Prepare Now for New Aviation Jobs Program
To keep tabs on all of ARSA’s work related to the current pandemic, visit arsa.org/anti-viral-measures.
President Biden signed the $1.9 trillion American Rescue Plan Act (ARPA) into law on March 11. The third major COVID relief law in a year a created a new Aviation Manufacturing Jobs Protection (AMJP) Program specifically for repair stations, aviation manufacturers and their suppliers.
ARSA and its allies at the General Aviation Manufacturers Association and Aerospace Industries Association, along with leading companies, worked in coalition since last summer to enact the new program into law. It allows an eligible company to designate up to a quarter of its workforce as at risk of being laid off because of pandemic-related economic disruptions. The federal government will contribute half of these employees’ compensation if the employer keeps them on payroll. The new AMJP program will be particularly valuable for repair stations that were ineligible for other pandemic relief resources.
On April 14, the Department of Transportation (DOT) announced that it had taken the first steps to implement the AMJP program. Given that once it is up and running deadlines are going to come quickly, DOT is encouraging potential applicants to start preparing now. Specifically, DOT recommends:
- Becoming familiar with all of the requirements of the program using DOT’s AMJP Program webpage.
- Applying for a Data Universal Numbering System (DUNS) numberif you do not already have one. A DUNS number is required to do business with the federal government, so your company may already have one. Check with your team internally to avoid duplication and future confusion.
- Registering online with the federal government’s System of Award Management (SAM) (another requirement for entities to receive federal money).
- Monitoring the AMJP program website frequently for updates, which will include Frequently Asked Questions and a link to the application system.
DOT cautions that, “obtaining a DUNS number and registering with SAM take time. Any business seeking funding under the AMJP program is strongly encouraged to begin these steps as soon as possible. These steps must be completed before submitting an application for the AMJP program.”
DOT has published a Federal Register notice describing the data that it anticipates collecting in order to implement this new program. DOT will publish more detailed instructions when the official AMJP program application process begins.
Previous updates on ARSA-led relief efforts...
March 29, 2021
As ARSA members engaged Congress on March 10, lawmakers finalized the most recent pandemic relief bill.
President Biden signed the American Rescue Plan Act (ARPA) into law on March 11. The law extended the existing Payroll Support Program (PSP) with $14 billion for airlines and $1 billion for contractors. It also created a new “Aviation Manufacturing Jobs Protection” PSP specifically for repair stations, aviation manufacturers and their suppliers.
ARSA and its allies at the General Aviation Manufacturers Association and Aerospace Industries Association, along with leading companies, have been working in coalition since the summer to enact the new PSP into law. It allows an eligible company to designate up to a quarter of its workforce (“eligible employee group”) as at risk of being laid off because of pandemic-related economic disruptions. The federal government will contribute half of these employees’ compensation if the employer keeps them on payroll.
To be eligible, an applicant must either be either U.S.-based or have “significant operations” and a majority of their production/maintenance employees in the United States. The company must also meet one of the following criteria:
- Actively manufacture an aircraft, aircraft engine, propeller, or a component, part, or systems of an aircraft or aircraft engine under an FAA production approval.
- Hold an FAA repair station certificate.
- Operate a process certified to SAE AS9100 related to the design, development, or provision of an aviation product or service, including a part, component, or assembly.
Additionally, the company must:
- Have involuntarily furloughed or laid off at least 10 percent of its workforce in 2020 or experienced a 15 percent decline in 2020 revenues vs. 2019.
- Not have not used the employee retention credit created by Sec. 2301 of the CARES Act in the preceding calendar quarter.
- Not have received support through the air carrier PSP.
- Not be expending Paycheck Protection Program money as of the date the application for the new program is submitted.
The “eligible employee group” for which payroll support may be sought may not exceed
25 percent of the employer’s total U.S. workforce as of April 1, 2020, cannot include employees with a total compensation level of more than $200,000 per year and must be actively engaged in aviation manufacturing activities and services, or maintenance, repair, and overhaul activities and services. Payroll support can be granted to eligible companies for up to six months.
