The United States Court of Appeals for the Eleventh Circuit has ruled that Spirit Airlines (NK, Fort Lauderdale International) must remit passenger security fees to the Transportation Security Administration (TSA), even when customers do not travel, rejecting the airline’s petition.

Following an audit, the TSA determined that Spirit had under-remitted fees by retaining the security fee component of expired credits, resulting in a liability of about USD2.84 million. The court upheld this finding, concluding that expired credits cannot be treated as refunds and that the airline had clear notice of its obligations under current statute and prior guidance.

In addition, the court stated that, under US law, airlines are required to pass on all collected security fees to the TSA unless they are refunded directly to passengers. To this effect, Spirit’s practice of issuing time-limited travel credits, which expired unused and were retained as revenue, did not qualify as a refund.

Spirit Airlines, which is currently under Chapter 11 bankruptcy protection, was not immediately available for comment.