Plane ticket taxes can often make up a significant portion of the total cost of air travel. When you purchase an airline ticket, you’ll notice various taxes and fees added on top of the base fare. These can include airport taxes, federal excise taxes, security fees, and other surcharges. Many travelers are frustrated by how high these taxes have become, especially given the already high cost of airfare. So why exactly are taxes on plane tickets so expensive? There are a few key reasons.
Aviation Fuel Taxes
One major factor is aviation fuel taxes. Whenever an airline buys jet fuel, they have to pay a federal tax on it. Currently, the federal aviation fuel tax is $0.184 per gallon. Airplanes consume massive quantities of jet fuel on every flight, so this tax adds up quick. Airlines then pass along this cost to customers through ticket prices.
Some key stats on aviation fuel taxes:
– U.S. airlines consumed over 16 billion gallons of jet fuel in 2019. At $0.184 per gallon, this equates to nearly $3 billion in federal aviation fuel taxes.
– These taxes have increased steadily over time. In the 1990s, the aviation fuel tax was just $0.043 per gallon. It has more than quadrupled since then.
– Airlines are charged additional state fuel taxes on top of the federal tax. When you combine all the taxes, airlines pay approximately $0.30 per gallon in jet fuel taxes.
As jet fuel prices rise, aviation fuel taxes take an increasingly large bite out of airlines’ revenues. To remain profitable, the airlines have no choice but to pass these costs along to consumers in the form of higher ticket prices.
Passenger Facility Charges
Another hefty tax added to plane tickets is the Passenger Facility Charge (PFC). This is a local fee charged by individual airports to help pay for construction projects and improvements. The PFC started at $1 per flight segment back in the 1990s, but has increased substantially over the years. Today, the maximum allowable PFC is $4.50 per flight segment, with a maximum of two PFCs charged on a one-way ticket (so up to $9 total).
Here are some key facts about Passenger Facility Charges:
– In 2019, U.S. airports collected $3.7 billion in PFC revenue. This was used to finance $15 billion in FAA-approved construction projects.
– The top 50 largest U.S. airports account for around 90% of total PFC collections.
– Some major hub airports have even higher PFCs up to the $4.50 limit, including Chicago O’Hare, Los Angeles International, and Atlanta International.
– Airlines are required to collect PFCs from customers when they buy their tickets and pass the revenues along to airports.
As more airports have raised their PFCs to the maximum level, this tax has become an increasingly large percentage of overall airfare costs.
September 11th Security Fee
After the 9/11 terrorist attacks, a new security fee was added to all plane ticket prices to help fund enhanced aviation security. This September 11th Security Fee started at $2.50 per flight segment and has increased over time.
Today, the September 11th Security Fee is $5.60 per one-way trip. Like the Passenger Facility Charge, the fee is capped at two segments each way so as not to exceed $11.20 on a round-trip ticket.
Key details on the post-9/11 security fee:
– Collected nearly $3.9 billion in fiscal year 2019
– Does not have to be paid on flights that originate outside the U.S.
– Has more than doubled from its initial level after 9/11, increasing from $2.50 per segment to $5.60 today.
– Revenue goes to the TSA to help fund screening operations, advanced imaging technology, agent training, and other security functions.
This fee is somewhat controversial, as some critics argue the costs should be paid out of general tax revenues rather than levied directly on air travelers. However, the TSA defends it as a user fee – passengers are paying for the direct security screening costs they require.
Other Taxes and Fees
In addition to fuel taxes, PFCs, and the September 11th Security Fee, there are a variety of other taxes and fees that get tacked onto airline tickets. These include:
– Federal Flight Segment Tax – 7.5% tax on the base fare, capped at $4.30 per segment.
– U.S. Transportation Tax – 6.25% of the base fare.
– U.S. Passenger Facility Charge – $4.10 maximum per one-way ticket.
– Immigration and Customs User Fee – $7.85 on arrival to the U.S. from abroad.
– Animal and Plant Health Inspection Service Fee – $3.96 on international arrivals.
– Customs User Fee – $5.95 on arrival to the U.S. from abroad.
Different routes may also include additional airport taxes and fees beyond those required federally. For example, some airports charge a passenger usage fee or a tourism surcharge on top of other taxes.
When you add up the mix of taxes and fees on a typical plane ticket, they now represent 15-25% of the total fare. On some international routes or routes with lots of connections, taxes can be up to 30-40% of the total price.
Why So High?
Given the significant tax burden on air travelers, a logical question is why are these aviation taxes so high in the first place? There are a few key reasons:
– Fuel costs – As noted above, federal fuel taxes represent one of the largest components of ticket taxes. Jet fuel is expensive and airlines burn through massive quantities of it. This large consumption base means the taxes quickly add up. Fuel prices have also risen sharply in recent decades, driving taxes up.
