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An ultimatum: Either give tax break or we're leaving

Avantair sells flying time-shares. It landed here in 2005, but may leave unless it is granted a sales tax exemption.

By STEVE HUETTEL and REBECCA CATALANELLO
Published February 23, 2007

ADVERTISEMENT [Handout photo] Customers buy shares that give them between 50 hours and 500 hours of flying a year, crews and maintenance included.

With new financial muscle as a public company, Avantair expects to expand quickly in the fast-moving fractional aircraft business.

But executives say the Clearwater company will be forced to move out of Florida unless the state provides a tax break potentially worth tens of millions of dollars.

On Thursday, Avantair merged with Ardent Acquisition Corp., a public shell company that raised money to buy an operating business, and kept the Avantair name.

The combination gives Avantair a listing on the NASDAQ exchange and about $40-million to more than double its fleet of small private aircraft.

Avantair sells shares in the six-passenger turboprop Piaggio Avanti aircraft to businesses and wealthy individuals who want to avoid flying commercial airlines. Customers buy shares that give them between 50 hours and 500 hours of flying a year, crews and maintenance included.

The fractional aircraft industry has grown rapidly, especially after the government crackdown on airport security in response to the Sept. 11 terrorist attacks.

Four-year-old Avantair is a relatively small player, ranked fifth in North America behind heavyweights such as NetJets, owned by Warren Buffet's Berkshire Hathaway and Flight Options, controlled by Raytheon.

Avantair opened a maintenance base at St. Petersburg-Clearwater International Airport in 2005 and moved the corporate headquarters from New Jersey a year later. The company has 257 employees. That includes 153 in Pinellas who earn an average annual salary of $52,600.

Avantair flies 31 of the Italian-made Avanti planes, a "pusher-prop" design that's more fuel-efficient than small jets and nearly as fast. Avantair has ordered 51 more and contracted to buy 20 six-seat Phenom 100 jets from manufacturer Embraer of Brazil.

But the big orders pose a tax problem for Avantair, says executive vice president Kevin McKamey. Florida is one of a few states that doesn't exempt commercial aircraft from sales tax or charge a small flat tax, he says.

Avantair would need to charge the 6-percent tax to customers, placing the company at a disadvantage to competitors based outside Florida. The tax break "is so critical that if we don't get it, we're forced to move out of state," says McKamey.

Sen. Mike Fasano, R-New Port Richey, became interested in the company when Mike Meidel, director of Pinellas County Economic Development, told him about Avantair's planned expansion in Pinellas.

"Right now, they are poised to grow, but they are being lured by other places," Fasano said. "I am going to do everything I can to keep that company there and those people employed."

A preliminary legislative analysis estimated the proposal could impact the state budget by between $3.5-million and $100.7-million in the coming fiscal year, with the loss of revenue increasing as years pass. But because the bill's scope is still being discussed, analysts were not prepared to issue an official impact estimate.

Sen. Evelyn Lynn, R-Ocala, voted against the bill when it came before the Senate's Commerce committee Tuesday. She was concerned the tax break would primarily help out wealthy owners using the planes for business or recreation. Said Lynn: "I'd like to know why we were doing it."

The smallest share, good for 50 hours flying a year, costs $415,000, plus a $8,900 monthly management fee and fuel charges. The 800-hour annual share runs $6.48-million, a $142,400 monthly fee, plus fuel.

Researcher Angie Drobnic Holan contributed to this report. Steve Huettel can be reached at huettel@sptimes.com or 813-226-3384.

[Last modified February 23, 2007, 12:10:12]