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The Ticket Tax Project is run jointly by the MIT Global Airline Industry Program and Daniel Webster College. Our aim is to measure both the amount and characteristics of taxes and fees added directly to airline tickets. We do this by analyzing actual ticket records. The project is studying both the U.S. and the European Union (EU).
Summary of ticket taxes for U.S. domestic flights
The table below summarizes average ticket taxes on U.S. flights within the 48 contiguous states. This is based on our analysis of the USDOT Origin and Destination Data Bank 1A Ticket Dollar Value Survey (DB1A). For an exact description of our methodology, please refer to our paper The impact of infrastructure-related taxes and fees on domestic airline fares in the US, published in the July 2004 issue of the Journal of Air Transport Management.
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| U.S. Domestic Ticket Taxes | |||||||||||
| Date | Category | Tickets in sample | Base fare | Taxes & fees | Total fare | Tax rate | FTT | FST | PFC | FSSF | Seg. |
| 2Q93 | Overall | 3,335,064 | 10.9% | ||||||||
| Round-trip | 2,164,162 | $340.32 | $37.02 | $377.34 | 10.9% | $34.03 | $2.99 | 2.7 | |||
| One-way | 1,170,902 | $105.79 | $11.63 | $117.41 | 11.0% | $10.58 | $1.05 | 1.2 | |||
| 2Q02 | Overall | 4,280,892 | 15.5% | ||||||||
| Round-trip | 3,559,912 | $277.84 | $44.06 | $321.90 | 15.9% | $20.84 | $7.95 | $8.64 | $6.63 | 2.7 | |
| One-way | 720,980 | $204.81 | $26.53 | $231.34 | 13.0% | $15.36 | $3.85 | $4.12 | $3.20 | 1.3 | |
| 2Q04 | Overall | 4,852,779 | 16.1% | ||||||||
| Round-trip | 3,893,783 | $268.29 | $44.25 | $312.54 | 16.5% | $20.12 | $8.06 | $9.58 | $6.50 | 2.6 | |
| One-way | 958,996 | $182.97 | $25.60 | $208.58 | 14.0% | $13.72 | $3.96 | $4.72 | $3.20 | 1.3 | |
The next table shows the same results, but here the values for 1993 and 2002 have been inflation adjusted to 2004 dollars using the consumer price index (CPI). This makes for a better comparison of fare and tax levels (but has no impact on the effective tax rate). The gradual increase of the effective tax rate from 10.9% to 16.1% is largely due to the drastic reduction in the base fare (a 40% decrease since 1993). Total taxes and fees have remained relatively constant in real terms (and even dropped from $48.40 to $44.25 for round-trip tickets). A simple analysis shows that, had the base fare remained the same as in 1993, the effective tax rate in 2004 would have been 12.9%, everything else being equal.
| U.S. Domestic Ticket Taxes – Inflation Adjusted to 2004 Dollars | ||||||||||||
| Date | Category | Tickets in sample | Base fare | Taxes & fees | Total fare | Tax rate | FTT | FST | PFC | FSSF | Seg. | CPI |
| 2Q93 | Overall | 3,335,064 | 10.9% | 144.5 | ||||||||
| Round-trip | 2,164,162 | $444.89 | $48.40 | $493.29 | 10.9% | $44.49 | $3.91 | 2.7 | ||||
| One-way | 1,170,902 | $138.29 | $15.20 | $153.49 | 11.0% | $13.83 | $1.37 | 1.2 | ||||
| 2Q02 | Overall | 4,280,892 | 15.5% | 179.9 | ||||||||
| Round-trip | 3,559,912 | $291.74 | $46.26 | $338.00 | 15.9% | $21.88 | $8.35 | $9.07 | $6.96 | 2.7 | ||
| One-way | 720,980 | $215.05 | $27.86 | $242.91 | 13.0% | $16.13 | $4.04 | $4.33 | $3.36 | 1.3 | ||
| 2Q04 | Overall | 4,852,779 | 16.1% | 188.9 | ||||||||
| Round-trip | 3,893,783 | $268.29 | $44.25 | $312.54 | 16.5% | $20.12 | $8.06 | $9.58 | $6.50 | 2.6 | ||
| One-way | 958,996 | $182.97 | $25.60 | $208.58 | 14.0% | $13.72 | $3.96 | $4.72 | $3.20 | 1.3 | ||
We have also completed a simple analysis of how the recently proposed $3 increase of the federal security fee would impact the effective tax rate. The impact depends on how much of the tax is absorbed by the air carriers and how much by the passengers. Consequently, we have looked at two cases: One where the passengers absorb the entire increase and another where the airlines absorb all of it. We believe that these represent reasonable lower and upper limits on the resulting tax rate. This analysis is shown in the table below (note that it disregards any effects of the tax hike on demand or supply).
| U.S. Ticket Taxes – Analysis of Proposed Security Fee Increase | |||||||||||
| Case | Category | Tickets in sample | Base fare | Taxes & fees | Total fare | Tax rate | FTT | FST | PFC | FSSF | Seg. |
| Original 2Q04 results | Overall | 4,852,779 | 16.1% | ||||||||
| Round-trip | 3,893,783 | $268.29 | $44.25 | $312.54 | 16.5% | $20.12 | $8.06 | $9.58 | $6.50 | 2.6 | |
| One-way | 958,996 | $182.97 | $25.60 | $208.58 | 14.0% | $13.72 | $3.96 | $4.72 | $3.20 | 1.3 | |
| Pax absorb FSSF increase | Overall | 4,852,779 | |||||||||