What are the taxes on airfare?

Due to their occupations[1] and collective penchant for balloon animals, the contributors to this website spend a disproportionate amount of their income[2] on airfare. They also spend a consequently disproportionate share of their income on the taxes that are associated with air travel. Naturally, then, they have their favorite domestic airfare taxes and fees.

Consider the following fare on an itinerary that one of our contributors recently declined to purchase, due to more cost-efficient methods of escape[3]. A United flight from Billings MT, to Tampa FL, with a connection in Denver. The base fare is $466.05 with $79.05 in taxes for a total of $545.10.

BILTPA

Air travel is taxed at a considerably higher rate than many other purchases. Of course, it does also require more infrastructure than most other purchases. The PSH contributors aren’t so concerned with the high taxes placed on air travel. Along with the considerable infrastructure needed for air travel, airline passengers tend to be wealthier than average, making potential arguments about regressivity kind of limp. Additionally, airline travel produces very high CO2 emissions, along with noise pollution, fights, this blog, and other things worth discouraging.

As Airlines for America[4] will point out, The nearly $80 of taxes make for a pretty significant chunk of the overall price (about a 17% tax rate). As Spirit and other low cost carriers will point out, many taxes are flat fees, and can make up an increasingly sizeable chunk on lower fares.

Taxes

There are four different taxes included in this fare:

  • US Transportation Tax
  • September 11th Security Fee
  • US Passenger Facility Charge
  • Flight Segment Tax

U.S Transportation Tax

The first two items are an Excise tax of 7.5% on the total base fare.

$466.05*7.5% = 34.95 = 20.16 + 14.79

Funds from this tax account for a significant amount of the Airport and Airway trust fund. Which funds the FAA, and all the services they provide.

This seems like a reasonable enough tax. There is no sales tax on airfare, and a percentage fee functions in much the same way. This is the only one of the fees included in the above receipt that is a percentage rather than a flat fee

Another item of note, is that this tax is only charged on the base fare, not on ancillaries such a bag fees.

September 11th Security Fee

This is a $11.20 Round trip fee, or $5.60 for a one-way fare. Which goes toward paying for TSA. Having a tax is probably more convenient than having travelers break out their credit cards prior to going through security but denies us the hilarity that would accompany the outrage caused by such a system.

There are some curiosities here. The first is that it does not vary by airport. Although presumably TSA costs per passenger do vary across airports, perhaps substantially.  The PARTYSHEEPHATS research team, couldn’t find any actual data on this, possibly because they didn’t bother looking.

Presumably the cost per passenger is higher at smaller airports which must have similar levels of equipment and staffing with a smaller volume of passengers, or airports that are inefficiently set up and require multiple decentralized security checkpoints.

U.S. Passenger Facility Charge (PFC).

This is a fee that goes to airports. It varies by airport as you can see in this big list. If you enplane (board) at an airport you must pay the PFC. On this Itinerary, one boards in Billings which costs $3.00, and Denver, which costs $4.50. Then, after a solid week spent huddling in the shadows of the Tampa airport, one boards in Tampa ($4.50), and again in Denver another ($4.50).

The fee is capped at $4.50 per airport, and at $18 per trip.

Flight Segment Tax

This is a $4.10 on each segment. Paid four times in this itinerary: BIL-DEN, and DEN-TPA on the way out then TPA-DEN and DEN-BIL on the way back. As you might expect, it partially funds the PARTYSHEEPHATS research team.

Other Taxes

These are just the domestic fees. International flights are subject to additional fees, which can be very significant (see below for an example of an Air Canada fare on a Seattle to London Round Trip, with over $200 in taxes, largely due to the UK’s Air Passenger Duty.)

ACSEALHR

 

There are also taxes on things like jet fuel, which are paid by the airlines but presumably ends up in the price of the ticket, which is of course subject to the 7.5% tax.

 

Which airfare Tax is the best?

The PSH contributors rank airfare taxes as follows (from best to worst)

  • 5% excise Tax
  • PFC
  • Flight Segment Tax
  • Security Fee

 

The reasoning should be obvious, and we see no reason to  provide unnecessary details at this time.

 

Related

Should we Privatize Air Traffic Control?

Why are airfares so volatile?

Does Reducing Airline Competition Benefit Travelers?

ARE FARES HIGHER AT LARGER AIRPORTS?

 

Links, Sources, and Further Reading

travelzoo.com

Amadeus

A4A on taxes

FAA PFC

FAA PFC List of fees

USA Today

 

 

 

[1] “Occupations”

[2] “Income”

[3] “Escape”

[4] “A4A”

 

WHITESHEEP

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