Airlines get $219 million bill from TSA

22 carriers owe back security fees to U.S. agency in dispute dating to 2005

June 08, 2007|By Bloomberg News

Southwest Airlines, American Airlines and 20 other carriers must pay the U.S. government $219 million in back security fees in a dispute dating to 2005, a federal agency said yesterday.

Southwest owes the most, $54 million, followed by AMR Corp.'s American at $40 million and Delta Air Lines Inc. at $32 million, said Ellen Howe, a Transportation Security Administration spokeswoman. The carriers will face penalties if they don't pay or arrange to do so in 30 days, she said.

The TSA's decision to seek the $219 million caps an 18-month dispute with the airlines, which are trying to curb security costs that they say should be borne by the government. The agency wants to limit its reliance on revenue from the Treasury Department.

"Our members intend to challenge TSA's action," said David Castelveter, a spokesman for the Air Transport Association trade group in Washington. "We will pursue all appropriate actions including review by the courts."

The 22 carriers had appealed the fees in January 2006 as unfair and excessive. The Transportation Security Administration denied the appeals and last week told carriers they need to pay the fees, which cover the period from January 2005 through March 2007, Howe said in an interview.

The security agency created the fee after the Sept. 11 terrorist attacks to help pay for screening passengers and bags.

The fees are supposed to be based on the airlines' screening costs in 2000, before the government took over responsibility for airport security.

Airlines have argued their 2000 costs were about $300 million, so they have been paying about that amount. The TSA has estimated that carriers spent $448 million on security in 2000, and it says the payments should be based on that figure.

US Airways Group Inc. owes $18 million; UAL Corp.'s United Airlines, $15 million; Continental Airlines Inc., $14 million; Northwest Airlines Corp., $9 million; and America West Airlines, now part of US Airways, $8 million, Howe said. She said the other carriers owe $5 million or less.

Carriers including Southwest, American, United and US Airways said they were considering how to respond to the agency's decision.

"We believe it is time for the TSA to develop a new system for allocating these costs, which is based on 2000 market shares," said Tim Wagner, a spokesman for American, the world's largest airline. "This old system is fundamentally unfair."

"We are reviewing our legal options," said Pete Scales, a United spokesman.

The roots of the dispute date to eight days after the Sept. 11 attacks, when then-Delta Chief Executive Officer Leo Mullin told a House committee that airlines spent about $1 billion a year on security. Mullin said carriers built into their forecasts the presumption that they would continue paying that sum.

When the TSA tried to collect $750 million in security fees in 2002, airlines objected, saying Mullin's figure was preliminary and that the actual 2000 cost was about $300 million.

Airlines last year paid a separate, larger security fee of about $2 billion assessed on passenger tickets. That larger fee isn't in dispute.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.