Polo Championships
This month has been busy! We have participated in a wide spectrum of events from the Phoenix Fashion Week last month to the upcoming Scottsdale Polo Championships.
This year marks our 25th anniversary in providing private jet services. We are excited to be a sponsor of the Polo Championships: Horses & Horsepower. This is the third annual Polo tournament held locally at Scottsdale’s very own West World Arena. Last year over 9,000 people attended this event and this year’s attendance is expected to be over 15,000. Polo teams travel from all over the world in hopes to take home the coveted Polo Championship Cup. We will be there this weekend November 1st and 2nd supporting our local Arizona Polo Club as it competes against The United States Military Team, Clogau Wales Polo Team and many others. It has been a highly anticipated event and it is finally here! As a sponsor we will have the only sky lounge located at mid-field with a two story viewing deck. We invite those with a special boarding pass to come and enjoy a bird’s eye view of the matches. To start every match the players will line up with their horses at mid-field and will run out onto the field from under our booth. This view will be like no other. If you aren’t into polo, maybe the cars will catch your eye. Sponsors such as Ferrari, Lamborghini, and Porsche will have all their latest models showcased at the field during the event. It’s Scottsdale’s second largest luxury car show behind The Barrett Jackson Auto Show. Of course after the matches you will want to stay for the after party with live entertainment by DJ Mr. P-Body. We are very proud to be a part of the Polo Championships and expect it to be a great time! For more information on the event be sure to click the link below.
Friday November 1, 2013
Gates Open at 3:00 PM
Saturday November 2, 2013
Gates open at 10:00 AM
This is the boarding pass which allows you access to our sky lounge for a bird’s eye view.
Pinnacle Aviation is proud to kick off Phoenix Fashion Week 2013! As the main sponsor this year, we have had a chance to work along side Phoenix Fashion Week in preparation for this exciting event. What an experience it has been! To start things off, we had the opportunity to host an epic photo shoot for some of Phoenix’s new and upcoming top models. The shoot was held in our aircraft hangar at Pinnacle Aviation. It was an amazing experience, everything from outstanding photographers, stunning models, and a luxurious aircraft.
The photo shoot was just the beginning, and the most exciting event is still yet to come! We are sponsoring the “Launch” after party on Saturday, October 5th 2013. The doors open at 9:30pm and there will be music from DJ Q, along with a live performance from Yasmeen. After recently returning from her tour in London this new pop star is sure to rock the house. Can you think of a better way to conclude Phoenix Fashion week? We sure can’t! Check out some of these awesome photos below. Comment and let us know what you think!
The AZ Redbook has published an article recently highlighting awards in safety recently received by Pinnacle Aviation. Click below to read the article now!
http://www.azredbook.com/leisure/pinnacle-aviation-goes-platinum/
AZ Redbook, July 2013
Pinnacle Aviation is proud to announce that we have received IS-BAO, Stage 2 Registration along with an ARGUS Platinum Rating. This accomplishment is a result of the safety culture we have established in our organization, being proactive in every facet of our operation. Our dedicated Safety Director, Bobby Garcia was instrumental in organizing a system that exceeded the standards of our recent audit. Pinnacle Aviation’s goal has always been to be at the forefront of programs that will enhance our safety and operational standards for our clients.
The President signed “The American Taxpayer Relief Act of 2012” on January 2, 2013. It’s important to check with your tax counsel and advisor to determine how this new law will impact your situation. The comments below apply to the Federal Tax Law. Each State may NOT adopt the Federal Law. Check on your State Law. Consider the items below for discussion with your tax counsel.
The new tax law provides specific benefits to some aircraft owners as well as aircraft purchasers concerning depreciation and Section 179 expensing. The benefits provided have some limitations on the aircraft owners/purchasers as well as timing issues on the expenses and purchases. Check with your tax counsel before making your decision on any major aircraft modifications or purchases based upon the items discussed below.
BONUS DEPRECIATION:
The 50% bonus depreciation option applies only to NEW aircraft purchases OR the cost of product improvements to new or used aircraft. Major limitations are noted below.
- The new aircraft must be placed in service prior to December 31, 2013 OR have binding purchase agreements executed in 2008-2013 and the aircraft qualifies as “certain aircraft” or “long production period” as defined in the Internal Revenue Code, then the aircraft can be placed in service during 2014 and still qualify for 50-percent bonus depreciation.
- For commercial aircraft used in the business of transporting persons or property for hire; the aircraft must cost more than one million dollars and have a production period greater than one year.
- For non-commercial aircraft used for business; the aircraft must cost more than $200,000, have a production period greater than four months, and the purchase agreement must have a non-refundable deposit of ten percent of the aircraft cost or $100,000 whichever is less.
- Agricultural and firefighting aircraft operators should check IRS bulletins for other special rules that may apply.
- The product improvement cost subject to bonus depreciation can include both new and used equipment provided that at least 80% of the product improvement equipment cost is new.
New equipment purchases will allow a bonus depreciation of 50% of the new equipment cost to be taken in the year the equipment is placed in service. The 50% bonus depreciation claimed in the first year is in addition to the normal depreciation calculated on the balance (Purchase price plus sales tax less the bonus depreciation). The total depreciation claimed can never exceed the purchase price of the equipment plus the sales tax.
