A Primer on US Aviation Taxes That Apply on Domestic Flights

After seeing the comments on yesterday’s post about fuel surcharges, it dawned on me that there’s probably not a great understanding out there around exactly which fees and taxes are imposed upon travel in the US. I thought I’d take the time to walk through it here. Today, we’ll look at domestic taxes, but on Thursday, we’ll tackle international.

Below you will see a screenshot of a raw pricing display in Sabre for a roundtrip ticket from LA to Ft Lauderdale with a stop in Vegas on the way out but a nonstop return. All flights are on Spirit Airlines. This might look like something in a foreign language, but you’ll get it once we’re done breaking it down.

Sample Domestic Fare Display

Base Fare
You can see a base fare of $307.89. That’s the money that the airline keeps but it’s a number you have almost never seen as a traveler. What you used to see until rules changed recently to show only the final price was a $331 fare plus tax. That fare included both the base fare and the US Domestic Transportation excise tax (see below). Please note that if you look toward the bottom at the line starting with LAX, you will see a “Q95.81″ charge there. That is a fuel surcharge of $95.81 that is included within the base fare of $307.89 so it is taxed just like the fare. Spirit shows this on its website but otherwise you wouldn’t know it was there. I haven’t seen fuel surcharges applied another way domestically, but we’ll talk about how you see it internationally on Thursday.

US Domestic Transportation Tax (US)
As mentioned above, on all domestic tickets, there is a 7.5 percent tax that the federal government keeps. In this example, you can see the US tax is $23.11. Combined with the base fare, it’s $331 and that’s the fare that the airlines file in the system.

Segment Tax (ZP)
Next to the US tax, you’ll see the ZP tax. Several years ago, the feds lowered the excise tax to 7.5 percent from 10 percent and in the process added a segment fee so that taxes were distributed a little more evenly between cheaper and more expensive tickets. That tax revenue is kept by the government. Today, the charge is $3.80 per flight segment, but it periodically increases. Since we had three segments in this itinerary, it’s $11.40 total.

US September 11th Security Fee (AY)
In the last decade, the US has nationalized security as we are all well aware. To pay for this, there is a $2.50 charge per flight with up to two charges each direction. That’s why you see the AY charge of $7.50 here. Now, if we had two connections (three flights) on the way out, it wouldn’t go any higher because of the cap. This fee is kept by the federal government.

Passenger Facility Charge (XF)
The Passenger Facility Charge is an airport-specific charge that can be up to $4.50 per departure from each airport. Not all airports charge this, and they can charge less than $4.50 but it has to be approved before charging the fee. There was a recent effort to bump this up to $7.50 but it failed, so the cap remains. The money goes to airports for capital projects. In this itinerary, it’s $13.50 and you can see the breakdown in the fare calculation line below. If you look toward the bottom, you’ll see that there are three charges of $4.50 for when the passenger departs Los Angeles, Las Vegas, and Ft Lauderdale.

That is it for domestic charges. Pretty simple, right? You will see something that says XT in that screenshot, but that’s just an aggregation of all the taxes and fees. The total XT here is $55.51 for a total out of pocket cost of $363.40 for the purchaser.

If you look below that, you can see the fare bases which start with V going out and R coming back. That’s how the airline tie fares with fare rules, but it’s definitely a topic for another post.

There are a couple of little caveats to this system here. First, what counts as a domestic trip? If we turn to the IRS, we can see that it’s, of course, any trip between two US points. But it also includes trips within 225 miles of the US border in Canada and Mexico. That includes most major Canadian points.

One other odd little quirk. This only partially applies for travel between the Continental US and Hawai’i and/or Alaska. In those circumstances, the domestic tax only applies to the part of the transportation that occurs within 3 miles of the US (or 225 mile border) and when it enters Hawai’i and/or Alaska. So if I look at an LA to Honolulu ticket costing $2211.34, the domestic tax is only $0.66. That’s because nearly all of the flight occurs outside the taxable area. There is, however, an additional international facility fee that is charged. I won’t get into too much detail on this one, but just realize it’s a blend of domestic and international tax when it comes to Alaska and Hawai’i.

Like I said, on Thursday, we’ll talk about international tickets.

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