Collected Means Payable: Airlines Must Remit TSA Security Fees Despite Cancellations; Expired Travel Credits Are Not Refunds

Case: Spirit Airlines, LLC v. Transportation Security Administration
Court: Court of Appeals for the Eleventh Circuit
Date: 2026-04-13
Statute: 49 U.S.C. § 44940 (Aviation security passenger fee)

I. Introduction

This petition for review arose from an audit finding that Spirit Airlines under-remitted federal aviation security fees to the Transportation Security Administration (TSA). Congress imposed a per-passenger security fee to help fund aviation security after September 11, and it required air carriers to collect the fee and remit “amounts collected” to the TSA. Spirit collected the fee at ticket purchase. When customers canceled, Spirit issued a short-lived travel credit (expiring after 60 days). If the credit expired, Spirit recognized the unused value—including the TSA fee component—as revenue and either did not remit that component or offset it against future remittances.

The central issues were:

• Statutory scope: Whether TSA may require remittance of security fees collected from customers who ultimately do not fly.
• Meaning of refund: Whether Spirit’s travel credits (and related cancellation-fee accounting) constituted a “refund” permitting Spirit to reclaim remitted fees.
• Due process/fair notice: Whether TSA’s position relied on an unannounced interpretation such that Spirit lacked fair notice.

II. Summary of the Opinion

The Eleventh Circuit denied Spirit’s petition for review and upheld TSA’s liability determination. The court:

• Agreed that § 44940(a)(1)’s fee is “impose[d]” on actual “passengers” during air transportation, not merely prospective travelers.
• Held that § 44940 nonetheless requires remittance to TSA of any “amounts collected,” distinguishing imposition from collection and making collection the triggering event for payment to TSA.
• Read § 44940(g) as granting TSA discretionary authority to refund fees “paid by mistake” or “in excess,” reinforcing that collected-and-remitted fees may be refunded only on TSA’s terms.
• Concluded that Spirit’s expired credits did not qualify as refunds under TSA’s publicly posted 2002 guidance; thus, Spirit could not retain the fee component.
• Rejected Spirit’s fair-notice challenge, emphasizing that the statute’s text and the 2002 guidance provided adequate notice.

III. Analysis

A. Precedents Cited

1. Loper Bright Enters. v. Raimondo, 144 S. Ct. 2244 (2024)

The court cited Loper Bright Enters. v. Raimondo for the proposition that statutory interpretation is reviewed de novo. That standard mattered here because Spirit framed the dispute as one of statutory meaning—especially the interplay among § 44940(a), (e), and (g). The panel did not defer to TSA’s reading as a matter of interpretive methodology; rather, it independently construed the statute and then evaluated TSA’s decision under that construction.

2. Southwest Airlines Co. v. United States, 777 F. Supp. 3d 1318 (Ct. Int'l Trade 2025)

Spirit relied on Southwest Airlines Co. v. United States to argue that an “ancillary” collection provision should not “override” the core imposition provision, and that “mere collection” should not establish the government’s entitlement. The Eleventh Circuit distinguished that reasoning as inapplicable because § 44940(e) is not a “single, isolated provision” but “an integral part of the statutory scheme.” The panel treated the structure of § 44940 as expressly separating:

• Imposition (who substantively owes the fee), from
• Collection/remittance mechanics (what happens once an airline collects money designated as the fee).

In other words, even if a person never becomes a “passenger” (and thus never owes an “imposed” fee), Congress still mandated that “amounts collected” be paid over, with any correction handled through refund mechanisms.

3. Biden v. Texas, 142 S. Ct. 2528 (2022)

The court invoked Biden v. Texas to interpret the word “may” in § 44940(g) as “plainly confer[ring] a discretionary authority.” That framing was central: Spirit’s position implicitly assumed a right to net out or reclaim fees when travel does not occur. By reading § 44940(g) as discretionary, the court reinforced that:

• Remittance is mandatory once amounts are collected; and
• Refunds are not automatic entitlements but depend on TSA’s chosen conditions and processes.

