UAL to pay less in security fees
Southwest Airlines Co., AMR Corp.’s American Airlines and 20 other U.S. carriers will see the fees they pay the government for screening passengers reduced after an appeals court ruled a regulator overstepped its authority.
The court in Washington found today that while the fees were proper, the Transportation Security Administration erred when it included the cost of screening non-passengers in implementing the Aviation and Transportation Security Act.
“We find merit in the attack on TSA’s understanding of the ATSA’s â€~overall’ limit, but not in the other objections,” Senior Circuit Judge Stephen Williams wrote for the panel.
The 22 carriers appealed in January 2006, saying the fees, which amount to some $98 million each year, were unfair and excessive. The appeals court upheld the TSA’s decision to implement the Aviation and Security Infrastructure fee, though it agreed with the carriers that the TSA was charging too much.
The security agency said in June 2007 that Dallas-based Southwest owed $54 million in back fees, the most of any company. Fort Worth, Texas-based American owed $40 million, followed by $32 million for Atlanta-based Delta Air Lines Inc. US Airways Group Inc. at $18 million and UAL Corp.’s United Airlines at $15 million.
Southwest is “very pleased” with the appeals court’s decision, spokesman Paul Flaningan said. “Southwest Airlines looks forward to a significant reduction, if not a total elimination of the approximately $24 million annually that Southwest has paid in these disputed fees since January 2005.”
Cutting Costs
The nine largest U.S. airlines have been trying to cut costs after posting $3.8 billion in combined operating losses for 2008. They have parked 460 jets and eliminated 26,000 jobs as they shrink capacity by more than 10 percent in response to sagging demand amid the recession.
The court today rejected a separate claim by American Airlines that the TSA owed it $14 million for the cost of developing and installing a new baggage security system.
“Although the court did not agree with all of the airlines’ arguments, we are pleased that it recognized that the Transportation Security Administration overcharged the airlines and that those fees must be reduced,” said David Castelveter, spokesman for Air Transport Association of America. “We look forward to working with the TSA to resolve the outstanding issues identified by the court and to bring this matter to a successful conclusion in the near future.”
Southwest rose 7 cents to $6.82 in New York Stock Exchange composite trading. The shares have fallen 21 percent this year.
The case is Southwest Airlines Co. v. Transportation Security Administration, 07-1280, U.S. Court of Appeals for the District of Columbia Circuit (Washington).