Airline add-on fees vs 7.5% "head tax"

gismo

gismo

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It's my understanding that the FAA's revenue from the airlines is made up entirely of a 7.5% tax on the base ticket price and that anything an airline adds as a "fee" isn't taxed. Assuming this is still true, why isn't someone (AOPA?) screaming "unfair" WRT the airline vs GA funding of the FAA? I'm also wondering if the airlines would be charging so many "fees" instead of just bumping up the ticket price if there wasn't a tax advantage to charging fees.
 
kkoran said:
Unfair in what way?
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By charging less for a ticket and making up for it with fees, they're skimping out on paying the 7.5% tax on the "fees" portion, thus skimping out on their share of FAA revenue...

How about we stop paying fuel taxes on anything put into tip tanks? That's effectively what they're doing.

That said, I don't think that's WHY they're doing it - They're doing the fee thing because we're all a bunch of cheap bastards and will buy whatever ticket comes up the cheapest on Expedia or Orbitz or whatever without regard for fees.
 
probably because they still pay a ****load more than we do
 
flyingcheesehead said:
By charging less for a ticket and making up for it with fees, they're skimping out on paying the 7.5% tax on the "fees" portion, thus skimping out on their share of FAA revenue...

How about we stop paying fuel taxes on anything put into tip tanks? That's effectively what they're doing.

That said, I don't think that's WHY they're doing it - They're doing the fee thing because we're all a bunch of cheap bastards and will buy whatever ticket comes up the cheapest on Expedia or Orbitz or whatever without regard for fees.
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close the loophole and charge any way you want to...
 
gismo said:
I'm also wondering if the airlines would be charging so many "fees" instead of just bumping up the ticket price if there wasn't a tax advantage to charging fees.
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When taxes are increased people will find a way to avoid them. That is the crux of the argument against raising taxes on the most productive (i.e. "the wealthy"). Perhaps they should remove the head tax entirely so the cost of the ticket will come down. Corporations don't really pay taxes anyway. They just collect them and pass them on. Tax the individual flyers instead. That way people will have a better idea of how much tax they are actually paying.
 
JOhnH said:
When taxes are increased people will find a way to avoid them. That is the crux of the argument against raising taxes on the most productive (i.e. "the wealthy"). Perhaps they should remove the head tax entirely so the cost of the ticket will come down. Corporations don't really pay taxes anyway. They just collect them and pass them on. Tax the individual flyers instead. That way people will have a better idea of how much tax they are actually paying.
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The wealthy are the most productive? But who does all the work?
 
woodstock said:
The wealthy are the most productive? But who does all the work?
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If you consider productivity getting return-on-investment on time spent, then the "wealthy" are unquestionably more productive.
 
When I must fly commercial (something which I generally avoid), I opt to fly on carriers which do not mask the true cost of the travel with fees for routine items (such as checked bags), and whose fares are consistently reasonable (not always the cheapest), and whose fares are, in the event of a change in plans, not subject to forfeiture.

_-_-_-_-_
- - - -
 
SCCutler said:
When I must fly commercial (something which I generally avoid), I opt to fly on carriers which do not mask the true cost of the travel with fees for routine items (such as checked bags), and whose fares are consistently reasonable (not always the cheapest), and whose fares are, in the event of a change in plans, not subject to forfeiture.

_-_-_-_-_
- - - -
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and before you go to bed each night you give thanks that you have that choice
 
SCCutler said:
When I must fly commercial (something which I generally avoid), I opt to fly on carriers which do not mask the true cost of the travel with fees for routine items (such as checked bags), and whose fares are consistently reasonable (not always the cheapest), and whose fares are, in the event of a change in plans, not subject to forfeiture.

_-_-_-_-_
- - - -
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By contrast, I never check bags, so I prefer airlines that don't make me pay for other people's bags.
 
If I'm going to pay, say, $300 for a ticket, I don't care how much is the base price, how much are fees and how much are taxes. I only care about the end price.
 
JeffDG said:
By contrast, I never check bags, so I prefer airlines that don't make me pay for other people's bags.
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While there may be fare differences from time to time, I doubt you can ascribe those differences to a fee versus no fee structure. The fee system is still relatively new, and is largely a response to LCC competition and increasing legacy costs.

In fact, on the routes I fly domestically, SWA and jetBlue are almost always cheaper. I never check bags.*

Cheers,

-Andrew

* I check flying ex-BHB from time to time.
 