When you consider a change in aircraft usage or aircraft ownership, you should evaluate the total cost method for using the aircraft as well as how a specific aircraft “A” compares to aircraft “B”. Do you own, lease, or contract for the usage of the aircraft? How does the costs of using aircraft “A” compare to aircraft “B”? Which usage methods and aircraft is the better deal from a financial viewpoint?
Please notice that no qualifiers have been placed on the usage method, intended usage, or specific expense category of either aircraft “A” or “B”. It might not even be an apples-to-apples comparison. You might already own “A” and want to compare the cost of keeping “A” to trading it for “B”. You might be comparing leasing, owning or contracting aircraft usage of several different aircraft models. Your interest is strictly financial. From a big picture standpoint, aircraft “A” and “B” could be investment “A” and “B”. Which investment is the better deal from a financial viewpoint? How do you make this financial comparison and answer this question? Please notice that the features and benefits of the aircraft usage methods or aircraft types is a totally different question that you should also be evaluating. This paper only discusses the financial consequences of an investment.
Please realize the importance of addressing these concerns today due to our current economic situation. Start planning now to determine the best financial decisions for your situation. When Congress passes the new tax laws, you can further evaluate your financial plan. Using NPV to evaluate your financial alternatives and specific aircraft models could save you significant money. If you aren’t familiar with NPV, do a little homework now so you have time to study and understand the impact NPV can have on any of your financial decisions.
WHAT IS NPV?
Use Net Present Value (NPV) to evaluate and compare any situation “A” and “B” financially. First, your rocket-science hat is not required to understand this concept. Please be patient and read carefully as only your common sense is required. When money is spent today that produces a cash flow (receipts or distributions) in the future, you can use NPV to calculate the value of this cash flow in today’s dollars. All investment decisions center on calculating today’s value of a future cash flow. This is more complicated than the simple addition and subtraction of the cash receipts because a dollar today is worth more than a future dollar. You must consider the time value of money. Performing a Net Present Value (NPV) analysis will provide you an answer on the current dollar value of your investment. You can use before or after tax cash flows to calculate today’s dollar value on any investment. Using after-tax cash flows provides the advantage of considering all tax benefits in your investment decision.
The Net Present Value (NPV) is a single dollar value that is calculated from a cash flow over a period of time which has been adjusted for the time value of money. The NPV of an investment is the difference between the sums of the cash flows (adjusted for the time value of money) produced by the investment less the amount initially invested. To adjust the cash flows to reflect the time value of money requires that each cash flow value must be adjusted for the time it was received (or disbursed) and the interest rate used to calculate the present dollar value. The interest rate used in the calculation is known as the discount rate. The discount rate used is usually your current cost of borrowing or the percentage return you could achieve with a safe investment. The single dollar value of the total adjusted cash flow not including the initial investment is known as the Present Value (PV). Therefore:
Net Present Value (NPV) = Present Value (PV) less Initial Investment.
As an example, assume $100,000 is the initial investment in an aircraft. This aircraft investment produces a cash flow of $25,000 a year for 5 years. The total cash flow received over the five-year period is $125,000. The aircraft is sold at the end of Year 5 for $70,000. Assume an interest rate (discount rate) of 10%. The adjusted cash flow for the time the payment was received (assumed here to be at the end of each year) and the 10% interest rate produces a Present Value (PV) of $138,234. See “Net Present Value Example” table and “HOW TO COMPUTE NPV” section below. The actual financial PV formula was used to calculate the “Adjustment Factor” in the table. However, it is much easier to use a financial calculator that contains the NPV function.
NPV = $38,234 = $138,234 (PV) less $100,000 (Initial Aircraft Investment)
By definition; if the NPV=0, then the investment return is equal to the discount rate. If the NPV is greater than zero then the investment return has exceeded the discount rate. If the NPV is less than zero then the investment return is less than the discount rate. In this example, the NPV is a positive $38,324. If you make this initial investment of $100,000, you will earn $38,324 more than 10%. A discount rate of 21.05% will produce a NPV=Zero, which means the investment return was 21.05%.
HOW DO YOU COMPUTE NPV?
Use a financial calculator or use the NPV financial function in Microsoft Excel to make the calculation. NOTE: Excel’s language about discounted cash flows differs from the standard finance nomenclature. Excel uses the letters NPV to denote the Present Value (not the Net Present Value) of a cash flow. To calculate the finance Net Present Value of an investment using Excel, calculate the Present Value using the Excel NPV financial function then subtract the amount of the initial investment. For your information, the IRR financial function in Microsoft Excel was used to calculate the investment return of 21.05% noted above.
The AircraftCostAnalysis program can be used to produce NPV analysis for any type aircraft, ownership method, lease or purchase, rent or contract situation. Do the math before you invest. Obtain the details at www.AircraftCostAnalysis.com.
At the end of December 2012, Pinnacle Aviation was engaged to provide management services for a new Citation CJ3. This is the second CJ3 in Pinnacle’s fleet, with the other CJ3 based in Teterboro, New Jersey and on our charter certificate. This new CJ3 will be based in Scottsdale with Pinnacle to provide the full spectrum of management services including pilots, operations, accounting, and maintenance.