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Unless things have changed in the last several years, it's complicated. The total cost to the AA employee will depend upon the class of service flown, and the employee's income-tax bracket. (The "value" of the travel, less what the airline charges the employee, is considered taxable income to the employee.)

forgive the typo...

ya, its a buddy who's getting the passes, but I feel like he might be trying to pay for his whole trip on my two passes... not that I don't mind paying a little extra or anything I just don't wanna get scammed by my 'buddy'. Anyway to ballpark roughly what these passes might run just to give me an idea?

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In most cases, the fare used to calculate the taxable value is the full Y fare.

Here's how it worked for me back in my nonrev days on CO:

Say that the Y fare for the trip in question is $1000, and that the employee pays a $100 fee for the pass.

$1000 - $100 = $900. 10 percent of $900 is $90.

$90 worth of income (imputed income) was added to the amount reported to the IRS. Therefore, if I were in a 33% marginal tax bracket, I would owe the IRS an additional $30 at tax time.

As the employee, the pass I provided to you eventually cost me $130 out-of-pocket.

What is he charging you? I'll let you know if it's in the ballpark.

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I think AA calculates the IRS "value" of the travel based on the distance flown, not based on any published fare. At least, that's how they used to do it.

If you don't trust your buddy, find another one.

I don't have any idea about buddy ticket pricing, but if you're not exaggerating about paying for the "whole trip" on the cost of two passes, keep in mind you should be able to get tickets to Brazil for $700-800 each if you're planning ahead.

On AA its different. Flying D3, all margins are set seperately regardless of what class you are trying to fly standby. Now the $130.00 (I assume to GIG)
that was quoted would be nice, but its signifacantly higher in Y. While i wont
digest exactly how much (propriortery info) it is, the calculations
quoted by Non Non-Rev for CO does not apply to AA.

The same buddy who works for AA who is giving you the passes?
Is this the same buddy going along with you on the trip??? He wouldn`t
be flying D3 (Passes) but flying D2 or D1. So him trying to cash in on
2 passes to possibly pay for his own trip doesn`t make any sense.

Anyway thats about as much as i can say. Have a good trip

Roughly $400 each RT DFW-GRU-DFW, coach. D3 on AA is almost the bottom of the barrel as far non-rev priority is concerned. There is no imputed income tax ramifications for the employee, it's a flat charge.

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My experiences on CO were from the years 1989 - 2000, so the calculation method may well have changed.

Also, although I think that FT readers understand that different airlines have (sometimes drastically) different employee travel policies, I do think that it is valuable to remind those who are being provided buddy passes that those passes are not "free" to the employee. .

[My point, which I think is valid, is that if OP can't trust his buddy on the amount, perhaps his friend is not worthy of trust in other matters.

the value of D3s come in flexibility as far as last minute travel, and cheap business and first class, if it's open. Downside, you're on standby so be prepared to wait.

Even if your friend charges you more than what they're being charged, but it's considerably less than what a confirmed ticket is, than you got a deal.

It's been a while since I had privs, but if he is charging you for the pass, he is (a) risking losing his flight privledges and (b) possibly leaving you in the lurch - if AA pulls them while you are away, you would have to buy a ticket home @ the walk up fare.

I would be surprised if there is an employee that doesn't charge at least the cost of the D3. I'm sure if you're friend travels a lot they will not risk losing their privilege. Have fun!!

If you haven't gotten your answer from skylady, PM me and let me know what your friend is trying to charge you. There are 3-classes of fares that can be charged for a D-3, however, as a D-3, they will most likely list you for F class, which is the most 'expensive' for non-rev travel.