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Court: TSA Overcharging Airlines

Court orders TSA to recalculate security fees for airlines  Feb 04, 2009

WASHINGTON - A federal appeals court Tuesday ordered the US Transportation Security Administration to recalculate the amount of fees it charges air carriers for passenger and baggage screening, a development that the airlines say could save them hundreds of millions of dollars.

"A large percentage of these fees have now been found to be unlawful," said Roy Goldberg, a Washington lawyer who represented 22 airlines that challenged TSA's calculation of the security fees. "The fees are going down, and we think they're going down substantially because of this ruling."

The group of airlines, which included all the major carriers, said they have overpaid TSA by $100 million annually since 2005. They are seeking to recoup those payments and to have the fees reduced going forward.

TSA took over security at the nation's airports after the Sept. 11, 2001, terrorist attacks and Congress authorized the agency to impose fees to fund its security services.

The U.S. Court of Appeals for the District of Columbia Circuit ruled Tuesday that TSA erred when it calculated the overall limit on the fees it can charge.

By statute, TSA's calculations are tied to how much the airlines spent on screening passengers and baggage in 2000, before the process was taken over by the federal government.

The court ruled unanimously that TSA was wrong to include the cost of screening non-passengers, such as greeters and sightseers, in its security-costs estimates.

An economist hired by the airlines said that TSA's use of non-passenger screening costs in its calculations caused the agency to overcharge the airline industry by $123 million annually.

The appeals court upheld other portions of TSA's calculations.

TSA said in a statement that it views the ruling "as another positive step in resolving this ongoing dispute with air carriers."

The agency said it would review the decision to assess its overall effect on screening fees. TSA, however, said the appeals court upheld its methodology of assigning fees to air carriers.

Southwest Airlines (LUV) has said that it would lose the most money if TSA does not adjust the fees.

Bob Kneisley, associate general counsel for Southwest, said TSA has overcharged the airline $24 million annually since 2005.

Kneisley said Southwest has been paying the fees under protest. He called Tuesday's ruling a big victory.

Court orders TSA to recalculate security fees for airlines
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