One of the less discussed, but still critically important, aspects of a career involving travel is the issue of food and expenses. In the working vernacular, this is shorthanded as per diem.
In nonflying occupations, employees get a certain per diem allowance each day, and it usually covers hotel and food expenses. At the end of a stint of travel, expense reports are submitted, and once they are verified by the accounting personnel, the employee is reimbursed.
The airlines do things a bit differently. Per diem is paid by the hour, starting with the official report time for the trip. It ends whenever the pilot is considered done with the trip, be it a one, two, three, or even 15-day assignment. So, if a pilot reports at noon on the first day of a trip and goes home on day four at noon, he will have logged 96 hours of what is called time away from base (TAFB). If his airline pays $2 an hour per diem, he’ll receive $192 in per diem expenses, which is intended to cover the cost of meals and incidental expenses; the company pays for the hotel directly.
At the majors, there is almost always a slightly higher rate for international trips to cover the higher cost of food in those locations. Per diem is usually paid on the second check of the following month, which allows the folks in payroll time to conduct due diligence on the record keeping.
Under the tax law, if a pilot flies a one-day trip, the per diem is taxable as regular income. If the trip has any overnights, the per diem is not considered taxable. For this reason, it’s common practice at the regionals for pilots and flight attendants to take a lot of their own food on trips, which allows them to pocket per diem as though it were extra income.
The downside to the way the airlines pay per diem is that the rate is always the same. That means that you’re getting the same allowance for dinner in an expensive city such as San Francisco as you’re getting in a less expensive town such as Cedar Rapids. Until the tax law changed this year, pilots and flight attendants could use the IRS meal and incidental expense (M&IE) tables to determine how much they were entitled to in each city, and their accountant or tax software would compute how much of the difference they were entitled to. Under the 2017 tax law, early interpretations are that this allowance has been eliminated, thus increasing the cost of eating on the road.
If the early interpretations of the tax law changes hold, it’s possible that per diem will paid and computed differently. Either way, as an employee, it’s up to you to verify that your per diem is paid to you properly, as well as understand how the rules apply to you and when.—Chip Wright