The current taxation of the U.S. domestic passenger airline industry is contributing to billions in lost revenue annually. This quantitative study measures the effect on yields before and after a change in the Flight Segment Tax using secondary data from the Department of Transportation's Bureau of Transportation Statistics. Using a simple regression test, the average price per ticket by each airline for one- and two-segment trips (Bureau of Transportation Statistics database, 2005) was used to determine the correlation between a change in the Flight Segment Tax and the yields airlines receive. Using descriptive statistics to augment the regression test, the changes were expressed in percentage form. The analysis supports the hypothesis that increases in the Flight Segment Tax reduce revenue in the U.S. domestic passenger airline industry. These data add to the under-developed body of knowledge on the effect of U.S. tax policies on the airline industry's yield and future profitability. The data can be used, with the existent body of knowledge, to implement efficient taxation to foster growth within the U.S. domestic passenger airline industry, which, in-turn, could be used to cultivate a stronger U.S. economy.
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