Changes in how the state of Indiana taxes aviation fuel and airplane parts could give a big boost to airports throughout the state and especially Northwest Indiana.
Under legislation passed by the General Assembly last session, the standard 7 percent sales tax charged for aviation fuel went away Monday, to be replaced by a 10 cents per gallon excise tax. The 7 percent sales tax on aircraft parts was also eliminated.
"For airports like Gary or Griffith, the cost savings with fuel can be a huge attraction for aircraft to come over to Indiana as opposed to Illinois," said Craig Anderson, vice president and general manager at Griffith-Merrillville Airport.
With aviation fuels currently priced in the $4 to $7 a gallon range, the money saved from the switch from a 7 percent sales tax to a 10 cents per gallon excise tax can be substantial. The bigger the plane the more the effect is magnified, with twin-engine prop planes sucking down as much as 250 gallons for a refill and jet planes sometimes more than 1,000 gallons.
Savings like that could have more aircraft owners putting Indiana in their flight plan, Anderson said. Plane owners will still have to pay federal taxes on aviation fuel.
In addition, the elimination of the 7 percent sales tax on airplane parts will encourage more aircraft owners to have maintenance and refurbishing done in Indiana, Anderson said. The two tax changes combined could be a game changer for aircraft owners who have a choice of basing aircraft either in Illinois or Indiana.
The Griffith-Merrillville Airport also hosts G&N Aircraft Inc., an industry leader in overhauling prop plane engines.
"This is a real good opportunity to bring in additional business and additional jobs for the state," Anderson said. "It's just a huge plus."
At Gary/Chicago International Airport, the Gary Jet Center provides fueling, maintenance, and charter operations. A number of Chicago businesses already base planes there.
Gary Jet Center owner Wil Davis said with Monday being the first day of the sales tax elimination, it will take some time to see how it all plays out and how attractive it proves to owners with planes based in Illinois.
"But it's all positive and very significant for our industry in the state," he said.