THE SENSIBLE TRAVELER
Air passenger fees, taxes adding to costs and to some worries

By Bruce Mohl, Globe Staff, 2/16/2003

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Air fares, like cigarettes, have become inviting tax targets.

Taxes and fees are eating up a bigger and bigger chunk of the typical round-trip fare. According to the Air Transport Association, federal taxes and fees represented 7 percent of a typical $200 round-trip fare in 1972. Today, they represent 26 percent and are poised to increase again.

The US Transportation Department's inspector general reported recently that the $2.50 passenger security fee created after the Sept. 11 terrorist attacks is covering only a fraction of the costs of the Transportation Security Agency, which is charged with protecting the nation's air travelers.

The inspector general said a fee of $8 would be necessary to cover all the agency's costs, which would mean passengers on a round-trip flight with one connection each way would pay over $32 in security fees alone.

While no one is expecting the passenger security fee to go up to $8, it probably will be increased. The only other options for closing the estimated $3 billion TSA spending gap include raising existing fees being paid by the nation's cash-strapped airlines, tapping a federal account intended for airport-improvement projects, or raiding the already-depleted federal treasury.

What's remarkable about the air-fare taxes is that they are so big and yet so little noticed. Most of the fees get buried in the cost of a flight; few airlines or travel agencies break them out in detail.

I was surprised by the tax bite recently when I booked a flight to St. Louis using Priceline, the bid-for-travel website. During the booking process, customers are asked to submit a bid for the flight they want. I bid $190 for the round trip, then learned that $40 would be added to cover taxes and fees, making my final bid $230. That was more than I wanted to pay, so I went back a frame and dropped my bid to $150. With the $40 added, my final bid came to $190. (It was accepted.)

According to Smarter Living Inc., a Cambridge travel information company, the typical taxes and fees on a nonstop domestic flight are $17 to $20. For a domestic flight with one stop, the fees range from $34 to $40. The fees and taxes on international flights can run as high as $200.

The taxes and fees run the gamut. There is a passenger ticket tax of 7.5 percent. There is a passenger flight segment tax of $3, with a cap of $12 per trip. The passenger security charge of $2.50 is also assessed per flight segment, and capped at $10.

Airports get into the act with passenger facility charges, which can run as high as $4.50 per passenger. (Logan International Airport's charge, at $3, is relatively cheap.) The facility charge is capped at $18 per flight. Many airlines also assess fuel taxes.

International flights carry many taxes of their own, including arrival and departure taxes and immigration and customs fees. In the United States, these add up to $41.50. The United Kingdom's departure tax ranges from $44 to $75, so a round-trip flight to London could cost a US traveler between $85.50 and $116.50 in fees and taxes.

The Air Transport Association says the federal taxes and fees on air fares exceed the federal taxes on cigarettes, gasoline, firearms, and luxury vehicles. It says the taxes and fees have been growing faster than both inflation and airline yields for years.

The bite is biggest on the cheapest flights with the most connections. For someone traveling nonstop, the taxes and fees account for 25.6 percent of a $100 fare and 9 percent of a $900 fare. For a flight with one stop, the percentages range from 44.2 percent for a $100 fare to 11.1 percent on a $900 fare.

Airline officials are worried that these spiraling taxes and fees deter their efforts to fill seats and make it more difficult to raise fares. They are also worried that the money is not being spent on projects related to air travel.

''The issue for us is how the money is spent,'' said John P. Heimlich, director of economic and market research for the Air Transportation Association. ''Is the user getting a return on that money?''

Traffic report

Last year was tough for airports across the nation, but those serving Eastern Massachusetts fared better than most.

The one bright spot was Manchester Airport in New Hampshire, which reported a 4 percent increase in passenger traffic despite the heavy downturn in the economy and the industry. The airport handled 3.4 million passengers.

T.F. Green Airport in Warwick, R.I., finished the year down 2.47 percent, handling nearly 5.4 million passengers.

Southwest Airlines, one of the few strong performers in an industry mired in bankruptcy and red ink, was a key reason why Manchester and Green did as well as they did. Southwest's passenger traffic at Manchester was up nearly 13 percent for the year, and up 6.15 percent at Green.

Logan finished the year with its passenger traffic off 7.3 percent from 2001. It served 22.7 million passengers.

Worcester Airport was the biggest disappointment locally, as its flights and passenger traffic steadily dwindled. US Airways, the last remaining airline operating in Worcester, is pulling out, leaving the airport with no commercial carriers.

Bruce Mohl can be reached at mohl@globe.com.