With President Trump’s current trade war, we’re of course seeing massive tariffs on all kinds of imports. This also applies to many aircraft, which creates major uncertainty for airlines. On the surface, that’s especially bad for Delta, which has a huge order book with Airbus.
Continue reading: Sneaky: Delta Avoiding Trump Tariffs On New Airbus Planes
Share your questions, experiences, and thoughts below.
Are there other implications of this? Examples; Are the planes going to be registered in another country? Can DL perform their own heavy maintenance here in the US or does it need to be done elsewhere? Obviously it’ll be a good while before the planes are due for a C or D check but curious how that works.
Once they transport it to NRT and thus avoid it being a "new" plane, why won't they be able to fly it domestically? It would seem they shouldn't have to take both of these steps.
This can be similarly prevented as California does for the “use tax” (equivalent to the sales tax rate) on out of state cars. It used to be that once the car is registered for 6 months outside California, no use tax would apply. This has since been changed to a 3 year period (if I remember correctly).
Here's a parallel scenario. If a private party in California is purchasing an aircraft, the person will have to pay California sales tax on the purchase. However, if the person takes delivery in Oregon (which has no sales tax) and keeps the aircraft in Oregon for at least 120 days, the person will sidestep California sales tax.
But narrow body Airbus jets aren’t subjected to tariffs, right? They make enough of it in Alabama to offset this concern? Otherwise it’d only hurt Alabama jobs
Why do they have to fly the plane to Asia? Wouldn’t it be more fuel efficient to fly it Cancun?
Registering with the FAA doesn't automatically mean that the aircraft are considered imports but CBP could potentially argue that it is effectively an import. Same with maintenance, though they probably would get a TIB for that to cover their bases. There's not a lot of law around it and it's all grey area: given that Delta is quite public about it it's very possible that the government comes after them and they fight it in courts.
It has worked for them before so i don't see why it shouldn't work again. I mean, even last year DL was still taking long haul planes via NRT.
The found a loophole and exploited it. I fail to see the issue. Happens everyday.
Another instance of corporations and billionaires hiring experts to find loopholes (carefully crafted loopholes, perhaps), while we mere mortals always get stuck paying full price.
You would be paying import on a used plane worth 99.9% of the value of the new plane. No carve out for used.
There certainly is some sort of carve out for not “new” planes, or they wouldn’t fly it via NRT for fun.
“ New Airbus jets are ones that have “no time in service or hours in flight other than for production testing,” or for delivery to the US
In other words, if a new plane operates a flight to a destination outside the EU other than the US, it would no longer be considered a new jet, and therefore potentially wouldn’t be subject to those tariffs.”
So we can just get around tariffs if someone else uses all our goods before sending it to the US? "Slightly worn sneakers, 30% discount"
@Watson- you’re welcome to do the same. Instead of crying about wealthy folks, why don’t you research ways to do what billionaires do. There are many investment vehicles accessible to “mere mortals”…sad if you want to cry on the sidelines, claiming victim status.
Please educate us mere mortals, as a salaried employee, how can I pay 10%-15% income tax like the 1% do? I am all ears.
Maintenance can be performed in the US without any issues.
Airlines typically send planes to another country for maintenance, it's not considered an import.
Most of the bits and pieces they use to assemble those jets are still subject to tariffs because Trump and Navarro are both monumentally stupid people.
I don't believe so. Foreign registered planes have extreme restrictions on domestic flights (FAA Part 129) - DL would need permission from FAA to fly a foreign registered aircraft domestically.
Bastian being a weasel does come in handy once in a while for situations like this. Less so when his airline is in crisis and he feels like heading out to the Olympics.
One way would be Tax-Loss Harvesting - this can significantly reduce your income tax burden
Ok. I see how it is. Time to make Japan our 52nd state.
Or is it 53rd? Where are we on Greenland? I'm so confused. And which of the new states is the one with the cheap eggs?
@Ole, you've never heard of donating $2 million to a presidential campaign and then requesting a meeting at the White House to plead your case? Come on, think outside the eggs box.
@Vinod
I understand what this is, but as a middle class individual with little in the way of investments outside of my 401k and IRA, it has essentially no effect on my tax bill. Multi-millionaires and billionaires have these mechanisms available to them because they are filthy rich. They have the disposable income to dump money into the stock market and tax loss harvesting can save them millions. As for me, it would have maybe saved me $50-80 this past filing.
DL has TechOps facilities/staff at NRT from the NW hub days. These aircraft (and others delivered to NRT over the last few years) won't just fly to NRT and then immediately start flying passenger flights. It'll be there for a couple of weeks and then enter service, just as it would had it been delivered to the US.
…. and someone suggested that the USA simply reverted to a British Colony again …. 🙂
If the plane needs maintenance while on the ground in US, would that require importing it?
It's definitely legal per today's laws, but all it takes is one madman with a pen and and EO and that option becomes unlawful.
TIBs typically have an up to 3-year expiration so that's not a good long term option, but again, one EO penstroke late...