4. SEC v. Chenery Corp., 318 U.S. 80 (1943)

Spirit argued that the court could not rely on § 44940(g) because TSA did not cite it, invoking SEC v. Chenery Corp.’s principle that agency action must be judged on the grounds given. The panel did not reject Chenery; instead, it concluded that TSA’s reliance on refund authority could be “reasonably discerned” from the decision’s reasoning, even if not perfectly articulated. Thus, Chenery did not bar consideration of § 44940(g) because TSA’s path reflected invocation of refund discretion.

5. Hewitt v. Comm'r of IRS, 21 F.4th 1336 (11th Cir. 2021) and Motor Vehicle Mfrs. Ass'n of the United States v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (1983)

These cases supplied the “path may reasonably be discerned” principle used to address Spirit’s Chenery argument. The court used them to justify affirmance despite “less than ideal clarity” in the agency’s explanation, concluding that TSA’s reasoning sufficiently revealed reliance on refund discretion embedded in the statutory scheme.

6. Caver v. Central Alabama Electric Cooperative, 845 F.3d 1135 (11th Cir. 2017)

Spirit cited Caver v. Central Alabama Electric Cooperative to support a broader view of “refund” (arguing merchant credits are refunds). The panel treated Caver as inapposite because it interpreted “patronage refund[]” under an Alabama statute, and therefore did not control what constitutes a refund under TSA’s guidance and § 44940’s regime.

7. Lapaix v. U.S. Att'y Gen., 605 F.3d 1138 (11th Cir. 2010) and SEC v. Almagarby, 92 F.4th 1306 (11th Cir. 2024)

The panel cited Lapaix v. U.S. Att'y Gen. for de novo review of fair-notice due process claims, and SEC v. Almagarby for the doctrine that even a reasonable agency interpretation may violate due process if regulated parties lack fair notice. Applying that doctrine, the court found no due process violation because the statutory text and publicly docketed 2002 guidance provided notice of the remittance/refund framework.

B. Legal Reasoning

1. The statute separates “imposition” from “collection,” and makes “amounts collected” payable

The opinion’s interpretive engine is its close reading of § 44940’s internal architecture:

• § 44940(a)(1): TSA “impose[s]” a uniform fee “on passengers.” The court agreed “passenger” connotes an actual traveler in transportation, not a mere ticket-holder.
• § 44940(e): “All fees imposed and amounts collected under this section are payable” to TSA by the remittance deadline. The court treated “amounts collected” as a distinct category that can exist even when the fee was not substantively owed (because travel never occurred).
• § 44940(g): TSA “may refund” fees paid by mistake or in excess. This provision, read with (e), suggests Congress anticipated overcollection and assigned its correction to TSA’s refund discretion—not to airline self-help through retention or offsetting absent authorization.

This is a “custodial collection” model: airlines can hold the money only temporarily; once collected, it must flow to TSA, and any unwind depends on the refund mechanism.

2. Remittance obligation attaches to the airline’s choice to collect early

The court emphasized that although an airline may not be required to collect the fee until it is “imposed” (i.e., when a person becomes a passenger), Spirit chose to collect at point-of-sale. Under § 44940(e), that business practice triggers the mandatory remittance of the “amounts collected,” irrespective of later cancellation. This reasoning prevents airlines from converting a statutory remittance duty into an internal accounting option contingent on subsequent travel.

3. The “refund” question is governed by TSA’s 2002 guidance, and expired credits are not refunds

Having concluded § 44940 does not itself authorize Spirit to keep collected fees, the court narrowed the remaining issue to whether TSA permitted Spirit to treat its travel credits as refunds. TSA’s 2002 guidance addressed the scenario where a passenger “does not travel” and the ticket “expire[s]” with “no value.” The guidance allowed carriers to offset refunds against future remittances only when the carrier actually refunds the fee to the purchaser; otherwise “the fees must be remitted to or remain with” TSA.

The court reasoned that a “ticket that retains some value after cancellation is a credit by another name,” and because the guidance requires a refund after the credit expires, the expired credit itself cannot be the refund. Spirit’s attempt to characterize its cancellation fee computation as a “refund” (by applying credit immediately against the cancellation fee) failed for the same reason: a “credit that Spirit reclaims immediately is no more of a refund” than one reclaimed after 60 days.