There are additional considerations and qualifications. To read the full legislation (Secs. 7201 and 7202 of the new relief bill), click here.
Unlike the air carrier PSP, which is administered by the Department of Treasury, the new program will be administered by the Department of Transportation. On March 25, the CEOs of ARSA, AIA and GAMA sent a letter to Transportation Secretary Pete Buttigieg urging the program be implemented as quickly as possible. ARSA and its allies ask Buttigieg to make the program “the highest possible priority to stimulate faster recovery of the aviation sector and avoid more extensive damage from the pandemic.”
The relief provided by the federal government in the past year through the CARES Act and subsequent legislation has been essential to U.S. maintenance industry’s survival. Treasury Department records indicate approximately $500 million was provided to repair stations through the airline PSP and ARSA analysis suggests that half its membership was able to take advantage of the Paycheck Protection Program. However, some maintenance companies fell through cracks because they didn’t perform functions at an airport (a requirement for the airline PSP) or were too large for PPP. For those companies in particular, the new PSP may be an attractive option.
To jump to the relevant sections of the ARPA, click here.
To read ARSA, AIA and GAMA’s letter to Secretary Buttigieg, click here.
February 4, 2021
On Jan. 8, the U.S. Department of Treasury published the Payroll Support Program Extension (PSP2) application for passenger air carriers and contractors.
The ARSA-supported program was originally created in March 2020 as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act and has since provided assistance to more than 600 companies. PSP2 was created by the Consolidated Appropriations Act when it was enacted in December 2020.
Treasury closed the application portal at the end of January. While the agency had initially stated applications could be received after the Jan. 25 deadline – noting that late submissions might not be considered – it then shut down the system claiming the PSP2 was “oversubscribed.”
After the program’s rollout, ARSA was contacted by the U.S. Government Accountability Office (GAO) seeking feedback about the program. The GAO asked the following questions:
(1) What worked well and what has not worked as well for your members when applying for and receiving PSP2 funds (e.g., application process, guidance, communication from Treasury staff)?
(2) What are you members’ views on the requirements new to PSP2 (e.g., recalling employees)?
(3) Given the size of PSP2 payments and outlook for the aviation sector, will this be enough to allow your members’ to stay in business until passenger demand for air travel and related services recover? Please explain.
(4) What has worked well and what has not worked as well for your members with regard to Treasury’s process for monitoring compliance with the initial Payroll Support Program (PSP1) agreement terms, such as Treasury’s guidance, recipient portal, or outreach/enforcement?
The association’s team has collected input from several key members, if you have experience with either round of the Payroll Support Program you are encouraged to share it with ARSA.
December 22, 2020
On Dec. 21, the U.S. House of Representatives and Senate both approved the Consolidated Appropriations Act of 2021 (H.R. 133, as amended). The legislation combines $900 billion in additional pandemic relief with $1.4 trillion in appropriations and includes policy from a host of other bills.
ARSA’s legislative team is reviewing the language of the bill (which came in at more than 5,000 pages), but can report on the following key elements:
Payroll Support Program
The bill extends the payroll support program created by the CARES Act for airlines and their contractors. Airlines will receive an additional $15 billion and contractors $1 billion. This is particularly significant given that contractors had been dropped from the payroll support program in a recent version of the bill. The engagement of many ARSA members and allies helped to resurrect the resource for the industry.
Paycheck Protection Program
The bill extends the paycheck protection program for small businesses. Businesses can obtain a second PPP loan (up to $2 million) if they have fewer than 300 employees (reduced from 500 employee threshold in CARES Act) and have seen a 25 percent drop in revenues as a result of the pandemic. The bill makes other changes intended to improve the program, including a streamlined forgiveness process for small loans.
