Report Title:

Airline Flight Crew Base; Tax Credit


Establishes a tax credit for airlines with flight crews based within the State of Hawaii.


H.B. NO.









Relating to Airlines.



SECTION 1. The legislature recognizes that commercial airlines can base flight crews, pilots, and flight attendants at any frequent destination or origination along its route structure. For instance, a plane can make continual trips between San Francisco and Honolulu. The crews for these planes can be based either in San Francisco or Honolulu. The decision on where to base crews is often made on cost considerations.

The legislature further recognizes that because flight crew members usually live in the city where they are based, they pay income, excise, property, and all other taxes residents normally pay. Furthermore, their expendable incomes provide economic opportunities to local businesses.

In the last decade, Hawaii has lost over two thousand flight crew jobs, mostly to other states, with more jobs scheduled for displacement. Many of these jobs were higher paying pilot jobs or senior flight attendant jobs. The Hawaii state tax department estimates the lost tax income from these jobs to be $21,000 for a typical pilot job and $5,600 for a senior flight attendant job. Additionally, many administrative, clerical, and management jobs that supported the flight crew bases were also lost.

The purpose of this Act is to establish a tax credit to encourage commercial airline operators to base more flight crew jobs in the State of Hawaii.

SECTION 2. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"235- Commercial airline flight crew tax credit.

(a) There shall be allowed to each qualified taxpayer subject to the taxes imposed by this chapter, a commercial airline flight crew tax credit that shall be applied to the qualified taxpayer's net income tax liability, if any, imposed by this chapter for the taxable year in which the credit is properly claimed.

The amount of the tax credit shall be $21,000 per additional pilot and $5,600 per additional flight attendant based in the state after February 1, 2004, and engaged in intrastate, interstate, or international commercial air transportation.

The airline shall provide documentation showing that the jobs claimed are over and above those already based in the state as of February 1, 2004. Replacement of jobs lost to retirement or termination after February 1, 2004, shall not count toward the tax credit.

(b) If the tax credit under this section exceeds the qualified taxpayer's income tax liability in that year, the excess of credit over liability may be used as a credit against the qualified taxpayer's income tax liability in subsequent years until exhausted.

(c) The director of taxation shall prepare any forms that may be necessary to claim a credit under this section. The director may also require the taxpayer to furnish information to ascertain the validity of the claim for credit made under this section and may adopt rules necessary to effectuate the purposes of this section pursuant to chapter 91.

(d) Claims for the tax credit under this section, including any amended claims thereof, shall be filed on or before the end of the twelfth month following the close of the taxable year for which the credit may be claimed. Failure to properly and timely claim the credit shall constitute a waiver of the right to claim the credit.

(e) For purposes of this section:

"Qualified taxpayer" means a principal operator of a commercial airline that has a Hawaii pilot and flight attendant crew based in Hawaii engaged in intrastate, interstate, or international air transportation."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect upon its approval, and shall apply to taxable years beginning after December 31, 2003.