4. Fair notice exists where the statutory default is clear and the guidance is publicly available

On due process, the court treated the statute as the primary notice source: § 44940(e) makes “amounts collected” payable and § 44940(g) places refunds within TSA discretion. The publicly docketed 2002 guidance reinforced that carriers cannot keep fees when passengers do not travel unless the carrier refunds the purchaser under the guidance’s terms. Spirit’s claim that it did not know of the guidance did not help; absent a known exception, the statutory default rule controls. Nor did prior audit silence create a safe harbor against the statute’s plain text.

C. Impact

1. Compliance consequences for airline ticketing, cancellations, and revenue recognition

The decision pressures airlines to align commercial cancellation practices with § 44940’s remittance-and-refund structure. In practical terms:

• If an airline collects the TSA fee at purchase, it must remit it on the statutory timetable even for later-canceled itineraries.
• If a passenger does not travel, an airline cannot treat an internal credit mechanism—especially one that expires and is recognized as revenue—as a “refund” that justifies retention or netting of the fee component.
• Airline accounting systems that breakage-recognize (unused credits) as revenue must segregate and exclude the TSA fee component unless and until an authorized refund is effectuated.

2. Litigation posture after Loper Bright Enters. v. Raimondo

The opinion illustrates how regulated parties may gain de novo judicial review of statutory meaning yet still lose where statutory text and structure support the agency. TSA’s win here did not hinge on interpretive deference; it hinged on the statute’s explicit “amounts collected” language and the discretionary refund design.

3. Administrative law: survivability of agency action under Chenery and “discernible path” review

The panel’s use of the “path may reasonably be discerned” approach signals that agencies need not write perfectly law-review-grade decisions to prevail, so long as the essential statutory hooks and reasoning are apparent from the decision record. Regulated parties should expect courts to sustain decisions where the statutory basis is evident, even if not exhaustively cited.

4. Due process/fair notice: public guidance plus clear statutory default reduces notice challenges

The court’s approach strengthens agency reliance on publicly docketed interpretive guidance for notice purposes, particularly when the guidance aligns with a clear statutory baseline and regulated entities are sophisticated repeat players. “We didn’t know the guidance existed” is unlikely to succeed where the statute itself directs the relevant conduct.

IV. Complex Concepts Simplified

• “Imposed” vs. “collected”: “Imposed” identifies who legally owes the fee (actual passengers). “Collected” describes money the airline has taken in as the fee. The statute makes “amounts collected” payable to TSA even if the person never becomes the kind of passenger who would ultimately owe the fee.
• Remit: To pay over to the government (TSA) what was collected.
• Refund discretion (“may refund”): The agency is permitted—but not required—to return overpaid funds, and it can set conditions for how refunds work.
• Travel credit “breakage”: The portion of issued credits that expires unused and is recognized as revenue by the issuer. The court treated retaining the TSA fee component within breakage as inconsistent with remittance duties.
• Fair notice doctrine: Due process can bar enforcement if a party lacked reasonable notice of what the law requires. Here, clear statutory text plus public guidance defeated the claim.
• Chenery principle (and its limit): Courts generally review agencies on the reasons the agency gave; however, a decision may be upheld if the agency’s reasoning path is reasonably clear even if not perfectly stated.

V. Conclusion

The Eleventh Circuit’s decision establishes a clear operational rule for the TSA security fee under 49 U.S.C. § 44940: once an airline collects the fee, it must remit it to TSA on schedule, regardless of whether the customer later travels, and any unwind is governed by TSA’s refund authority and conditions. Spirit’s practice of issuing short-expiration credits and recognizing unused credits as revenue—while retaining the embedded TSA fee component—did not constitute a refund and therefore could not justify non-remittance or offsets. The court also reinforced that regulated entities have fair notice where the statute’s text is plain and agency guidance is publicly available, even if the entity did not subjectively consult that guidance.