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While flying from KSNA to KVCB VFR at night, Norcal Approach asked for my current altitude. I was somewhere between 12.0 and 12.5 depending on which reading I was going to use. ATC had me confirm. My GPS altitude was 12.5, my transponder was showing 12.3, and my altimeter indicated 12.0. I am assuming, since altimeter settings are based on the barometric pressure on the ground, that the thinner air above 12,000 feet would make my altimeter the least reliable of the three and the GPS the most reliable.

When ATC asks, should I give them the altimeter indicated altitude? Also, is the transponder altitude that I can see derived from secondary radar and isn't that what ATC is already seeing?

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    $\begingroup$ Ask yourself this - if ATC told you to fly a certain altitude, which instrument would you use? $\endgroup$
    – J...
    Nov 1, 2017 at 11:57

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When asked for altitude, you report the altimeter reading, utilizing the correct barometric pressure entered into the Kollsman window.

ATC separates traffic based upon indicated altitude. The indicated altitude may include errors, such as the pressure ATC provides, but all aircraft in the area will presumably be using the same barometric pressure, and will have similar errors.

GPS altitude, which some call an absolute altitude, is an altitude relative to a model, normally the WGS84 elipsoid, and has it's own set of errors.

By convention, indicated altitude, based upon local pressure, is used for aircraft separation.

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    $\begingroup$ "all aircraft in the area will presumably be using the same barometric pressure" and if, for any reason, you're uncertain about the altimeter setting, you can always ask for the current setting. Either separately, or just report something like "maintaining XXXX feet, altimeter 29.89, N345"; if you've got the wrong setting, ATC would hopefully catch that and give you the correct setting. $\endgroup$
    – user
    Mar 11, 2019 at 10:22
  • $\begingroup$ Based upon local pressure below transition level; above transition altitude it is standard pressure (but then it will be called flight level rather than altitude; in the USA the transition level is uniformly 18,000 ft, so you won't be above it in a piston single, but in other countries it may be as low as 5,000 ft). $\endgroup$
    – Jan Hudec
    Jun 21, 2020 at 16:57
  • $\begingroup$ Good point on the other countries. I have run into that but have a North American bias in my answer as the OP cited US locations. $\endgroup$
    – mongo
    Jun 22, 2020 at 12:51
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You should generally report what you see on your altimeter (at least that is what i was always instructed to do) but this presumes that you are up to date on your local pressure settings (which you should be). This also insures proper separation in the airspace system.

FWIW Transponders generally report the altitude calibrated to a set 29.92 and then rectified as necessary on the receiving end.

GPS altitude is triangulated off the system and (as far as I know) is never used for compulsory reporting as it does not provide proper separation altitude.

One thing to consider is that ATC may have been asking you to verify your altitude i.e. that you were off your expected altitude potentially due to an incorrectly set altimeter, the proper phraseology should have been

Note that exact altitude or flight level means to the nearest 100 foot increment. Exact altitude or flight level reports on initial contact provide ATC with information required prior to using MODE C altitude information for separation purposes. At times, controllers will ask pilots to verify that altitude. The phraseology used will be:

"Verify at (altitude)."

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