Part 147 Reform
The bill contains the FAA certification reform legislation developed by the House Transportation & Infrastructure and Senate Commerce Committees to address issues identified in the Boeing MAX investigations (“the Aircraft Certification, Safety, and Accountability Act”). Legislation directing FAA to overhaul 14 CFR part 147 (the rule governing aviation technician schools) was added to the Senate version of the FAA bill during the Commerce markup and retained in the final omnibus bill. The PARTT 147 Act (which was sponsored by Sens. Inhofe, Moran and Duckworth and Reps. Young and Bustos) was the focus of an intense lobbying effort this summer by ARSA, the Aviation Technician Education Council, the Aircraft Mechanics Fraternal Association and AAR.
Aviation Career Development Grant Programs
While the grant programs are not specifically addressed in the bill, the joint explanatory statement for the transportation appropriations portion of the omnibus states that, “Unless otherwise noted, the language set forth in House Report 116-452 carries the same weight as language included in this joint explanatory statement and should be complied with unless specifically addressed to the contrary in this joint explanatory statement.” House Report 116-452 states that, “the Committee provides $5,000,000 for the aviation maintenance technician development program and $5,000,000 for aviation workforce development program in accordance with section 625 of the FAA Reauthorization Act (P.L. 115-254).” ARSA is working to confirm our understanding that the grant programs will be fully funded for FY 2021. In related news, FAA is expected to shortly issue its notice of funding availability for the funds appropriated for FY 2020, which are still available despite the fact that FY 2020 ended on Sept. 30.
Taken as a whole, the bill is an imperfect but significant achievement and a vital bridge for the industry until Congress can do more in 2021.
Look for more analysis from ARSA in the weeks ahead. Is you have specific questions or points of discussion related to the bill, contact ARSA Executive Vice President Christian Klein.
To review a PDF copy of H.R. 133 as amended, click here.
December 13, 2020
The Government Accountability Office (GAO) has found that repair stations, airlines, ticket agents and defense contractors received less than half of the $46 billion in emergency loan money authorized for them by Congress in the CARES Act. In a new report titled “Financial Assistance: Lessons Learned from the CARES Act Loan Program for Aviation and Other Eligible Businesses,” the GAO determined that of the $21.9 billion in assistance provided through the targeted loan program, 95 percent went to airlines.
ARSA played a leading role in the CARES Act debate, which gave repair stations access to billions of dollars in loans and grants through the Paycheck Protection Program (PPP), the payroll support program for airlines and their contractors and the loan programs discussed in the GAO report. The CARES Act set aside $25 billion exclusively for repair stations, airlines and ticket agents. Some maintenance providers were also eligible for the $17 billion loan program created for businesses critical to maintaining national security. The loan programs expire this month.
According to the GAO, while 41 repair station operators applied to the U.S. Department of the Treasury for loans totaling $1.5 billion, ultimately, only five maintenance companies executed loans totaling $20 million. The GAO found the amount of time Treasury took to review applications and ultimately make loan offers, along with other challenges, resulted in relatively few smaller airlines, repair stations and ticket agents taking advantage of the program.
The GAO identified a number a factors contributing the low utilization by eligible businesses, including Treasury’s prioritization of loans to airlines, delays in processing and evaluating applications, miscommunication about whether loan applicants should first consider sources of financing, and the loan program’s credit standards. The report also highlighted problems with a “one size fits all” approach when trying to serve both large, financially sophisticated companies and smaller businesses.
As the 116th Congress draws rapidly to a close, lawmakers are still debating another round of COVID relief. If Congress does manage to cobble together a last-minute deal, it will focus on renewing the PPP and payroll support programs rather authorizing any than major new economic support programs. Obtaining additional relief for repair stations is a top priority for ARSA in 2021.
For information about the GAO report, click here.
Stay tuned to the association for updates as relief talks continue and Congress turns over in early January.
