Airlines Fees vs. Fares: Impacting Taxes
October 21, 2012 § Leave a Comment
The liberal Washington Post complains:
There’s a 7.5 percent federal tax on every airline ticket. The money goes into a fund that pays for the air transportation system: airports, capital improvements and the operation of the Federal Aviation Administration. …
When the airlines kept ticket prices down by shifting $12.8 billion to baggage fees, they also saved almost $964 million in federal taxes they would have owed if they had hiked ticket prices by that amount.
via The Washington Post.
First let’s take a look at the real story when it comes to airline taxes:
- September 11 Security Fee: A September 11 Security Fee of $2.50 USD applies per flight segment (maximum charge per trip — $5.00 USD one-way, $10.00 USD round-trip). A flight segment is defined as one takeoff and one landing.
- Passenger Facility Charges: Passenger Facility Charges (PFCs) of up to $18.00 USD may apply, depending upon the itinerary chosen.
- Federal Excise Tax: A 7.5% domestic tax is applied to the airline base fare. The tax may be pro-rated for flights to/from the 48 contiguous U.S. states and Alaska and Hawaii, and some international destinations. A Travel Facilities Tax of $8.40 USD per direction also applies to flights to/from Alaska and Hawaii and the 48 contiguous U.S. states or between Alaska and Hawaii.
- Federal Domestic Flight Segment Fee: A federal domestic flight segment fee of $3.80 USD applies per flight segment. A flight segment is defined as one takeoff and one landing.
Looks like the G is getting more than it’s fair share of the airline travelers’ dollar. The money collected — and wasted — by the TSA and FAA is staggering. It’s no wonder that back in March the Orlando Sanford Intl. Airport was choosing to opt-out of using the TSA for security screenings. Regardless of how they spend it, the government is taking plenty of money from the airline traveler.
Also, let’s take a look at the wording of the story. The newspaper writes, “When the airlines kept ticket prices down by shifting $12.8 billion to baggage fees, they also saved almost $964 million in federal taxes….” Wrong! The airlines didn’t save anything; the consumer saved. This sentence should be written, “By shifting $12.8 billion to baggage fees airline passengers saved nearly $1 billion in taxes that the federal government would have otherwise imposed.
The headline of this story should be, “Shifting fares to fees permitted $1 billion in extra air travel last year.” Air traveler the big winner.
Further, the baggage fees were NOT paid by everyone. If you travel light and didn’t check a bag you paid nothing. If you needed to check a bag, then you paid for the service you received.
The whole situation seems very fair to me. That the government is out the money is just icing on the cake.