A Fifth Circuit judge literally laughed when the TSA insisted it isn’t equipped to refund the 9/11 security fee to millions of travelers—while the agency defended a $48 million penalty against Southwest for allegedly failing to refund that same fee. The fight boils down to a simple question: when a passenger cancels and never flies, who has to send the money back—an airline, or the government that collected the fee?
Here’s How Southwest Has Been Harming Passengers
TSA says Southwest collected the September 11th Security Fee from passengers who later canceled their trips and received a travel credit. Some of those credits expired unused, and Southwest kept the money. But the law requires a cash refund of the security fee for unused trips.
The agency conducted two audits of Southwest covering 2015 – 2019, back when Southwest credits used to expire (before becoming non-expiring, and now under the new anti-consumer Southwest they expire again). They calculated approximately $48 million in refunds and penalties due.
49 U.S.C. § 44940 authorizes TSA’s passenger security fee and includes a provision that TSA may refund fees paid by mistake or paid in excess of what was required. And 49 CFR 1510 specifies that airlines impose and collect up to $5.60 per one-way and $11.20 per round trip.
If the passenger changes the itinerary, that’s “subject to … refund of the security service fee” as appropriate. This isn’t the airline’s money, they’re fees collected “in trust” for the government. When a passenger cancels and never flies, the security fee is not “due” so it must be returned to the passenger.
Southwest Says They Don’t Have To Give Passengers The Money
The airline argues that by giving a travel credit, the “refund already happened.” At oral argument they suggest that federal law doesn’t impose an extra, second-step obligation to cut a check later just because the passenger let the credit expire.
They argue that it’s TSA that should be doing any refunds. It’s a federal fee that airlines collect for TSA. The statute says TSA ‘may’ refund amounts paid by mistake or in excess. If the fee isn’t properly owed once travel never occurs, then what exists is essentially an overpayment, and the government has refund authority. They shouldn’t be punishing an airline for not running a national refund program for the government’s fee.
The government argues airlines are supposed to refund passengers and then offset those refunds against later remittances to TSA.
The Judge Laughs At TSA
TSA’s lawyer defended the agency’s position by effectively saying: TSA isn’t built to cut refunds directly to “millions of passengers” even though TSA is pursuing a $48 million penalty because Southwest should have done that exact same thing.
One of the Fifth Circuit judges immediately and audibly laughed, because the government’s stance sounds like: “We can’t do this at scale, but we’re fining you for not doing it either.”
Ultimately this affects how a court evaluates the fairness of the agency’s stance. If TSA says passengers are entitled to refunds, TSA won’t do them, so they’ll penalize airlines who don’t do it for us that can look like an agency using enforcement to conscript private parties into administering a federal refund program. Of course it’s the airlines who collected the money from customers, who have the relationship with customers, and the contact details of whom is owed, and who hold funds due to the agency.
There’s More Than Just $48 Million At Stake
This isn’t just the $48 million that TSA is assessing against Southwest – it’s the precedent that expired credits mean a cash-refund obligation for airlines. That affects the whole airline industry. This matters to customers for whether they can expect real money back for the TSA fee when they cancel.
The Fifth Circuit oral argument of Southwest Airlines v. TSA argued on Thursday is available online.
Southworst, now in so many ways. These morons have lost my 40+ years business as they spiral down to become a Spiritt/Frontier clone.
Would be wild for the Fifth Circuit (TX, LA, MS) to all-of-the-sudden actually help consumers, over greedy corporations, but, I presume, this is less about that, and more about hating government agencies (which, arguably, are not efficient because they are jobs programs for needy Americans… and, you know, poverty isn’t good… if we wanna make things more efficient, just do UBI.)
I actually agree with TSA on this even though I disagree about much of what TSA does. The TSA does not keep a list of credit cards used, mailing addresses, etc. of airline passengers. The airlines do this. Therefore when a refund is needed, TSA should provide the money for their collected fees to the airline and the airline do the refund. Does this cost the airline some money to do it? It does. But the airline makes money on cancellation fees so they can use some of that to process the refund.
NO US CARRIER WILL REFUND THE MONEY THEY COLLECTED ON BEHALF OF OUR AND OTHER GOVERNMENTS. I HAVE ASKED AND THEY REFUSE JUST SAYING IT’S ALL NON-REFUNDABLE. EUROPEAN CARRIERS AS A MATTER OF COURSE ROUTINELY REFUND THE TAXES AND FEES THEY COLLECT (EVEN THOUGH BOAC ILLEGALLY, I BELIEVE, KEEPS £15 OF IT, I GUESS AS WHAT THEY SEE IS THEIR “CUT”). EVERYTHING ABOUT THE UNITED STATES IS ABOUT THE RELENTLESS WORSHIP OF THE DOLLAR BILL, AND PART OF OUR WORSHIP IS TO GUARD RELIGIOUSLY THE SACRED GOLDEN CALF FOR OURSELVES.