June 23, 2020
When a regulatory or legislative issue broadly impacts the maintenance industry, ARSA coordinates industry response. A broad coalition of aviation and business associations routinely and willingly supports these efforts and coordinates on issues of mutual interest.
But ARSA’s can’t be at the front of the pack on every policy issue, so it is occasionally a loyal and supportive partner when others seize the reins.
The CARES Act is a case in point. Working with members, ARSA convinced Congress to provide billions of dollars in relief for repair stations through the Paycheck Protection Program (PPP), the Air Carrier Worker Support Program and a special loan fund created for airlines and repair stations. Once the bill was signed into law, the association continued to work with Congress and the Treasury Department to ensure the new programs benefit as many repair stations as possible. (See updates below for full coverage of these efforts.)
But there’s a lot more to the CARES Act than just the maintenance industry economic relief; the law also includes a new employee retention tax credit (ERTC), modified net operating loss (NOL) carryback rules and other tax law changes to help businesses weather the storm. In recent months, ARSA has joined numerous informal coalitions to expand, protect or change certain parts of the CARES Act.
Net Operating Loss Carryback Rules
The CARES Act provides a five-year carryback for NOLs generated in 2018, 2019 or 2020. Second, the CARES Act suspends for 2018, 2019 and 2020 the otherwise applicable limitations on excess business losses for noncorporate taxpayers. Combined, these provisions allow businesses to apply losses incurred in the current tax year to prior years and get a tax refund. On June 22, ARSA joined more than 70 groups on a letter coordinated by the National Mining Association encouraging Congress to protect the NOL provisions.
In late May, in response to concerns that business could become targets of lawsuits because of their response to the pandemic, ARSA joined a letter coordinated by the U.S. Chamber of Commerce urging that the next round of coronavirus relief legislation include liability protections.
Employee Retention Tax Credit
ARSA also recently joined letters coordinated by the International Franchise Association in support of legislation to expand the ERTC, which many association members have indicated they plan to use. The letters express support for the JOBS Credit Act (H.R. 6776), which was introduced in May by Reps. Stephanie Murphy (D-Fla.) and John Katko (R-N.Y.). The bill would expand the ERTC credit percentage from 50 percent to 80 percent of qualified wages and increase the per-employee limitation from $10,000 for all calendar quarters to $15,000 per calendar quarter (and an aggregate of $45,000 for all calendar quarters) and improve coordination between the ERTC and the PPP so employers can be eligible for both programs.
By joining these and other efforts, ARSA is able to support advocacy efforts with impact while reserving its limited resources to focus on the issues that uniquely impact the maintenance community.
For more information about ARSA’s broad efforts to support industry needs, contact Executive Vice President Christian A. Klein.
May 11, 2020
As Congress gears up for the next round of coronavirus relief legislation, ARSA has weighed in with lawmakers on the maintenance industry’s priorities.
In a statement submitted to leaders of the Senate Commerce, Science and Transportation Committee in conjunction with a May 6 hearing on COVID-19’s impact on the aviation industry, ARSA said that despite assistance for the maintenance industry provided by the CARES Act business conditions for repair stations remain dire and thousands of jobs are at risk.
In making the case for additional relief for the maintenance industry, ARSA cited Oliver Wyman CAVOK (OW) projections that a dramatic drop in aircraft utilization will result in global maintenance, repair and overhaul (MRO) spending dropping by more than 50 percent in 2020, from a pre-pandemic forecasted level of $91.2 billion to $42.3 billion in the post-pandemic world. In the United States, demand is expected to fall 43 percent.
Repair station workers are highly trained, and it takes years to gain the necessary expertise to be an effective technician. ARSA and its members are concerned that if the industry loses a substantial portion of its workforce, repair stations will lack the capacity to support the nation’s civil and military fleets as aviation activity returns to normal levels. This, in turn, will pose long-term risks to both the efficiency of the aviation system and to national security.
