Taxes and Aviation: Like Flies on Sh*t

Government Regulation

There’s something about the airline industry that acts as a lightning rod for taxation. Need to solve the world’s problems? Well, let’s just tax commercial aviation. Seriously. Earlier this year, several European countries decided it would be a good idea to tax aviation in order to solve the AIDS, malaria, tuberculosis problems worldwide. The French government led the charge, but several others followed.

Now the big kick is on charging a tax to curb global warming. If you’re a regular reader of my blog, you know my thoughts on making aviation stop global warming. (If not, click here.) Of course, that won’t stop the British. Just yesterday, the British government announced it will double passenger taxes on Feb 1 to help fight global warming. That means short haul flights in coach will go from GBP5 to GBP10 and long haul flights from GBP20 to GBP40. Ugh.

Anyone who thinks that air travel is undertaxed raise your hand. Nobody? That’s what I thought.

Let’s take a look at a transatlantic ticket to see just how painful this is for consumers today. Since US Airways breaks down taxes very well on their website, I’m using them for reference here. I’m looking at a roundtrip flight from Los Angeles to London/Gatwick with a connection in Charlotte both ways. The flights leave on Feb 4 and return on Feb 11. All numbers below are roundtrip.

Base Price – $268
Fuel Surcharge – $130
Total Advertised Base – $398 (or $199 each way).

Sounds like a great deal, right? The airline only gets $398 for that long trip, but now the taxes get added in:

US Intl Arrival Tax $14.50
US Intl Departure Tax $14.50
US Immigration $7.00
US Animal & Plant Health Inspection Svc $5.00
US Customs Users $5.00
US Passenger Facility Charge $7.50
US Sept 11 Security Fee $7.50
Total US Taxes $61.00

UK Passenger Service Charge $15.05
UK Air Passengers Duty $39.60
Total UK Taxes $54.65

Total Tax $115.65
Advertised Price $398.00
Total Price Paid by You $513.65

That’s right. By the time you’re done, it’s over $500 on a ticket that was supposed to be less than $400. In fact, taxes are more than 22% of the total amount paid by the customer. Now, as if the UK is in a race with the US for the highest tax rate, you’ll have to pay an additional $39.60 (GBP20) for the Air Passengers Duty for a grand total of $553.25. That means taxes rise to 28% of the total ticket price. All this does is keep fares higher which in turn keeps passenger growth (which spurs economic growth) down.

Now, I’m not saying that taxes shouldn’t exist. In fact, I find it funny that people in the industry break out the argument that aviation is taxed more than cigarettes. Aviation requires a lot more government resource (customs, immigration, security, air traffic control, etc.) and that requires funding. But these latest taxex have nothing to do with that. They are done to reduce global warming or eliminate AIDS, but as I said before, there are better ways to do that than penalizing aviation.

Focus on car and truck emissions to eliminate global warming and you’ll have much more success. AIDS and other diseases can be tackled through the proper channels – there is no reason for aviation to even be involved here.

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