JeffDG said:
By contrast, I never check bags, so I prefer airlines that don't make me pay for other people's bags.
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Good to know that the airlines which charge for checking bags have conditioned you so well! Interesting, though, that the carrier most known for not charging to check bags also manages to (1) make profits when its competitors fail to do so, and (2) pays its people the best in the industry.

All said, the bag thing is no big deal, by my reckoning, since you can always plan for that in advance. It's the forfeiture of money paid (either big change fees, or total loss,as the case may be) that is most offensive.

It's gravy that my chosen carrier also gives more room between seats than most of its competitors.

Like Tony said, I am very thankful to have the choice.

In any event, I avoided commercial flying before, avoid it more, now.
 
New biz model: All tickets $5. But there's a seat fee, a FA announcement fee, checked bag fee, carry-on bag fee, cabin air usage fee...
 
EdFred said:
New biz model: All tickets $5. But there's a seat fee, a FA announcement fee, checked bag fee, carry-on bag fee, cabin air usage fee...
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Already exists in Europe. It's called Ryanair...
 
Perhaps a better way of saying it is "who executes on the business owner's vision?" Certainly not one person - meaning said business owner. And without execution, who pays, indeed. Can't pay if there is nothing produced and no money coming in.
 
woodstock said:
Perhaps a better way of saying it is "who executes on the business owner's vision?" Certainly not one person - meaning said business owner. And without execution, who pays, indeed. Can't pay if there is nothing produced and no money coming in.
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Need the money to pay first, especially in this day and age of "we need net 90 terms," so, the rich person/owner is still the most productive, because he's forking out wages 90 days before the work gets paid for via A/R
 
woodstock said:
Perhaps a better way of saying it is "who executes on the business owner's vision?" Certainly not one person - meaning said business owner. And without execution, who pays, indeed. Can't pay if there is nothing produced and no money coming in.
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The American economy is still pretty heavily dominated by small business and the business owners in those businesses do indeed bust their ass.

Just ask Spike.
 
Yes they do - Ask Jay Honeck too. And when the small business sucessfully grows to a mid or large business? Most of the time the business owner(s) get vilified as the "evil rich" that don't do their fair share - never mind that they pay a higher tax rate than others.

WashPost had an interesting editorial piece today on how people in Europe are feeling that their government's cutting back on the social benefits programs (because they're broke) is a breach of the social contract. I'm confused and saddened by people's sense of entitlement.
 
Greg Bockelman said:
Who pays those that do the work?
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The people who buy whatever is being sold by those that do the work.

The varying characterizations of the various relationships seem to have a lot to do with self-interest, rather than with the relationships themselves.
 
TMetzinger said:
Yes they do - Ask Jay Honeck too. And when the small business sucessfully grows to a mid or large business? Most of the time the business owner(s) get vilified as the "evil rich" that don't do their fair share - never mind that they pay a higher tax rate than others.

WashPost had an interesting editorial piece today on how people in Europe are feeling that their government's cutting back on the social benefits programs (because they're broke) is a breach of the social contract. I'm confused and saddened by people's sense of entitlement.
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Continental statist paternalism at work. It's cultural; it's an expectation that the crown/state will provide certain things for you, in exchange for certain things from you (tax, lower wages).

Cheers,

-Andrew
someone's going to slam me for this
 
woodstock said:
The wealthy are the most productive? But who does all the work?
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This is an interesting line of reasoning for an attorney.

I put all the capital I have to work. Those assets are monetary, cognitive, and human and I expect a return on all of them. If done well the return on these assets will be greater than the sum of the parts.

For some people the only capital they have are their hands and backs. They will get a return on their asset as well.

What percentage of billing do your paralegals get paid?

Eggman
 
Productivity is an interesting argument. Output per unit input.

So what are you measuring? ? Share price or process efficiency? If you are in a position to make senior management decisions, you may greatly influence share price in the short term, but devastate the health of the organization in the long term. Are you really being more "productive"?
 
There's an interesting article in this weeks Economist, which, in a nutshell, points to near record profits being reported by the largest publicly traded corps while the labor market bumps along the bottom. Why? In addition to arbing the piles of low-cost cash available to them courtesy the low interest rates made possibe by taxpayer largess, the productive investments which are being made are being made in lower cost labor markets. Obviously very productive for share holders, but where does that leave the "backs and hands" of the American people?
 
tonycondon said:
probably because they still pay a ****load more than we do
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As well they should. Without them flying around, we could probably shut down all of the TRACONs, a hundred or more control towers, and reduce the ARTCC's to 2 people at a time.

We also wouldn't have to build massive runways, ramps, terminals, etc.

So, damn skippy the airlines are paying more than we are, and they should. And they're trying to skimp out on it, too...
 
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