ARSA is therefore urging Congress to:
- Improve repair station access to federal relief by directing the Small Business Administration (SBA) to immediately increase the small business size standard for all North American Industry Classification System (NAICS) codes applicable to aviation maintenance industry companies to at least 1,500 (and, ideally, to 3,000) employees. (The industry’s main small business size standard is currently $35 million in annual revenues, so PPP access is limited to companies that have 500 or fewer employees. Increasing the size standard would give more maintenance companies access to the PPP.)
- Temporarily exempt companies covered by those NAICS codes from SBA’s affiliation rules for purposes of accessing pandemic relief. (The affiliation rules have prevented even small companies with private equity backing from tapping into the PPP).
- Give air carrier maintenance contractors and subcontractors not located at airports access Air Carrier Worker Support (ACWS) resources. (The CARES Act requires most contractors and subcontractors to be located at airports to access ACWS assistance.)
- Provide significant additional resources for both the Paycheck Protection and ACWS programs.
- Refrain from imposing unnecessary restrictions and requirements on companies seeking access to relief.
- Create temporary tax incentives and grant programs to encourage business investment in worker training, equipment and facilities and air carrier investment in maintenance.
- Resolve the uncertainty surrounding the tax treatment of PPP loans. (The IRS has recently raised questions about the deductibility of business expenses paid using PPP funds.)
Another issue not raised in ARSA’s letter to the Commerce Committee is the problem of airlines not paying their bills for past work. It is bad optics from a public relations standpoint for the airlines to be taking taxpayer money and then stiffing small business vendors. Airlines would likely respond that the various programs are very specific and restrictive about how relief money may be used (i.e., payroll, benefits, etc.). ARSA is therefore exploring the possibility of amending the CARES Act to clarify that paying external vendors is an acceptable use of ACWS funds.
However, obtaining additional relief is likely to be a challenge in the current political environment. The negative publicity surrounding the PPP (large companies getting access, administrative issues, etc.) has clearly soured members of both parties on the PPP and members of Congress on both sides of the aisle seem disinclined to expand eligibility. Expanding access to the ACWS may get more traction as it does not make sense to discriminate against airline maintenance contractors and subcontractors based on location (on-airport vs. off-airport).
Another complicating factor is that whereas ARSA and other aviation trade associations were at the front of the line requesting assistance at the outset of the CARES Act debate, lawmakers are now receiving pleas for relief from businesses in every sector of the economy, making it less likely (though not impossible) that there will big bailout packages for specific industries.
ARSA welcomes suggestions for other near- and long-term relief proposals to help the maintenance industry weather what is likely to be a long period of uncertainty. To share your ideas or get more involved in the association’s advocacy, please contact ARSA Executive Vice President Christian Klein at email@example.com.
To read ARSA’s full statement, click here.
May 11, 2020
Another round of coronavirus relief legislation is on the way to the president’s desk after clearing the House on April 23 and the Senate on April 21. The Paycheck Protection Program and Health Care Enhancement Act (H.R. 266) provides $321 billion in additional funding for the Paycheck Protection Program (PPP) created by the CARES Act, as well $60 billion for small business economic disaster loans, $75 billion for hospitals and $25 billion for coronavirus testing.
H.R. 266 is the fourth coronavirus bill passed since the pandemic crisis began in early March and brings the total relief spending approved by Congress to $2.7 trillion.
At the urging of ARSA and its members, Congress has made significant resources available to help repair stations weather the storm. The CARES Act included $25 billion for loans to airlines, repair stations and ticket agents and $3 billion for “Payroll Support Program” grants for airline contractors. The PPP, which was replenished by H.R. 266, provides small businesses and companies with fewer than 500 employees access to forgivable loans of up to $10 million to cover payroll and other expenses.
On April 21, the Treasury Department issued additional guidance confirming that repair stations located at airports are eligible to apply for “Payroll Support Program” grants. However, the Treasury Department has said nothing about the eligibility of off-airport maintenance subcontractors (to read ARSA’s April 2 letter to Treasury Secretary Steven Mnuchin, click here). The deadline to apply is April 27.
