What Taxes and Fees on Airline Tickets Cost You – Prepare to be Shocked

Published by Rick Seaney on August 4, 2010

I hope you appreciate the work of the TSA security folks and the efforts of those air traffic controllers who juggle all those planes in the air.

You should, since you're paying for it. You and me and everyone else who buys an airline ticket.

Let's talk about those airline ticket taxes – and fees – and what it costs us.

What Does Your Airline Ticket Really Cost: The Breakdown

First, you know it costs something, and sometimes a lot. When you see, for example, Frontier sale promoting $29 fares, you know it's going to cost you more than $58 for the roundtrip flight, because you know those taxes and fees add up.

And sometimes they add up to about 30%. Let me give you an example: Let's start with a base airfare of $200 for a connecting flight with one stop. Now let's add to that:

Base airfare – $200.00
Federal Excise Tax (7.5%) – $15.00
Flight Segment Tax – $14.80
Passenger Facility Charge (PFC) – $18.00*
Sept. 11 Security Fee – $10.00

*This charge may vary and can be lower

Total airfare: $200. Total taxes and fees: $57.80. Total ticket price of $257.80.

Airline Ticket Tax: Nearly 30%

And allow me to do the math for you: the taxes and fees represent 28.9% of your ticket – nearly 30%.

Think about that, and while you do, might as well toss in the other costs like checked-bag fees (and let's not forget Spirit's carryon bag fee which the airline began charging in 2010).

By the way, know what kind of taxes you pay on that PlayStation.Portable you can get on Amazon? None (unless you live in Kansas, Kentucky, New York, North Dakota, or Washington). Food for thought.

Four Main Taxes/Fees on Your Airline Ticket

Meantime, let's break it down, to see what exactly you do pay in taxes and fees on that airline tickets of yours. We'll start with the four main taxes and/or fees:

Federal Ticket Tax

As noted above, this is a 7.5% excise tax on each ticket (collected by the airlines); it goes toward the government's Airport and Airway Trust Fund which supports the FAA and air traffic control, and they sure can use it – I mean, c'mon, our air traffic control system is still stuck back in the '50's and desperately needs improving.

Segment Tax

This tax is set at $3.70 and is charged per "flight segment", meaning one take-off and landing. This money is also channeled to the Airport/Airway Trust Fund.

Passenger Facility Charge (PFC)

Another "flight segment" tax and this one varies though it can cost as much as $4.50 per segment, but gets capped out at $18. This helps fund various local airport projects, some useful and some that strike me as kind of vainglorious. I like a comfortable airport – that works -I am not into monumental edifices.

Sept.11 Security Fee

This is only $2.50 per segment (and it tops out at $10 per flight), and as you might expect, it funds the Transportation Security Administration (TSA). Yes, security is important these days, but there are times when you shake your head in dismay (I'm thinking of an episode earlier this year when some overzealous TSA agent confiscated a child's Play-Doh). I think we all have some interesting stories on this subject.

Remember, all these taxes and fees that are levied on an airline ticket are not paid for by the airlines – they are paid for by the passengers. And yet, U.S. airlines themselves make tons of money from their own fees (bags and more) – about $770 million in the first quarter of the year alone, and guess what? The airlines do not pay taxes on that income.

Tax the Airlines? Or New Taxes for Passengers?

Congress doesn't like this – but then, they'd like to get their hands on some of this money (and taxes on the fee money airlines rake in could amount to $230 million this year alone). So, the politicians are starting to argue that, yes, the airlines should pay taxes on this revenue. Only – the airlines wouldn't! They'd just pass on the costs to their customers – the passengers.

To be fair to the airlines, they've had some rough years of late, with many carriers going out of business – or going in and out of bankruptcy. And unlike the Big Three Automakers, you didn't see the government lining up to give the airlines a hand (or handout).

I'm not sure what the answer is, but I don't like to hear the government talking about "taxing the bag fees" – because chances are excellent that we are the ones who would be opening up our wallets – the passengers, not the airlines.