Southwest Leads The Charge

It's hard to be a low-cost airline when the cost of doing business keeps going up. That's especially true for the LCC pioneer, Southwest... which, like other carriers, faces government efforts to almost double the fees charged for security screening.

Southwest alone currently pays $26 million a year in screening fees, and the TSA wants to almost double that annual payment to $50 million. It's all part of a system-wide adjustment the government is pushing on the airlines.

The Street.com reports domestic carriers now pay $319 million a year for security screening... and if the government has its way, that cost would go up by about $104 million.

All told, airlines pay the government more than $3 billion a year for security services -- at a time when domestic carriers are losing a combined $40-billion over the past five years.

Southwest says the new security charge is "improper," was "completely unexpected" and "made without notice or opportunity to protest." The airline disclosed the change last week, when it reported its 2004 Q4 earnings of $86 million.

One Southwest lawyer says the company will do everything it can -- including suing the government, if necessary -- to fight the proposed increase, which stems from government claims the airlines haven't been paying their fair share.

Passengers already shoulder most of the burden in the current security payment structure, with passengers paying up to $5 per trip ($2.50 per flight segment) as part of security procedures implemented following the 9/11 attacks. Since then, the government has also required the airlines to pay the same charges they once did for private security screeners, although the program was now handled by the TSA.

"[Since 9/11] there has been consistent grousing from the TSA about the numbers reported by the airlines," said Southwest Legislative Counsel Tom Chapman. "The TSA has always maintained that the airlines under reported, although there have never been any specific examples. No one at TSA ever questioned our number, and in fact, some high-ranking folk at TSA and the Department of Transportation publicly praised Southwest for the thorough job we had done and the number we reported."

As far as the other airlines, the other six biggest US airlines say they haven't paid and haven't decided how they will respond.

"We have not paid the TSA's retroactive fee increase," said American Airlines spokesman Tim Wagner. "We are still exploring our options in regards to the increase."

Other carriers issued similar statements. Additional new charges include $14.9 million for Delta -- which that carrier, even more than most, can ill-afford to spend.

TSA spokesman Chris White wouldn't comment specifically on Southwest, but said the new charges are legitimate and resulted from impartial analysis from the GAO.

"They came up with their own independent numbers," said White. "We're trying to collect past-due amounts. The fee is a vital piece of our nation's security costs. The airlines have a cost to bear, the passengers have a cost to bear and the American people have a cost to bear."

The airline industry contends since 9/11, they have been singled out to shoulder most of that burden.

"The method TSA used to calculate the amount it claims carriers owe is inconsistent with Congressional intent," said Airline Transport Association President James May. "We strongly oppose TSA's action."

FMI: www.tsa.gov, www.airlines.org/home/default.aspx