are to be made available within 120 days after passage of ARRA (mid-June 2009). The funds will be distributed under existing DOT grant programs, but without requiring any matching or sharing formula.
Funds are being made available for research, development and demonstration activities related to aviation safety, environmental impact mitigation and the Next Generation Air Transportation System (NextGen).
While not specific to the aviation industry, ARRA includes an extension of the "bonus depreciation" that was part of the Economic Stimulus Act of 2008. Under ARRA, many taxpayers are allowed to take a 50 percent "bonus depreciation" deduction for new aircraft purchased and placed in service in 2009. Bonus depreciation can also apply to purchases of fractional aircraft interests. The DOT has already allocated $12 million for airport infrastructure projects in Pennsylvania. The rest of the funds are, at this point, unallocated and will be governed by action of the various named agencies.