tax-forms.jpgIt’s tax day, and what better opportunity to ask what taxes you’re paying when you travel, and where that money is going?

Of the big three — air, hotel, and car rental — air travel within the U.S. is the most tax-standardized (which isn’t saying much). Hotel occupancy taxes vary by municipality, and car rental taxes range wildly depending on how badly the state or local government wants to stick it to out-of-towners.

Air taxes, on the other hand, are more readily summarized. But when you learn about how some of those taxes are spent, you may not be happy.

Bob Porterfield of the Associated Press does the heavy lifting for us and tallies them up — 7.5% federal taxes, $3.40 segment taxes for each leg of the flight, $2.50 security fees per segment, and the airport-imposed passenger facility charges of up to $4.50 per landing.

But the real kicker is where some of those monies — in particular the 7.5% federal taxes on all scheduled air tickets — are going:

The federal government has taken billions of dollars from the taxes and fees paid by airline passengers every time they fly and awarded it to small airports used mainly by private pilots and globe-trotting corporate executives.

Fan-freakin’-tastic. Not only do these folks get to opt out of the mass-market security hassles, they get subsidized by the general public till to do it.

You may be asking if private aviation pays a different set of charges to cover its use of America’s overstretched aviation systems. Yes, and no. Mostly no.

Passenger taxes are collected in noncommercial aviation only in instances involving the fractional ownership of private jets, air charter operations and small commuter flights. Instead, it contributes to America’s air transit infrastructure in the form of a fuel tax that covers just a fraction of the services it uses.

For the most part, private jets don’t pay taxes, and certainly not nearly the percentage of taxes to which commercial travelers have gotten accustomed.

So are private jets paying enough? Nope.

A study released in February by the FAA said it cost $2.4 billion just to provide air traffic control for private and corporate planes in 2005. The industry contributed just $516 million in fuel taxes that year.

So how do you fix the disparity? Uniform, distance-based taxation? Fuel taxes? Landing fees? I don’t know, but I’d love to hear your ideas.

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15
Jan
2007

little britain Flying from the UK?  Pay your taxes or lose your ticket

Traveling from (or through) Britain? If you’re departing on or after February 1, 2007, and you’ve already got your tickets, you need to check with your airline to make sure you don’t owe more money.

The reason is the increase in the Air Passenger Duty, announced in December, with monies intended to go toward projects that reduce global warming. (See here for a backgrounder, including some speculation on how the increased taxes might boost traffic at Frankfurt, Paris, or Amsterdam.)

For tickets purchased before the tax went into effect, you’re not exempted. British Airways is covering the tax for its customers, but (unsurprisingly) easyJet and Ryanair aren’t. And making matters worse, it’s YOUR responsibility to find a way to pay the taxes before your flight. If you don’t pay, you don’t fly.

How much can you expect to pay as a supplement?

Air passenger duty will rise from £5 to £10 for economy-seat passengers taking domestic and European short-haul flights, and from £20 to £40 for economy-seat travellers on long-haul flights. Business and first-class passengers will face bills of £40 for short-haul flights and £80 for long-haul.

Check your airline’s website as soon as possible. Expect plenty of angry flyers, and plenty of mayhem at British airports in February.

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23
Feb
2006

Christopher Elliott jumps the gun in his “Airlines add surcharges” post. The U.S. Department of Transportation is reconsidering how airlines advertise their fares. Right now, airlines are required to include self-imposed items like fuel surcharges in the advertised base price, and are only allowed to exclude government-mandated taxes and fees. So you;ll see a fare advertised as $179 round trip (plus taxes and fees), which means the ticket will likely cost $199 if it’s nonstop. Since the extras are all government-imposed, this is legit under the current rule.

Now, the DOT is considering weakening this rule. Elliott’s headline is a bit premature. But he is right to warn readers that changes may be afoot. And they won’t be positive. In the extreme, an airline could advertise $1 fares (plus taxes and fees), but the price could be the same $199 you paid earlier ($1 base fare, $20 in government taxes/fees, and $178 in fuel surcharges…)

While Elliott is right that this seems like a dumb idea — it makes prices LESS transparent, not more — it may be much ado about nothing. The effect on consumers buying tickets on the internet may be minimal. When you search the major booking sites, you are quoted the total fare, including all fees. (One exception is Travelocity’s flexible date search, where fares are ranked by the base fare, before taxes/fees.) So the net change for online booking may be nil.

In the end, newspaper advertisements may end up being the most misleading.

What concerns me more is how this rule might affect the fees associated with frequent flyer mile redemptions. Right now, when you cash in miles, you pay a small amount in taxes. If fuel surcharges can be parsed out under the proposed DOT rule, then the airlines might tack them on to the frequent flyer tickets as well. That could potentially devalue the miles a great deal.