On April 23 the Treasury Department also updated its PPP guidance, produced in coordination with the Small Business Administration.
While the vast majority of ARSA members can benefit from the various programs Congress has created since mid-March, certain businesses (particularly mid-size companies with off-airport repair stations) have found it difficult to access relief. As such, the association is working to include additional support for the maintenance industry in the next round of coronavirus legislation. To get involved in those efforts, please contact ARSA Executive Vice President Christian A. Klein at firstname.lastname@example.org.
April 22, 2020
On April 20, the U.S. Treasury Department issued guidance confirming that repair stations are eligible for grants from the Air Carrier Worker Support (ACWS) program created by the Coronavirus Aid, Relief and Economic Security (CARES) Act (H.R. 748).
In addition to the Paycheck Protection Program for small businesses and companies with fewer than 500 employees and a special $25 billion loan fund for air carriers and repair stations, the CARES Act authorized $32 billion in direct financial assistance to airlines ($25 billion), cargo carriers ($4 billion) and airline contractors ($3 billion). The deadline to apply for money out of the program is April 27.
Although it was always ARSA’s position that maintenance providers were intended to be included in the ACWS program, the legislative language is ambiguous. ARSA sent a letter to Treasury Secretary Steven Mnuchin on April 2 urging the law be interpreted to include repair stations – both those serving air carriers at airports and those acting as subcontractors off-airport. Several members of Congress also contacted the Treasury Department about the issue.
The guidance – which is organized in Q&A format – is clear about the eligibility of on-airport repair stations:
“Are Part-145 certified repair station operators and ticket agents that are eligible for loans under Division A, Title IV, Subtitle A of the CARES Act also eligible to apply for the Payroll Support Program as contractors?”
The answer is:
“Yes, if they meet the eligibility requirements for the Payroll Support Program.” The guidance then goes on to restate the requirements, including being a contractor for a part 121 air carrier and being on the property of an airport.
The clarification is good news for on-airport repair stations serving air carriers either as direct contractors or subcontractors because they can now tap into the $3 billion grant pool. However, the Treasury Department did not answer the second question ARSA raised in its letter to Mnuchin: whether, like contractors, subcontractors must be “on-airport”. The guidance simply restates what is in the CARES Act: “A subcontractor that performs such functions is also eligible”. ARSA’s position is because the law does not explicitly state that subcontractors must be on-airport, location should not be a factor in determining eligibility.
As the association continues its efforts to clarify the CARES Act and ramp up for the next round of coronavirus relief legislation, please share suggestions about other things Congress can do to help companies weather the pandemic. Send suggestions and thoughts to ARSA Executive Vice President Christian Klein at email@example.com.
More information about the ACWS program and other Treasury coronavirus responses initiatives is at home.treasury.gov/policy-issues/cares/preserving-jobs-for-american-industry.
April 6, 2020
In an April 2 letter to U.S. Department of Treasury Secretary Steven Mnuchin, ARSA asked the administration to interpret the most recent pandemic response bill – the Coronavirus Aid, Relief and Economic Security (CARES) Act – to ensure repair stations are able to benefit from relief provided to airline contractors.
ARSA’s lobbying helped ensure repair stations, along with airlines and ticket agents, were eligible for a special $25 billion CARES Act loan and loan guarantee program. However, maintenance companies were not included in a non-exclusive list of air carrier contractor functions eligible for $3 billion in grants provided by the bill. The letter to Secretary Mnuchin said that because repair stations provide an essential service to air carriers they should be allowed to tap into the resources, regardless of whether they were direct contractors to airlines or subcontractors working on aircraft equipment such as components or engines.
The letter also urged the Treasury Department to use its discretion not to require repair stations to provide warrants, stock, promissory notes or other items as collateral for obtaining grants.
To read ARSA’s letter, click here.
