American Airlines, a major employer in Charlotte, is on “high alert” that state lawmakers will target tax breaks on jet fuel in response to the company’s opposition to House Bill 2, the state’s new law on public accommodations and employment practices.
That’s according to an email Dana Fenton, Charlotte’s lobbyist in Raleigh, sent Wednesday to City Council and other officials in Charlotte, including interim aviation director Brent Cagle.
“American Airlines is on high alert as it is rumored that an amendment will be filed to eliminate the aviation fuel tax exemption,” wrote Fenton. “There has been increasing speculation recently that such a repeal would be attempted. Many in the NCGA connect such an amendment with the airline’s high profile call for repeal of House Bill 2.”
Fenton said he discussed the issue with an American Airlines government liaison. An American Airlines spokeswoman declined to comment Wednesday.
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The N.C. General Assembly is hammering out its budget, with the state House taking it up for debate Wednesday. The House and Senate will then work to reconcile their budgets and come up with a spending plan for the state.
The House passed its budget on second reading Wednesday, and there will be a third vote Thursday. The House did not discuss repealing the fuel exemption Wednesday, said State Rep. Scott Stone, a Charlotte Republican. It’s possible the Senate could still act, he said.
American is a major employer in Charlotte, which is its second-busiest hub behind Dallas/Fort Worth. The company operates about 650 flights a day from Charlotte Douglas International Airport – more than 90 percent of the airport’s total – and employs 11,000 people based at the city. Statewide, American employs 14,000.
The company took an early stand against HB2, which among other measures limits legal protections for LGBT individuals. The law was passed in response to a Charlotte ordinance that would have expanded anti-discrimination protections and allowed transgender individuals to use the bathroom of the gender with which they identify.
In March, American put out a statement that said HB2 is discriminatory: “Laws that allow such discrimination go against our fundamental belief of equality and are bad for the economies of the states in which they are enacted.”
Other companies such as Facebook, Google and Bank of America have also voiced their disapproval of HB2.
But American’s Charlotte hub doesn’t just benefit North Carolina: The company also receives a tax break from the state that saves it millions each year it would otherwise have to pay in taxes for jet fuel.
American lobbied heavily last year to preserve and extend a state law that capped a company’s jet fuel taxes at $2.5 million a year. That cap had been set to expire this year, which would have cost American Airlines millions of dollars in additional taxes.
Lawmakers went a step further, exempting jet fuel from sales tax entirely. American said the break was key for maintaining its ability to be profitable in Charlotte, a low-cost hub for the airline, while critics pointed to the airline industry’s string of record-beating profits as fuel prices plummeted last year.
Charlotte leaders generally view the jet fuel tax break as an important part of the city’s economic development: When the sales tax break was announced last year while the Charlotte Chamber was at its annual retreat in Durham, there was applause from local business and government leaders.