A blog by Joseph Carfagna Jr., President & CEO Leading Edge Aviation Solutions
It’s now no longer fresh news that the “One Big Beautiful Bill” passed on July 4th. We decided here at Leading Edge that rather than write up a blog about the bill itself, we would leave that to the tax and legal experts. Instead, we’d wait to see how the market has reacted to it several weeks later. We’ll report the latest, fresh market gut check news and share a link to the newly released article by David Shannon, a Partner at Lewis Brisbois Bisgaard & Smith, which outlines key details you may need to determine whether you can take advantage of the new depreciation rules.
This blog is a twofer; what we hope to present here for our readers is a one stop shopping of market opinion mixed with tax and legal opinion from David Shannon on the subject, which is linked a few paragraphs down.
The market since July 4th passage of the bill – The first half of this year was pretty so-so as far as interest in aircraft purchases go. A lot of uncertainty about tariffs and the see-saw of the stock market seemed to dominate people’s thinking. After July 4th, which coincidentally is smack dab one half of the way through the year, we can say we have seen things flip like a switch. The second half of this year seems to hold a lot more promise than the first half. We have made a fair number of deals in the last three weeks that will yield a fruitful autumn (even though Autumn isn’t fruit season, is it?)
What to do? Act soon if you are looking to purchase. No, this is not a high-pressure sales pitch – do yourself a favor if you’re looking to take advantage of the tax benefits if you qualify. Why? Because if history repeats itself, which we think it will, the industry will get pinched in the way that causes buyers to ultimately make sacrifices and compromises. Supply of the more desirable aircraft will constrict, yielding less choices. The professionals in the industry will get busy no matter the capacity they are in. The shops that perform pre-purchase inspections will get booked up as the weeks go by. Waiting until October or November will place the potential 2025 tax benefit a buyer may be after into jeopardy. Of course, the argument can be made that waiting until near year end and using an aircraft for only business use a few times before year end is more convenient, however for the few short months that this applies, it will cost buyers in ways they likely did no anticipate. It takes a professional in this industry to know what sacrifices get made in the form of less due diligence and less choices with bullish sellers in only a few short months.
Look at it this way – Imagine waiting to have a knee replacement until many other people also need one at the same time and in the same place before the end of the year. There will be a pinch in the supply chain of the titanium parts that replace knees. The doctors will be overworked and make mistakes. The hospitals will get crowded and the nursing staff will get cranky and go on strike. The overcrowded hospital will have more staph infections. The insurance companies will be slow to approve and pay because there are a glut of claims. Suddenly on December 20th some desperate, pressured and less scrupulous doctor will say “well in your case we can use a left knee part instead of a right because you need this now and there are no more rights available. You will walk in an uncontrollable circle after the surgery and perhaps for the rest of your life but at least we will get it done before the end of the year”.
I could go on and on but hopefully I made the point. This all relates to that airplane you walk up the airstairs into and make a right along with the rest of your business associates and take a seat in. Do it right. If upgrading your aircraft or purchasing your first one is in your plans for 2025, each week that goes by will cost you in ways only the experienced industry veterans can relate to. So, the time is now. So much for our industry opinions on this matter, Click Here for David Shannon’s opinions on the facts (opinions on facts – that sounds like a play on words) which I am sure will resonate.
We strive to do the most professional job we can for our clients when purchasing an aircraft, and we truly feel we offer the best approach in the industry. After nearly 60 years in the industry, we take a lot of pride in doing things right and the simple fact of the matter is the busier we get, the harder it becomes to deliver that gold standard we offer. Our dedicated team has risen to that occasion in years past when the tax tail is wagging the dog at year end, and we will do it again. Experience has taught us very clearly that when 100% bonus depreciation entered the pre-owned AND new aircraft market (a first for pre-owned) in 2017 and as it “sunsetted” through 2024, how the end of the year looks. Now that we are back to 100% we suggest you plan for it. Those who fail to plan, plan to fail as they say.
Please reach out to us to discuss your plans and consider that knee replacement analogy – You can avoid cutting corners, dealing with less choices and bullish sellers with an industry that can serve you well if you begin your upgrade or first-time purchase now. Airplanes are nothing like knees, our industry has no doctors, nurses nor staph infections, but we have the same kind of factors theses analogies describe.
