Providing Tax and Accounting Advice for the Reinvigorated Commercial Airline Industry Supply Chain

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Reinvigorated-Commercial-Airline-Industry-Supply-Chain The United States has the oldest and deepest commercial airline supply chain in the world. After decades of losses, the reorganized commercial airline industry now has three large, financially strong U.S. carriers - Delta, American, and United. In addition, regional U.S. carriers Southwest and JetBlue are also financially strong.

Perhaps more importantly, some of the world’s largest airlines now operate outside of the United States, including in Asia and the Emirates, and are growing even more rapidly than U.S. airlines.

Growth Impact

This level of industry growth impacts the entire airline industry supply chain.  Increased orders for new planes ripple through the entire supply chain. Existing aircraft bodies themselves can last for decades, however sustained growth generates engine and component replacements including landing gear, tires, and seats.  Existing aircraft can be updated to today's avionics and the seat replacements can include today's entertainment systems and accompanying audio visual systems.

Tax and accounting advisers have the opportunity to provide a variety of airline supply chain growth related services.

Financial Statements and Loans

Expanding aircraft suppliers need working capital and facility expansion financing which often requires regular, timely, and typically a higher level of financial statement preparation.  To get lenders comfortable with the new industry environment, advisers should communicate recent positive industry trends to the lending community.

Equipment Purchases

A strong commercial airline supply chain needs new machine tools and other equipment.  Today's advanced machine tools provide the precision and quality necessary in this industry.  The aircraft industry has become the leading purchaser of new 3D printers for both original equipment manufacturing (OEM) and replacement parts. Tax and leasing opportunities are available for 3D printers which are described in detail in Thomson Reuters’ October 2015 newsletter issue (Providing Business, Tax, & Accounting Advice for 3D Printer Purchase Decisions).

Regulatory Industry

For obvious safety and reliability reasons, the airline parts and equipment business is highly regulated.  U.S. suppliers have made major investments in time and money to achieve the certifications and approvals necessary to supply and serve this industry. Informed advisers can help the U.S. airline supply chain industry leverage its existing intellectual property and position in this industry and capture a large percentage of this new growth in the U.S.

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Charles R Goulding Attorney/CPA, is the President of R&D Tax Savers.

Peter Saenz is a Tax Analyst with R&D Tax Savers.