Taxation in the Aviation Industry: Insights and Challenges

Quinton White, David R. Agrawal, Jonathan W. Williams

Research output: Contribution to journalArticlepeer-review

3 Scopus citations

Abstract

Taxation in the aviation industry has evolved considerably over the last 25 years. Despite the vital role aviation and airports play in efficiently moving goods and people, the effect of taxation in this industry is understudied. Understanding how passengers and carriers respond to taxes and government fees is crucial to efficiently raising government revenue. After an overview of how taxation has evolved in the industry, this paper estimates how fares adjust in response to tax changes. Exploiting variation in taxes across similar routes and over time, the results suggest taxes are over-shifted to consumers (i.e., a $1 increase in taxes results in more than a $1 increase in the total fare). The paper discusses potential explanations for this result: the nature of competition in the industry and the propagation of taxes within a network.

Original languageEnglish
Pages (from-to)666-673
Number of pages8
JournalTransportation Research Record
Volume2673
Issue number9
DOIs
StatePublished - Sep 2019

Bibliographical note

Publisher Copyright:
© National Academy of Sciences: Transportation Research Board 2019.

ASJC Scopus subject areas

  • Civil and Structural Engineering
  • Mechanical Engineering

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