– Airport infrastructure – Airports require ongoing maintenance and improvements, which are often financed through PFCs and other airport fees levied on travelers. As airports have expanded and upgraded facilities, these fees have grown.
– Security enhancements – Post-9/11 security remains a major cost for airlines and airports, covered in part by the Security Fee. Ticket taxes help offset these large expenses.
– Lower fares – Average airfares have actually decreased over the past couple decades when adjusting for inflation. This means taxes represent a larger percentage of overall ticket prices.
– Lack of public funding – Some argue aviation taxes have grown so high because air transportation infrastructure is not sufficiently funded through public resources like other modes of transportation.
So in summary, a need to fund large and growing aviation costs – combined with airfare prices that have not kept pace – has led to the current situation of steep taxes on plane tickets.
Are Taxes Too High?
Given how large these taxes have grown, many air travelers and consumer advocates argue that taxes on airfare have become unreasonably high.
Some key concerns about sky-high ticket taxes:
– Makes air travel less affordable, especially for lower income travelers
– Significant taxes can discourage flying and hurt the airline industry
– Complex mix of taxes creates confusion and frustration for consumers
– Security fee itself has grown very large and airlines want TSA costs covered by general taxes
– Airlines say high taxes put them at competitive disadvantage vs foreign carriers
– Fuel tax has not changed in many years and does not reflect improvements in efficiency
However, there are also arguments for why current tax levels are reasonable or even justified:
– Airports require ongoing infrastructure funding that has to come from somewhere
– Fuel taxes help account for environmental impacts of aviation emissions
– Security fees help cover the billions required annually for aviation security
– Lower fares mean taxes represent a larger percentage today
– Foreign airlines also pay many of the same fees, especially on U.S. travel
– Taxes and fees help cover major costs generated directly by air travel
There are good-faith arguments on both sides of this issue. Finding an appropriate balance between affordable airfares and funding essential aviation infrastructure remains an ongoing public policy challenge.
Outlook for the Future
Looking ahead, what is the future outlook for taxes on plane tickets? Here are some possibilities:
– Taxes continue creeping upwards – If past history is any indication, taxes are likely to continue rising gradually over time as fuel prices and infrastructure costs increase. However, airlines and travelers will push back against hikes.
– Temporary tax reductions – Congress could pass temporary tax cuts or freezes to provide relief during challenging economic times or to boost travel demand. These would likely be reversed once conditions improve.
– Shift from fees to general funds – There may be efforts to cover more air transportation costs through general tax revenues rather than fees directly levied on air travelers. This could lower the ticket tax burden.
– New environmental taxes – With growing focus on addressing climate change, new taxes could be introduced related to the carbon emissions from aviation. This would further increase ticket prices.
– Higher future airfares – If airlines are able to significantly raise base fares in the future after the pandemic recovery, taxes would represent a smaller percentage of total ticket costs.
Overall, it seems likely that the general trend of increasing taxes and fees on air travel will continue into the future. However, the rate and nature of these increases remains uncertain. A lot will depend on how much airlines, airports, lawmakers and travelers are willing to stomach.
Ways to Reduce Your Tax Burden
While air travelers may not be able to avoid taxes entirely, there are some steps you can take to reduce your tax burden:
– Book nonstop flights – Taxes are charged per flight segment, so choosing direct nonstop routes when possible can help minimize fees.
– Fly from airports with lower PFCs – If you have multiple airports to choose from in your region, check their PFC rates and select the one with lower fees.
– Don’t check bags – Checked baggage fees are subject to the 7.5% federal flight segment tax, so avoiding checked bags saves a little tax.
– Enroll in airline rewards programs – Some airline rewards credit cards and elite status levels provide exemptions from certain ticket taxes and fees.
– Buy abroad for international trips – You can sometimes save on taxes and fees by purchasing the international portion of your ticket through a foreign carrier.
– Fly premium cabins – Upgrading to first or business class means the taxes represent a lower percentage of your overall airfare spend.
While you can’t completely control what you pay in airfare taxes, following some of these tips can help minimize the taxes you do pay as an airline passenger.
Conclusion
Plane ticket taxes in the United States have increased substantially over the past couple decades. A combination of fuel taxes, security fees, airport facility charges, and other taxes can now add between 15-30% on top of your base airfare. These taxes help fund important aviation infrastructure and security, but also cut into consumer budgets and discourage air travel. There are arguments on both sides about whether current tax levels are justified. Looking ahead, taxes will likely continue rising gradually in the future, but the rate of increase could depend on whether Congress and the aviation industry work to restrain the growing burden on travelers. While you can’t eliminate these taxes completely, following some smart tips can help reduce the amount you pay.
