Summary
The Eleventh Circuit denied Spirit Airlines’ petition for review of the Transportation Security Administration’s determination that Spirit under-remitted passenger security fees. The court held that fees collected from customers who later do not travel must be remitted to the Administration unless refunded, and that expired travel credits and credits applied to cancellation fees do not constitute refunds under the Administration’s guidance. The court also held that Spirit had fair notice of its obligation to remit the disputed funds.
Topics
Practice areas
Questions Presented
- Whether 49 U.S.C. § 44940 requires an airline to remit security fees collected from customers who ultimately do not travel.
- Whether an expired travel credit, or a credit applied to a cancellation fee, constitutes a refund of the security fee under the Transportation Security Administration's 2002 guidance.
- Whether imposing liability on Spirit violated due process because Spirit lacked fair notice that it could not retain the disputed security-fee amounts.
Holdings
- Section 44940 requires an airline to remit to the Transportation Security Administration all security-fee amounts it collects, including amounts collected from customers who later do not travel, unless the Administration grants a refund.
- An expired travel credit is not a refund under the Transportation Security Administration's 2002 guidance, and a credit immediately reclaimed by the airline to satisfy a cancellation fee is likewise not a refund.
- The agency's enforcement action did not violate due process because Spirit had fair notice that it was required to remit collected security-fee amounts unless the Administration granted a refund.
Key quotations
“We agree with the Administration that the fee statute requires all collected fees to be remitted to the Administration, and expired credits do not count as refunds.” (2)
“By distinguishing between “fees imposed” and “amounts collected,” the statute makes clear that the imposition of the fee is distinct from its collection.” (7)
“Expired credits do not constitute a refund under the 2002 guidance.” (9)
“The plain text of section 44940 made clear that Spirit had to remit any “amounts collected” to the Administration unless the Administration granted a refund.” (11)
Factual background
Spirit Airlines collected aviation security fees from customers purchasing tickets. When customers canceled tickets, Spirit imposed a cancellation fee and issued any remaining value as a travel credit that expired after 60 days; if unused, Spirit retained the credit's value, including the security-fee portion, as revenue. A Customs and Border Protection audit concluded that Spirit had under-remitted security fees because expired credits were not refunds, and the Transportation Security Administration adopted a liability determination of $2,838,849.11.
Procedural history
The Customs and Border Protection audit determined that Spirit had under-remitted $2,838,849.11 in security fees. The Transportation Security Administration adopted the audit's findings and liability determination, and after Spirit sought administrative review, the Administration upheld its decision. The Eleventh Circuit denied Spirit's petition for review.