Airline Ticket Tax Project: About the Project

►About the project

About the Project

The Airline Ticket Tax Project was started in January 2003 by MIT Professor Amedeo Odoni and MIT Research Affiliate Joakim Karlsson.

Objectives

The study team's objectives can be described as:

Study the level of infrastructure and security related ticket taxes and fees in absolute terms and relative to the total ticket price in the U.S. and in the European Union
Measure both aggregate and distributive impacts of ticket taxes and fees

Goals

The objectives listed above are implemented as the following goals:

Determine the distribution of the base fare and individual taxes and fees making up the total fare for typical travel patterns
Measure how ticket taxes change with the cost of a ticket
Measure how ticket taxes change with trip distance
Measure how ticket taxes change by type of carrier (e.g., legacy vs. low-cost carrier)
Measure how ticket taxes have changed over time
Identify trends and patterns

We are also interested in the broader issues of the cost and funding of air transportation infrastructure.

Research Notes

Research results cover the period 1993 to 2011. They are inflation adjusted using the consumer price index (CPI) and are expressed in 2011 dollars. They are based on our analysis of 341 million ticket records from the USDOT Airline Origin and Destination Survey (DB1B). Specifically, we use the DB1BMarket tables available from the Bureau of Transportation Statistics. For the latest description of our methodology, please refer to the article A Review of U.S. Domestic Ticket Taxes and Fees. Note that our research does not cover ancillary fees charged directly by airlines, such as baggage fees. Only taxes and fees collected by the federal government and passenger facility charges collected by airports are included.

The DB1BMarket database represents directional travel. This means that the outbound and return portions of a round-trip ticket are treated as two separate one-way records. The results shown above represent approximate round-trip values, obtained by simply doubling the directional, one-way values.

The project has focused on the U.S., but has also studied the European Union (EU). There is no equivalent database that covers air travel in the EU. For travel within the EU-15 nations, we have estimated the average effective tax rate to be 11%. This is based on a sample of 3 million tickets from fifteen days in the period January 2004 to February 2005 (for details, see Chapter 2 of the thesis Incidence of Ticket Taxes in U.S. Domestic Air Travel). Since EU ticket taxes and fees do not cover the cost of air navigation services, this result cannot be directly compared to the U.S. tax rate. A preliminary correction to account for this difference suggests that the true effective tax rate is slightly higher in the EU than in the U.S. Note, however, that the EU-15 ticket sample omits most charter and low-cost carriers.

Acknowledgments

This work has received support from the MIT Global Airline Industry Program, the Alfred P. Sloan Foundation, Amadeus, S.A., and the Alfred L. and Constance C. Wolf Aviation Fund. We wish to thank these organizations, as well as the many individuals at the USDOT Bureau of Transportation Statistics, Federal Aviation Administration, Transportation Security Administration, Airlines for America, Lufthansa, and SAS Group who have provided valuable assistance. We also want to acknowledge the hard work of the research assistants who have contributed towards the project over the years. Any errors in this work and all views expressed are entirely our own.

Massachusetts Institute of Technology	MIT Global Airline Industry Program
Last updated: 06/02/2012