Aircraft Maintenance Technology - 39

ARSA INSIGHT

Getting More for Phase IV
With the aviation industry reeling from pandemic-related air travel disruptions,
ARSA is focusing on the next round of relief legislation ("Phase IV" or "CARES 2.0").

The
pandemic's
economic
effects will
continue
well past its
health impact,
particularly for
the aviation
sector.

With significant efforts from the association, its
members and allies, Congress made considerable
resources available to help aviation weather the storm.
The CARES Act included loans to airlines, repair stations and ticket agents and "Payroll Support Program"
grants for airline contractors. Also, because the vast
majority of repair stations are small companies, many
can benefit from the Paycheck Protection Program
(PPP), which was replenished in late April. (To catch
up on the legislative effort to provide economic relief,
visit arsa.org/covid19-relief.)
Unfortunately, some maintenance companies have
found it difficult to access the resources provided by
Congress. ARSA is working to include additional support for the maintenance industry in the next round(s)
of coronavirus legislation.

ARSA is asking Congress to exempt businesses with
the NAICS codes most applicable to aviation maintenance from the SBA's affiliation rules for PPP purposes.

Small Business Size Standards

Tax Credits for Investment,
Training and Maintenance

Companies qualify for PPP loans under the CARES
Act by meeting standards set by the Small Business
Administration (SBA). The agency establishes small
business size standards based on annual revenues and/
or the number employees for each North American
Industrial Classification System (NAICS) code category.
ARSA is asking Congress to mandate SBA to issue a
direct final rule raising the size standard for code 488190
("Other Support Activities for Air Transportation") to
put repair stations on par with other industries and
allow more members to qualify for the PPP.

SBA Affiliation Rules

By Christian Klein

Christian A. Klein is
the managing member
of Obadal, Filler,
MacLeod & Klein,
P.L.C. and is executive
vice president of the
Aeronautical Repair
Station Association.

Combined with the size standards, the SBA's affiliation
rules also make it difficult for some aviation maintenance companies to access PPP relief; in particular,
those partially or wholly-owned by private equity companies or operated as a family of small companies under
a common ownership umbrella. Recognizing that the
affiliation rules would prevent small and mediumsize businesses in certain industries from accessing
PPP relief, Congress included language in the CARES
Act exempting certain franchises, food service and
accommodation businesses from the affiliation rules.
However, despite being similarly situated and in desperate need of assistance, none of these exemptions apply
to the aviation industry.

Off-Airport Repair Station Access
to Airline Contractor Grants
The CARES Act included a $3 billion "payroll support"
grant program for airline contractors. Unfortunately,
the qualification language is ambiguous. Treasury
issued guidance on April 21 confirming repair station
eligibility, but, despite ARSA's urging, has said nothing
about the eligibility of off-airport maintenance subcontractors. ARSA is requesting Congress to define
"contractor" as that term is used in 14 CFR part 120
so "off-airport" maintenance providers will have the
ability to access grants.

Well-crafted tax policy can stimulate economic activity
and recovery. After 9/11, the temporary "depreciation
bonus" encouraged considerable business investment.
ARSA is urging Congress to repeat that success by
creating temporary refundable tax credits for capital
investment in facilities, worker training and aircraft
maintenance.

Topping Up the Buckets
The pandemic's economic effects will continue well past
its health impact, particularly for the aviation sector.
Experts from Oliver Wyman CAVOK project that global
MRO spend in 2020 will be half of earlier projections.
Even as other industries and sectors begin recovery, the
maintenance industry will need support to maintain
the capacity necessary to service the U.S. fleet. ARSA
is therefore requesting that the Phase IV bill replenish
the payroll support program and PPP to provide relief
to companies that will need continued sustainment.

The Work Continues
In addition to legitimate differences of policy opinion,
this is an election year and politics is front and center.
Not only is the White House at stake, but Democrats
are increasingly optimistic about winning seats they
need to take back the Senate (three if Biden wins the

www.AviationPros.com

http://www.arsa.org/covid19-relief http://www.AviationPros.com

Aircraft Maintenance Technology

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