To review key resources from Treasury, which are also available on the Anti-Viral Measures page, use the following links:
(1) Air Carrier Worker Support – Assistance for airlines, cargo carriers and certain airline contractors and subcontractors
(2) CARES Act loans – Air carriers, cargo carriers, repair stations and businesses essential to national security
(3) Guidelines and Application Procedures for Payroll Support to Air Carriers and Contractors
(4) Paycheck Protection Loans – Forgivable loans for small businesses and companies with 500 or fewer employees
(5) Procedures and Minimum Requirements for Loans to Air Carriers and Eligible Businesses and National Security Businesses
(6) Q&A: Loans to Air Carriers and Eligible Businesses and National Security Businesses Added on April 7
(7) Treasury Loan Application for Air Carriers and Certain Eligible Businesses Updated on April 9
March 27, 2020
On March 27, Congress officially responded to the aviation maintenance industry’s pleas for economic assistance in the face of pandemic-related air travel disruptions. The Coronavirus Aid, Relief and Economic Security Act (CARES) Act passed this week by the Senate and House directs specific relief to repair stations and their employees.
Since President Trump’s national emergency declaration on March 13, ARSA has been working to provide resources to help its members weather the storm. Central to that effort is a campaign to urge Congress to provide short-term help to the maintenance industry. Association members from around the country weighed in with their representatives and senators in support of ARSA’s call for grants and loans to help repair stations meet payroll. That unprecedented grassroots campaign has yielded significant results.
The relief legislation contains several provisions aimed at providing aircraft maintainers with liquidity to avoid layoffs. Sec. 4003(b)(1) of the bill sets aside $25 billion for loans to repair stations, airlines and ticket agents. Aviation maintenance companies that are located at airports and perform work for air carriers should also be able to benefit from a $3 billion financial assistance program for airline contractors and subcontractors (Secs. 4111 to 4120).
The aviation provisions aside, the legislation provides broad relief for individuals in the form of direct payments and forgivable loans to help small businesses and companies with 500 or fewer employees meet payroll and keep businesses operating (Sec. 1102). The overwhelming majority of repair stations are small and medium-size entities that will be able to tap into those resources.
The effort on Capitol Hill to provide maintenance industry relief was led by Sens. Jim Inhofe (R-Okla.) and Tammy Duckworth (D-Ill.), “While ARSA is grateful to all the members of Congress and staffers who’ve worked tirelessly in recent weeks to craft the bill, Senators Inhofe and Duckworth deserve special recognition,” ARSA Executive Vice President Christian A. Klein said. “Thanks to them, there are 250,000 men and women working in the maintenance sector – including 12,000 employees in Oklahoma and 7,000 in Illinois – who can rest a little bit easier knowing that financial help to keep their companies afloat is on the way.”
March 26, 2020
On March 25, House, Senate and White House negotiators reached a deal on a massive coronavirus relief package. In addition to resources for healthcare workers and others on the front lines, the legislation contains provisions aimed at businesses and specific resources for the aviation maintenance community.
Repair station inclusion no accident; ARSA members answered the call to action in unprecedented numbers, reaching House and Senate offices to echo ARSA’s request for assistance (see below) and direct lobbying. The message was simple: In the wake of widespread aviation disruptions, repair stations need help to maintain liquidity and pay highly trained and dedicated workers.
It’s clear elected representatives heard that message loud and clear.
Sec. 4003(b)(3) of the draft bill provides $25 billion in loans and loan guarantees to repair stations, passenger airlines and ticket agents. Cargo airlines would have access to an additional $4 billion in loans.
Secs. 4111 to 4120 provide grants for airlines ($25 billion), cargo airlines ($4 billion) and airline contractors working at airports and their subcontractors ($3 billion) to pay wages, salaries and benefits. Some repair stations may be able to benefit from the latter pot of money, given that the definition of contractor includes those that perform “functions on the property of an airport that are directly related to the air transportation of persons, property, or mail” and their subcontractors. While maintenance is not on the list of enumerated contractor functions (baggage handling, security, ticketing, aircraft cleaning, etc.), the fact that the words “including but not limited to” appear before the list means that it’s not intended to be exhaustive. ARSA will be working with allies on the Hill and those in the administration to resolve any ambiguity.
