OP holds a US passport issued by the US State Dept. Right or wrong, the US State Dept can determine the validity of its own documents and may have done so incorrectly here. But, the GA / local manager isn't an international lawyer and, to be frank, if I were in the same situation as the GA / local manager, I would not rely on a document issued by an industry group such as IATA over one issued by the document-issuer itself. The best OP can hope for is a refund and more likely a credit voucher as a matter of customer service. That is only likely to occur if he speaks with the right person and they are moved.