Thursday, March 12, 2015

Airlines Have Standing to Challenge TSA Fee, But Lose on Merits

The D.C. Circuit ruled this week that airlines have standing to challenge a TSA fee charged to passengers, because the fee, built into the price of an airline ticket, increases the net price for tickets and thus reduces demand. But the court went on to rule against the airlines on the merits.

The airlines in Airlines for America v. TSA challenged a TSA rule implementing a statutory fee designed to cover the cost of screening passengers. Airlines collect the fee as part of the ticket price and pass the proceeds along to TSA. The airlines challenged the rule as it applies to passengers whose travel begins abroad but includes a connecting flight within the United States.

TSA argued that the airlines lacked standing. But the court disagreed. The court said that the airlines were harmed by the fee (even if minimally), because it jacked up the ticket price and thus reduced demand:

We recognized . . . the basic proposition that "increasing the price of an activity . . . will decrease the quantity of that activity demanded in the market." . . . TSA has given no reason to suspect that any . . . exception is applicable here. Thus, the security fees injure the airlines by increasing the net price for airline tickets and reducing demand for those tickets. . . .

While the impact on demand is likely to be modest, the direction of change in demand is clear (downward). . . . [T]he court's duty to refrain from merits rulings until assured of jurisdiction . . . does not mandate an econometric study of the exact quantity of change. And, as the injury is inferable from generally applicable economic principles rather than from any special circumstances, it is sufficiently "self-evident" that we require "no evidence outside the administrative record."

But the court went on to rule against the airlines on the merits. In short, the court said that the statute, which sets the security fee at "$5.60 per one-way trip in air transportation or intrastate air transportation that originates at an airport in the United States," allows TSA to collect the fee for travel that begins abroad and connects in the United States (for example, from Paris to New York with a connection to Chicago).

https://lawprofessors.typepad.com/conlaw/2015/03/airlines-have-standing-to-challenge-tsa-fee-but-lose-on-merits.html

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