An Airfare Tax Holiday Too?

Incredibly the federal government and various airports across the country are snagging almost $67 of that $400 ticket, just less than 17 percent. A $200 out-the-door airline ticket with a similar fuel surcharge has a whopping 25 percent of the total price heading to the government and airports.

To put this into perspective, we had slightly less than 300 million U.S. domestic passengers last year, which would make the total "tax revenue" north of $14 billion, assuming an average $400 ticket price. That is three times larger than the market cap of all six legacy airlines in the United States combined.

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Rescinding the 7.5 percent tax on just the fuel surcharges alone would save passengers more than $1.5 billion a year. These are dollars that the federal government wasn't even collecting early last year when there were little or no fuel surcharges. At minimum, this windfall should be earmarked for fixing air traffic control or ensuring that passengers aren't stuck in sardine cans for six hours on the tarmac.

The tax story doesn't just end there -- the federal government is actually double dipping on jet fuel. Turns out that airlines also pay a 4.4 cent per gallon federal excise tax on jet fuel, plus a sales tax that varies depending on the city and state of purchase, similar to the gas tax for automobiles. Airlines accumulate these charges on their bottom line, and that invariably ends up getting passed on to travelers.

Simply put, the 7.5 percent sales tax is overly onerous on air travelers, especially as ticket prices begin to skyrocket, not to mention the fact that international airline tickets don't even have a percentage-based federal sales tax.

Sales tax on international tickets is fixed at $30.80 roundtrip -- only 2 percent of the total cost of a summertime airline ticket to Europe, and half of that for inbound foreign travelers. This tax is wallet friendly, as the charge is fixed (not a percentage of airfare) and doesn't apply to the average add-on of $240 and $310 roundtrip for trans-Atlantic or trans-Pacific fuel surcharges.