What’s the status of the JetBlue litigation on this?
https://viewfromthewing.com/those-taxes-belong-to-us-now-jetblue-caught-illegally-holding-onto-passenger-tsa-fees-faces-lawsuit/
Fundamentally, how is that any different from retailers who collect state and local sales taxes on behalf of a state and its subdivisions and then periodically remit those taxes to the state?
If a customer returns taxable goods to a retailer, the retailer refunds the sales tax collected and offsets the sales tax refunded to the customer against the next periodic remittance of sales tax to the state.
Incredibly simple!
Airlines manage to turn the simplest things into major undertakings akin to solving Fermat’s Last.
Took a look at the statute and regs.
It’s nonsensical that an airline must collect these fees in trust for TSA, remit them in full every month, and the airline could be arguably still “on the hook” to refund to the canceling customer money that it (the airline) no longer has control over, and was never legally possessed in the first place (only held on behalf of TSA until it could be transferred to them). If a person books and cancels prior to the airline remitting their fee, I get it. Outside of that, it’s a bit ridiculous, unless airlines are specifically allowed to refund already submitted fees out of the fee money currently held in trust for future TSA remittance at any given point in time.
All the while, the law is that TSA itself “may” but is not required to refund “excess” it actually possesses and owns. Go figure.
TSA seeking massive fines is really the “chef’s kiss”.
@Derek McGillicuddy:
No need to shout, VFTW isn’t an old folks home!
Inside voice, if you please
So tired of TSA Kabuki theatre which actively assists Somalian passengers taking carry-ons packed with millions or billions of cash from US taxpayers onto flights out of the US.
I just want a domestic flight to visit Grandma without experiencing prision guard yelling, brass knuckles and Obamacare proctology exam.
Thank you, @Gentleman Jack Darby. Reading @Derek McGillicuddy’s ALL-CAPS comments is like visiting grandpa with Fox News on full-volume 24/7.
Airlines are like banks: Crooks.
Bigtee, STFU!
And, thank you to @Adam Kennedy, for keeping it real, while @BigTee loses it. Oof.
@ymx, Jetblue case is still ongoing. I have also lost some $5.6 charges to Jetblue as they refunded the taxes in a credit which expired.
https://www.courtlistener.com/docket/61612172/hahn-v-jetblue-airways-corporation/
Just another Trump grift. TSA will keep the funds and put them into Trump’s slush fund….
@Derek McGillicuddy
BOAC? pardon the Pan Am/TWA memories outta me…
BOAC stands for British Overseas Airways Corporation, the former British state-owned airline that operated long-haul international flights, founded in 1939 and merging in 1974 to become the foundation of today’s British Airways (BA), though BOAC also refers to the Board of Airport Commissioners for Los Angeles (LAWA) and the municipality of Boac in the Philippines. It was known for connecting the UK with its colonies and the world, operating iconic aircraft like the Boeing 747 before its services were folded into BA, according to Wikipedia.
@Gentleman Jack Darby This is exactly what I was thinking.
Why must this be any different for airlines? This is no more special or complicated than a simple retail transaction where various local taxes are collected and refunded. Stores also do store credit that then could expire.
Airlines don’t need special treatment
The problem starts at the beginning. When you cancel a fight you should be issued a REFUND. Issuing a credit should be ILLEAGAL.
Gary Leff…being paid by DL and UA to write a hit piece about WN. Haven’t seen this one before.
The ALLCAPS comment was mocking Trump. Get it?
If the fare is nonrefundable then most US domestic TFCs are also nonref; except the USD5.60AY. Ideally, if/when issuing travel credits, the airline would roll the nonref values into the credit, but refund the refundable TFCs at the same time. You’d get a small refund to your CC, and a slightly reduced credit voucher. Would add complexity, but comply with the federal requirements. As it is, the whole unused value rolls into the credit and the airline hopes it expires…
Seems to me people are overlooking a bigger issue, why are SWA credits expiring? If a ticket is cancelled and a credit is issued, that credit should NEVER expire until it’s used. If it’s going to expire, then they should cut a check back to the person. They don’t just get to keep someone’s money for a service that was never rendered!
@GregM Most if not all airlines offer a fully refundable fair. It is your choice to cheap out and buy the refund to credit or non-refundable ticket.
@Gentleman Jack Darby it’s exactly like a retail store, if you buy a product marked as is/no-refunds or all sales final and you return the product you get nothing. If you buy something that is only returnable for credit you get a credit for the full amount paid, and if that credit expires(most don’t) you lose all the money. If you buy something fully refundable you get all your money back.
The only difference is that most airline credits expire while, store credit general doesn’t.
The real issue is the TSA does not maintain, or ever collect, specific flyer payment information. It simply cannot refund the money because it doesn’t know who to refund it to.
Southwest has this information.
How is this any different if I return a shirt to a store? The store refunds the sales tax.
On the sales tax return the retailer makes an adjustment for refunded sales.
For TSA, they have no idea who I am. Or my address. Or how to get the money to me.
This is not hard. I am a CPA and this is how it works.
The may is in the statute for flexibility for isolated cases.
Southwest has lost my business entirely, unless its the only nonstop on an obscure route. Its not the same airline. Good riddance
I tried to use an expiring flight credit on SW to book a new award flight on SW and got an error message to the effect of, “you can’t use this credit to pay the $5.60 for the new booking”. Crazy!
