Tag Archives: Impact

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Steptoe hosts Construction Industry Tax Seminar

Contractors, developers, construction managers, and homebuilders are invited to attend Steptoe & Johnson’s 10th Annual Construction Industry Tax Seminar co-sponsored by the AzBusiness Magazine. Steptoe’s tax lawyers will bring participants an annual update on the latest developments in Arizona’s sales and property taxation.

The seminar will take place September 27, 2013 and the Arizona Biltmore Resort.
The program will focus on new legislation, which if passed and signed by the Governor, will turn the sales taxation of contracting upside down–from taxing the prime contractor to taxing the sale of building materials, except for road and bridge construction where the prime contractor will still be taxed (H.B. 2111). In addition, seminar leaders will bring you up to date on legislation (already signed by the Governor) that does away with the “permanent attachment” test under the exemption for installing exempt machinery and equipment (H.B. 2535).

Speakers include Pat Derdenger, Dawn Gabel, Frank Crociata and Ben Gardner, all members of Steptoe’s Tax Group in Phoenix. Steptoe’s tax lawyers bring to clients decades of consulting, transactional, and advocacy experience in all substantive areas of federal and state taxation.

The luncheon speaker will be Hon. John Shadegg, partner in Steptoe’s Phoenix office and former US Congressman. He will give his perspective on the Affordable Care Act and how it will impact Arizona businesses.

For more information, call 602-257-7708. Register online at www.steptoe.com.

usairways

How will airline merger impact Arizona?

The potential merger of US Airways and American Airways raised fears in Arizona that the combined airline would ditch its major hub in Phoenix, costing thousands of jobs in a region just now recovering from the housing collapse and recession that crippled the economy for years.

But when the merger was announced Thursday, city and airline officials both said those worries were overblown.

US Airways CEO Doug Parker said Sky Harbor International Airport and the vast majority of the employees based there aren’t going anywhere when the two companies merge. Instead, he said not only Sky Harbor, but the combined airlines’ seven other major hubs will stay.

That brought elation from officials in Phoenix, where 300 US Airways flights a day use 50 gates at the airport’s largest terminal. US Airways has about 9,000 employees in Arizona, most at Sky Harbor. Between 600-750 work at the company’s headquarters in nearby Tempe, and some of those are expected to go to Texas once the merger is complete, including Parker.

But John McDonald, the company’s vice president for corporate communications, said US Airways just signed a new five-year lease with a five-year option on its headquarters building and expects to keep hundreds of people working there.

American has a tiny presence by comparison, with just 20 departures a day using three gates in the smaller Terminal 3. Those operations will most likely move to the US Airways area of Terminal 4 when the merger is complete, airport spokeswoman Deborah Ostreicher said.

Still, the loss of the headquarters is a blow, Phoenix Mayor Greg Stanton said, even though the city will see more international destinations added with the merger.

“It’s great news that the world’s largest airline will maintain Sky Harbor and Phoenix, Arizona as a hub. It good news for the business environment in our entire region,” Stanton told reporters at the airport. “But we’re not naive, we’re not naive, we know it’s disappointing to lose a corporate headquarters, particularly one that has the history of US Airways and before that America West. We went through the 90s together, we went through Sept. 11 together. Phoenix was a big part of the recovery of America West after that tragedy.”

America West Airlines, headed by Parker, merged with US Airways in 2005 and kept its corporate headquarters in Tempe. The company has struggled with combining its labor contracts, but McDonald said that’s never been something that affected customer service. That, he said, has become better, with better on-time and lower baggage loss rates.

Some airline analysts questioned Thursday whether the combined company could keep all eight hubs, placing Phoenix on the short list for eventual closure. But McDonald said that’s not the case, American’s Los Angeles hub complements Phoenix, just as several hubs in the eastern U.S. complement each other.

“When you have an airport like Phoenix that can have a massive western region to feed, out of Phoenix, you have an asset to bring to this equation,” McDonald said. “American Airlines has a lot of trans-continental out of Los Angeles, they also operate some Asian Pacific out of Los Angeles, with very little West coast feed into that hub.”

AMR-US Airways

What an American-US Airways merger means to you

While American Airlines and US Airways have started merger discussions, it would be several months — if not years — before passengers see any real impact.

Passengers with existing tickets on American or US Airways — and members of both frequent flier programs — shouldn’t fret. No changes will come anytime soon.

Assuming quick merger negotiations, American’s parent company, AMR Corp., would still have to work its way through the bankruptcy process. Then the Department of Transportation and the Justice Department would have to sign off on it. Finally, once a deal closes, the new company could operate two separate airlines for a number of years.

If the airlines finally merge, here’s what passengers can expect:

AIRFARE

In the past decade, the airline industry has seen the combinations of Delta with Northwest, United with Continental and Southwest Airlines Co. with AirTran. Further consolidation is likely to raise airfares. The price of a domestic round-trip flight has climbed nearly 20 percent, when adjusted for inflation, over the last 10 years, according to the Bureau of Transportation Statistics.

The merger would give a combined American and US Airways Group Inc. the ability to increase fares. United, Delta and Southwest would be likely to follow.

FREQUENT FLIER MILES

Your miles would be safe. Eventually, the two airlines would merge the miles into one program. Before then, elite status from one airline would likely be honored on the other and passengers would be able to transfer miles from one program to another. That puts the occasional traveler closer to rewards.

The merged carrier would continue American’s participation in the OneWorld alliance, which was founded by American, British Airways, Cathay Pacific and Qantas. Today, it has 12 airlines including Finnair, Mexicana and Japan Airlines. US Airways would leave the Star Alliance, which includes rival United Airlines, Lufthansa, Air Canada and 24 other airlines. Alliances allow passengers to earn and redeem miles on partner airlines.

DESTINATIONS

A key reason for merging is to link both airlines’ networks, creating a system on par with Delta Air Lines and United Airlines, part of United Continental Holdings Inc. American currently serves about 250 cities in more than 40 countries with 3,400 daily flights. US Airways has 200 destinations in 28 countries with 3,200 daily flights. There is some overlap. But by joining forces the combined airline would become more attractive to companies seeking to fly employees around the globe with few connections.

US Airways passengers would gain access to American’s international destinations, particularly London and Latin America. American’s passengers would be able to better connect to smaller U.S. cities that US Airways serves.

The combined carrier would have considerable presence in New York, Philadelphia, Washington, Charlotte, N.C., Miami, Chicago, Dallas, Phoenix and Los Angeles. It is unclear how many of those cities would survive the merger. In past mergers, airlines have promised not to close any hubs but have gone ahead and dramatically reduced service in once-key cities.

PASSENGER CONFUSION

The merger of two airlines often means confusion and hassle for customers. Which terminal or ticket counter do they go to for check in? If there is a problem with a ticket, which company should they call? For a while, United and Continental were issuing two confirmation numbers for each ticket so either airline’s staff could make changes. Problems with the integration of their frequent flier programs angered many loyal road warriors. It could be months, if not years, until all American and US Airways planes get a uniform paint job.

“These things are never as seamless as they seem,” said Thomas Lawton, a professor of business administration at Dartmouth College’s Tuck School of business. “There will probably be some initial teething problems.”