Arizona is entitled to collect property taxes on all parts of an airplane, right down to the software in its computers, the state Court of Appeals has ruled.
The judges rejected the contention of Southwest Airlines that it had to pay the state's annual property tax only on the physical parts of each aircraft. Instead, they unanimously concluded that the software is an integral part of the plane and therefore part of its value.
Judge Diane Johnsen said the avionics software is part of what is necessary for the Federal Aviation Administration to certify the plane is "airworthy." That essentially means the software is necessary for the company to fly the planes commercially.