Rev. Rul. 67-414

Advice has been requested whether amounts paid for transportation of persons by air cushion vehicles, also known as ground effect machines or hovercraft, are subject to the tax on transportation of persons by air imposed by section 4261 of the Internal Revenue Code of 1954.

The vehicles in question operate on a cushion of air created by a fan which forces air downward beneath the craft. Forward propulsion is achieved by a conventional airplane propeller. The vehicles are capable of performing a variety of missions over land, water, ice, snow, and marsh, including use as a passenger ferry, utility freight carrier, highspeed search and rescue craft, weed and pest control vehicle, and survey and exploration craft. The vehicles are not designed to use the airlanes, airports, or any of the facilities commonly used by conventional aircraft.

It is held that transportation of persons by the vehicle described above is not transportation by air within the intendment of section 4261 of the Code and amounts paid for such transportation are not subject to the tax imposed by that section.