Hahn Air: Passenger Fees Collected, Government Payments Missing

The Hahn Air passenger fee False Claims Act settlement totaled $26.8 million and resolved allegations that the company collected government travel fees from passengers but knowingly failed to pass them on. The government’s claim began with money passengers had already paid. For someone in ticketing or revenue accounting, the question is where that money went after collection and who decided what reached the government.

The Justice Department announced the settlement on May 2, 2024, with Hahn Air Lines GmbH, a privately owned German company, and its Minneapolis-based subsidiary, Hahn Air USA Inc. The agreement says the Minnesota office transacted business throughout the United States on behalf of Hahn Air Lines GmbH. The allegations concerned fees collected from commercial airline passengers flying into or within the United States. A whistleblower brought the case under the False Claims Act.

How Hahn Air Divided the Ticket Money

Hahn Air’s electronic ticketing business put it between travel agencies, the airlines carrying passengers and government agencies owed fees. Its settlement agreement describes the arrangement: travel agencies worldwide could issue passenger tickets through its database for travel on airlines with which Hahn Air had interline agreements. Hahn Air Lines GmbH collected the airfare, taxes and fees associated with those tickets.

The money then split. Hahn Air remitted airfare and certain interlineable fees to the partner airlines that transported passengers. It kept a service fee for itself, while retaining other taxes and fees for remittance to government entities around the world, including the United States. The agreement describes those government amounts as non-interlineable fees.

That distinction is the heart of this case for a revenue-accounting employee. The service fee was Hahn Air’s compensation, while the government fees were collected to be passed along. Both could stay with the intermediary when the partner airline was paid, but they had different destinations. An insider who knows how the ticket money was divided may be able to explain a shortfall that the airline’s payment record alone would not show.

The Passenger Fees and Agencies Owed

The government alleged that Hahn Air knowingly avoided or reduced its obligation to transmit four categories of passenger fees. Its settlement agreement names the fees and the agencies owed:

• Agricultural Quarantine and Inspection User Fees: owed to the Agriculture Department’s Animal and Plant Health Inspection Service.
• Customs User Fees: owed to U.S. Customs and Border Protection.
• Immigration User Fees: also owed to Customs.
• Passenger Civil Aviation Security Service Fees: owed to the Transportation Security Administration.

For the agricultural, customs and immigration fees, the allegations cover January 1, 2012 through December 31, 2017. The passenger-security allegations start on the same date but extend through January 31, 2018. In both groups, the government said Hahn Air had already collected the fees through third-party ticket agents from passengers purchasing Hahn Air tickets.

For an accounting insider, the fee’s identity matters as much as the total collected. A combined travel-fee total can obscure the question the agreement separates: which agency was owed which money, and did that money reach it?

The Settlement Credited Earlier Remittances

The settlement amount included $16,083,192 in credit for remittance payments Hahn Air had already made to the United States. The agreement required a remaining payment of $10.7 million. The headline settlement included earlier transfers, not just a new payment. For an insider looking at collection and payment records, those earlier transfers belong in the money trail alongside the unpaid amounts the government alleged.

The Justice Department’s Civil Division and the U.S. Attorney’s Office for the District of Columbia obtained the resolution, with assistance from the Homeland Security and Agriculture departments’ Offices of Inspector General. The whistleblower who brought the qui tam case was to receive approximately $4.8 million, according to the settlement announcement. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

What Evidence Is Needed to Prove Fraud?

For a passenger-fee case, we look for the connection between a fee collected, the company’s obligation to transmit it and what the people responsible knew about the payment. Hahn Air’s agreement gives that inquiry a concrete business setting: ticket agents collected passenger money, the intermediary divided the proceeds, and government agencies were owed particular fees.

A ticketing employee may recognize the fee attached to a transaction. Someone handling partner-airline settlements may know which amounts went to the carrier and which stayed behind. A revenue-accounting employee may know how retained fees were tracked and whether a reconciliation showed amounts still owed.

We would examine the ticket’s fee detail against the intermediary’s allocation, the remittance calculation and the government payment record. We also need to know which entity was responsible for transmitting each amount. If you know of an internal reconciliation or an instruction about retaining fees, that may help connect the collection to what the company knew about the unpaid obligation. Your knowledge of how the business actually moved the money gives those records their meaning.

Government Money a Company Never Pays

Hahn Air’s reverse false claims case concerned money owed to the government. The government alleged that the company knowingly failed to transmit that money. The passenger-fee obligation arose in a ticketing business, with funds collected from customers for government agencies.

That is the connection to customs fraud involving unpaid duties: the government is missing money that should have arrived. Hahn Air adds a distinct transaction to that picture. The commercial payment comes from the passenger, and the alleged shortfall occurs in the intermediary’s onward payment to the government.

You Know Where the Ticket Money Went

If you work in ticketing, travel distribution or revenue accounting and know that government fees were collected but withheld, talk with our whistleblower experts about the payment trail you can explain. We build the case around the transactions you know and bring in payment-fraud whistleblower lawyers who understand obligations to remit government money. From the first conversation through the case, we stay beside you to build your strongest passenger-fee whistleblower case.