The grant money comes with certain strings; among other things, it can only be used to pay wages, salaries and benefits. Recipients must also refrain for furloughing workers, engaging in stock buybacks or paying dividends. There are also limitations on executive compensation.
The aviation provisions aside, the legislation provides broad relief for individuals in the form of direct payments and assistance for companies of all sizes, including forgivable loans equal to ten weeks payroll (up to $10 million) for businesses with fewer than 500 employees. The overwhelming majority of repair stations are small and medium-size entities that will be able to tap into those resources. ARSA is still digging through the hundreds of pages of legislation to identify the provisions most important for the maintenance industry.
This analysis is based on a draft of the relief bill obtained by ARSA. Changes will be made before the Senate votes, so don’t take the news to the bank (literally or figuratively!). However, as of 3:00 p.m. on March 25, things have moved in the right direction. ARSA’s “anti-viral” webpage will bring further updates and analysis.
The maintenance industry helped itself get to this point; it establishes the power of grassroots and growing visibility of the maintenance industry on Capitol Hill. When the fat lady sings, if you were one of the many who reached out to Capitol Hill, please circle back with lawmakers’ offices to thank them for their support so the momentum is not lost.
To download a copy of the bill published by POLITICO, click here.
Note: The original version of this post noted that the forgivable loans equal to ten weeks payroll would be available to business with fewer than 500 employees per location. It is not clear from the text of the bill that the employee account applies to specific locations as opposed to total corporate size, with few exceptions, so that language has been updated.
March 17, 2020
In the wake of severe aviation industry impacts due to the coronavirus, ARSA has proposed a maintenance, repair and overhaul (MRO) industry relief package to Congress and the president designed to ensure repair stations can continue to pay employees and to encourage airlines to continue to contract for maintenance during the downturn.
In a March 17, 2020 letter to President Trump and House and Senate leaders distributed to all congressional offices, ARSA said it is hearing from members concerned about cashflow in light of maintenance work being canceled and customers potentially unable to pay bills. The maintenance industry – which includes FAA-certificated repair stations and parts manufacturers and distributors – employs more than 250,000 workers nationwide and generates approximately $50 billion in direct annual economic activity.
As lawmakers huddle to craft economywide and industry specific relief legislation, ARSA is proposing a 50 percent tax credit for airline contract maintenance work performed at U.S. repair stations between April 1 and Dec. 31, 2020. The association said that historically, tax incentives such as the highly successful depreciation bonus created after 9/11 have stimulated economic activity by encouraging businesses to shift future purchasing into the present. The temporary tax credit ARSA is proposing would encourage airlines to continue to contract for maintenance during the anticipated downturn.
ARSA is also urging the administration and Congress to provide repair stations with $11 billion in relief split between grants ($8 billion) and loans or loan guarantees ($3 billion). These amounts would help ensure repair stations are able to maintain their present workforce for the next six months, which will be essential to having the necessary capacity to perform maintenance when commercial aviation activity returns to normal and preventing large industry job losses that would put additional pressure on existing government benefit programs. (e.g., unemployment insurance).
ARSA also pointed out that the maintenance industry has long been suffering from a severe and well-documented technician shortage and maintaining a highly trained workforce is critical to ensuring the long-term stability of the entire U.S. aviation sector.
“The simple fact is that we don’t know how long the coronavirus disruptions will last and what the impacts will be,” ARSA Executive Vice President Christian A. Klein said. “Congress needs to act swiftly to limit damage to the aviation maintenance industry, which has both a huge impact on the economy and which is so essential to the safe operation of aircraft.”
To read ARSA’s full letter, click here.