These are all workarounds for one madman and his sycophants in power in the other two branches of government. Instead of workarounds, they should let him know his chaos destruction tour is over.
I am a DL frequent flyer and I think the federal government should look at this and take action. Every aircraft will go through an initial delivery flight and these types of loophole or abuse should be closed.
DL is probably jumping through a lot of hoops to make this work... This means they will have to cancel a flight to Japan, so they can use this aircraft to fly passengers back... or ferry another empty A330 or A350 back if they didn't disrupt an outbound flight. DL does not operate fifth freedom flights out of NRT, so there is no way to de-virgin the aircraft.
If they really want to do this "right", they would fly it to ICN, and use it to do intra-Asia flights, but NRT is an old choice since DL no longer flies to NRT.
Someone can correct me if I'm wrong, but I believe the Mobile Final Assembly is in a Foreign Trade Zone. So even planes manufactured there would still be subject to tariffs.
Brilliant move by my former company. A 5 y.o. could outsmart this administration.
If Trump sends the Delta execs to El Salvador, I guess they can use the plane for that flight? Win win!
This is not sneaky, it’s smart. Same reason why almost all Pharma companies have an office in Zug Switzerland and they actually act as owner of goods and thus they can play their global sales and duty tax avoidance practices which allows them to make huge profits and which google , meta apple all use those heavens for tax avoidance on their income and assets. This is why many aircraft leasing companies sit in Ireland etc. , just follow tax avoidance deals.
Trump needs to close this loophole. Everybody needs to play fair. This is like we buy a car from no sales tax state and bring into home state and avoid the sales tax.
You’ll never get anywhere in life if you have that mindset. People are for the most part where they are because of their minds, not their wallets. There’s so many rags to riches examples. You are where you want to be, and being middle class has nothing to do with it. It’s a total cop out. Learn the game, it’s free and called YouTube. Really that strategy didn’t require lawyers to figure out. I don’t have a college education and I thought about it before I saw this article. If you can work the system legally, then do it! More power to you!
Like hiring good accountants to avoid taxes, I am sure DAL can do the same with tariffs. What is stopping DAL from just leasing the airframes from an Irish lessor to avoid the tariffs? Wealthy companies avoid taxes and I am sure they will minimize tariffs too.
No, its because they still have to "prep" the plane to DL standards. They'd usually do it at a TechOps facility in ATL, but they also still have a TechOps facility open in NRT from the NW days that they are using for this instead.
Nope. Typically a temporary import bond (TIB) is issued for 1 year for foreign aircraft getting maintenance done in the US.
Surely the "new jet" definition is no longer relevant (like it was in 2019) since the tariffs now apply to all goods? The "trick" seems to simply be that the plane will never enter the US permanently, but only visit temporarily for a few hours and thus won't be subject to tariffs.
From my experience, if you buy in one state and do not pay sales tax and then register a new car in your home state, you will need to pay the sales tax in your home state. This is also true if you buy a used car, whether from car retailer or private seller. If you owned a car in a state and previously paid the that state's sales tax, then later become a resident of a new state, my experience has been that you will not be required to pay the new state's sales tax when you apply for a tag. States do have reciprocity in some aspects of vehicle registration, with DMV and Dept of Revenue sharing information. It is possible you might even receive a refund if you paid sales tax to the state where purchased in excess of what your home state would collect for that new car purchase.
Clever…
Reading the article this morning, I could not help thinking about several European airlines who were broken up into separate EU and an UK entities because of Brexit.
One is legally registered in the UK and falls under CAA rules, the other somewhere in the EU falling under EU rules.
That all went well until the UK unit had an airplane going tech in the EU and now wanted one of their EU unit airplanes fly the passengers to the UK and the UK CAA did not allow them to.
They were furious, but either you are two legally separated airlines or you are not.
You can’t have it both ways.
Of course, Ryanair being Ryanair thought they could eat their cake and keep it too.
Hope Delta does not make the mistake to try to fly one of their “international only” A350’s from Seattle to Atlanta one day. Technically they would be smuggling an A350 into the US.
For what it's worth, Flightaware is showing that TLS-NRT flight as canceled now.
Like I said back then
"People are mistaking “We will defer any deliveries that have a tariff on it.” as not taking deliveries as scheduled for years."
Likely depend on the origin of parts percentage, like the us administration always considers 51% chinese made product chinese, regardless whether they have been proxied via VN/TH or Cambodia.
Couldn't they just land in UK or CA and call it a day, No need to go via NRT? or the DL facility at NRT plays a role here?
You do realize that if Delta ends up being subject to these tariffs, it will be you, the consumer, that ends up paying them. The will just increase the price of their tickets to cover the price of the tariffs.
Trump isn't interested in closing tax loopholes. They are the reason he paid little or no income taxes in many years.
Why’s everyone complicating this so much. A subsidiary in Japan or Canada owns it, puts it in a trustee relationship with the Bank of Utah who registers it with FAA - and “leases” it to Delta US. Can operate anywhere, and all legal.