The dispute stems from a 2019 audit by U.S. Customs and Border Protection's audit division, which determined that Spirit had under-remitted security fees. The audit calculated a liability of $2,838,849.11, finding that the airline retained amounts from expired credits rather than refunding them to customers or remitting them to the TSA.
Spirit collects the mandatory $5.60 security fee when customers purchase tickets. When customers cancel flights, Spirit provides a credit toward future travel that expires after 60 days. If a credit expires unused, Spirit recognizes the amount as revenue, including the portion attributable to the security fee.
The court rejected Spirit's argument that the TSA lacks authority to collect fees from non-passengers. While the fee statute applies only to actual passengers, the court explained that once an airline chooses to collect the fee when selling tickets, those "amounts collected" must be remitted to the TSA by the end of the following month.
Spirit also argued that its travel credits constituted refunds. The court rejected this, noting that 2002 TSA guidance specifically addressed this scenario. The guidance requires airlines to refund the security fee when a ticket purchaser does not use a ticket for air transportation and the ticket then expires or loses its value. The court concluded that because the guidance requires a refund after expiration, an expired credit itself is not a refund.
Spirit raised a due process challenge, arguing it lacked fair notice of the TSA's interpretation. Chief Judge Pryor rejected this, writing that 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. The court added that even if Spirit was unaware of the 2002 guidance, it should have assumed the statutory default rule applied.
The decision reinforces that federal security fee collections must be handled according to strict statutory requirements regardless of airline business practices. The court noted that many other airlines have complied with the same requirements, undermining Spirit's argument that the TSA's interpretation was unforeseeable.