@Jeff, are you a Russian troll?
Common sense here who is wrong. Example: I pre-pay for a rental car from XYZ company in PHX.
State/County/City TPT 10.6%
State Surcharge 5%
Country Surcharge 3.25%
Airport Concessions/Facility 10-25% (varies by company)
I show up for my car and they oversold. Who is responsible to give me my 20-40% of fees back? If Budget charged me $100, do they owe me $100 or $60? Am I supposed to apply for refunds from everyone else?
BigTee letting their racism show!!
Spirit and Frontier Airlines both keep the taxes after u cancel a flight using points. Isnt that illegal too?
Airlines charging, accepting and transferring the fee to the government is fine but they should just generate a new refund form to give to customers when a flight is cancelled. The flight gets refunded or credited for future use and a refund form given to the customer to send to the government to claim the TSA refund. Or, how about this? YOU cancelled your flight, stop crying about a $10 fee and forget about it. At least you got the hundreds or thousands of dollars flight credited back.
How about when you can take a flight period and they keep money because it was too late to get a refund
This is a scam.
In DJT America, airlines, booking agents, hotels, Air BnB, grocery retailers, banks, insurance, hedge funds and every other crooked business management have received the message: rip off the consumer is ALL GOOD. There will not be any regulatory consequences, no consumer protections, no illegal tariffs refund, no services offered where spending has already been approved and allocated. You are on your own.
SA is hoping that, by offering such crappy service and credit resolutions, their customers will be so turned off that the “credit” offered will expire worthless. The TSA fee they collect is free profits. If you were treated with such disdain and contempt, it would be unlikely that the “credit” offered would be used for another unsatisfying experience.
This is Donald Trump’s America, get used to it.
No great loss. I haven’t flown since I was in college, when on a flight back from the UK, something fell.off the plane and they had to make an emergency landing in Newfoundland.. I probably won’t fly again.
Southwest says I have $5.60 credit but won’t let me use it! How is that even legal? It’s clearly sitting in my account and very visible
I hate to agree with TSA as well but Southwest should be refunding all taxes and fees collected. In the past when I’ve booked with points I paid this fee and was refunded if I cancelled the flight. We really need high speed rail in this country
Which judge laughed?
@Lars, you are so wrong.
Person giving sales tax example is on the right track.
Airlines are setup to coltct abd refund fees
Theyrcremittance to TSA is net collections
Very simple.
Judge should be disbarred for not having common sense if that really what happened.
Airlines can be given 30 days to issue refunds or at least mane good faith attempt and then VEO should be jailed until they do.
Americans are loosing common sense sensibility and it shows in so many ways.
Shut them down if they will not refund.
I don’t see the issue. WN already has a consumer relationship with the customer. They have their flight reservation, address and payment info in an existing payment system. Maybe it’s outdated after a year but the TSA doesn’t have any of this. They might have the name and address but how would they know who cancelled a trip or let a credit expired. They don’t really have a payment system unless someone bought tsapre but that’s not tied to the reservation. It makes a lot more sense for WN to process the refund for the fee THEY collected
I’m with @jns and @GJD here. If I missed it in the article, I appologize. But, is it not the case that SW forwards $5.60 per (one way) trip to TSA, and I assume it either occurs when the flight is taken or when the ticket is purchased. I assume that, if the latter, it is $5.60 per ticket sold minus $5.60 per ticket canceled. So, the $48 million is money SW has that it shouldn’t, not TSA.
It’s abundantly clear that Southwest violates the law by not giving the tax back to travelers in the form of a tax refund! It should be considered criminal theft!
#SouthwestSucks
Pedo Joe Biden really screwed the while country up.
I agree with “the other guy”, I want to hear the judge laughing!
As for ALL CAPS usages , I’m ROFLMFAO!!
Y’all wanna be prim and proper yet the world is laughing at your circus act.
That’s why I prefer to drive!
Airlines collecting TSA fees are no different than every state that collects sales tax. Stores collect, and in turn, send funds into their state. Then, if something is returned, the sales tax is refunded to the customer. The sales tax credit is just applied to the next submittal. The state doesn’t refund sales tax directly to the person yet every store that collects sales tax becomes a tax collector. It’s no different this is just a different fee.
The TSA shouldn’t be allowed to follow a double standard, but they are a government agency, so you know. Because people pay with credit cards, the simple solution is for Southwest to credit the fee to their card. Problem solved. My other question is why has been singled out once again by the government? They were singled out and fined after their computer meltdown and massive cancellation that happened over a holiday. If you fly on American Airlines cancellations are a daily occurrence, with no consequences.
No airline should be issuing taxes and fees as a ‘credit’. They should immediately refund the taxes to the original form of payment, and then retain the actual ‘flight credit.’ After all, that credit could be used on a flight with a different tax amount due. How much do you wanna bet they double dip by hitting you with the taxes again on that new flight?
@BigTee STFU you bigoted troll. It’s possible to have an adult conversation about something factual without dragging in a culture war.