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Marketplace listener Scott Murphy from Dallas asked:
If I purchase a non-refundable airline ticket but do not use it, why am I not getting a refund of government taxes and fees (airline restaurant fee, segment tax, transportation tax, and US security fee)? Does the airline still pay this to the government? Or does the airline pocket them?
Buying a plane ticket comes with a seemingly endless array of fees. There’s the passenger ticket tax, the waybill tax, and a security fee, as well as nearly a dozen others, depending on your travel conditions.
These different fees go to different government agencies – along with the airlines themselves – which explains why airlines can issue a refund for some of them.
“But for the most part, they don’t unless consumers stink about it,” said John Breyault, vice president of public policy, telecommunications and fraud for the National Consumers League.
Air tickets are subject to a 7.5% excise tax on all domestic flights imposed by the IRS. The agency says that if an airline actually reimburses the ticket, a pro-rated amount of excise taxes can also be reimbursed.
The Federal Aviation Administration also has a passenger facility fee program that allows airlines to charge up to $ 4.50 for each eligible passenger, with a maximum of two PFCs for a one-way trip or four PFCs for a round-trip trip. (Airlines for America, a trade organization, has compiled a comprehensive list of the commercial and general aviation taxes you must pay here.)
Some fees that are refundable whether or not your ticket is in use include the $ 5.60 TSA fee (also known as the September 11th security fee), customs usage fee, and immigration fee, according to Breyault.
But he said you need to request a refund for those special fees. A 2010 government report found that few consumers charge a Transportation Security Administration fee “because airlines don’t need to notify consumers.”
In cases like the excise tax, Breyault stated that it was collected at the time of purchase.
“Then the airlines transfer this fee to the IRS. It doesn’t matter if the consumer ever flies that ticket or not, ”he said. “So this is not a fee that airlines can return to a consumer.”
Marketplace reached out to several airlines to clarify their guidelines. An American Airlines spokesman said passengers on non-refundable tickets can request a refund of taxes that the airline does not have to pay.
“We cannot provide a comprehensive list as it changes frequently given the multitude of domestic tax authorities we work with and the many international countries we serve,” the spokesman said via email.
The spokesman also noted that these taxes and fees will be applied to their new tickets when customers receive flight credit for not using their tickets.
Mary Schiavo, head of the aviation practice group at plaintiff Motley Rice, said the airlines are keeping the remainder of the ticket fees, which are not paid directly to the government.
Schiavo said the FAA allowed airlines to do so on the grounds that the regulator is looking at the airlines’ financial health.
Revenue for the Airport and Airway Trust Fund, which helped fund FAA operations, has grown steadily since the 1970s, according to the Tax Policy Center. The AATF receives funding through excise duties on passenger tariffs, air freight and aviation fuel. In 2018, it received around $ 16 billion.
In 2004, a group of customers filed a lawsuit against major US and overseas airlines for alleging they had wrongly withheld the fees and taxes associated with their tickets. However, a district court dismissed the case, which was upheld by the 1st US Circuit Court of Appeals in 2007.
Marketplace asked the Department of Transportation to comment on the policy regarding taxes and fees on airline tickets but did not receive a timely response for publication.
According to Breyault, consumers who want a refund should first contact their airline and ask about their options. He added that it wouldn’t hurt to file a complaint with the DOT as well.
“The DOT reviews all complaints people submit and they can take action,” Breyault said.