Commercial Aircraft Fleet Optimization Analysis Yields Significant Tax Savings
A large commercial airline (the “Company”) engaged Duff & Phelps to provide property tax consulting services including, preparing valuation and uniformity analyses to support the Company’s estimate of market value for their existing fleet of aircraft, filing tax appeals when warranted, and negotiating with local and/or state assessment officials regarding the value of the Company’s taxable tangible assets.
The Company’s local jurisdiction had historically valued the Company’s fleet of commercial aircraft solely based on a “blue book” price guide without any consideration of external factors, including soaring fuel prices and volatile economic conditions that are currently affecting the commercial airline industry.
Duff & Phelps produced an innovative and highly supportable valuation model to quantify physical, functional and economic obsolescence by comparing the Company’s existing fleet of aircraft with a more modern, fuel-efficient, right-sized or “Optimal” fleet. The valuation model was proactively presented to local and/or state assessing officials prior to the current year assessment roll being established, through a number of informal meetings.
Duff & Phelps’ valuation model successfully withstood the scrutiny of local officials, resulting in an assessment for the Company’s fleet at roughly 40% of the value produced by the “blue book” price guide. Our valuation resulted in significant property tax savings of $4.7 million for the fleet.
The Duff & Phelps Difference
Duff & Phelps’ Property Tax Services group brings valuation skills, industry knowledge and over 20 years of property tax experience that result in highly supportable valuation modeling. We efficiently and effectively handle complex property tax appeal matters.