An appeals court has agreed with airlines that new government rules about fee transparency could harm the aviation industry and has paused their implementation pending a full review.
At issue were regulations from the Department of Transportation (DOT), finalized in April, which require carriers to be upfront with consumers about additional fees, such as for checked and carry-on bags, seat assignment, and itinerary changes.
The DOT said rules would end the “bait-and-switch tactics some airlines use,” in which low base fares are advertised without additional charges included, and save consumers $543 million annually in unexpected fees.
Airlines Object
Airlines objected, with lobbying group Airlines for America (A4A) arguing that fee disclosure would “greatly confuse consumers who will be inundated with information that will only serve to complicate the buying process.”
“U.S. airlines care deeply about the customer purchasing experience from first search to final purchase and invest heavily in their websites and mobile apps to ensure both transparency of all costs and ease of use for each customer with a purchase path tailored to that customer’s specific choices,” the group said in May.
Photo: Courtesy of Denver International Airport.
Additionally, it argued that the rules were redundant because “airlines engage in competitive advertising and emphasize ancillary fee discounts and benefits when they promote their loyalty programs.”
A4A, representing most major U.S. airlines, including American, Delta, United, JetBlue, Southwest, and Alaska, sued the DOT over the rule in the 5th Circuit Court of Appeals in Louisiana.
Their suit alleged that the regulation “exceeds the department’s authority” and is “arbitrary, capricious, an abuse of discretion, and otherwise contrary to law.”
On Monday, a panel of three judges agreed with A4A and ruled that the fee transparency rule “likely exceeds the DOT’s authority and would irreparably harm airlines.”
The court stated that it had received “ample evidence” from airlines regarding the potential harm they could face if the rules were enforced as planned from next April. The court has temporarily halted the rule’s implementation and has indicated that it will prioritize the airlines’ petition for a review of the regulations. The case will be heard at the next available oral argument panel.
Buttigieg’s Response
Transportation Secretary Pete Buttigieg said the DOT would continue fighting for fee transparency. In a post on X, formerly known as Twitter, he said: “The airline industry lobby is trying to tie this up with lawsuits, but we will not back down from protecting passengers.”
“Airlines are simply wrong to argue that merely having to disclose their fees would ‘irreparably harm’ them. It’s common sense.”
Photo: Courtesy of Denver International Airport.
In a statement, the Department of Transportation said it “will continue defending our rule that protects consumers from surprise fees that can unexpectedly jack up the price of air travel.”
“Nothing in the Court’s decision prevents airlines from voluntarily complying with this common sense rule that simply requires them to keep their customers fully informed when buying a plane ticket,” it added.
Setback for Biden Administration
The ruling is a setback for the Biden administration, which has championed consumer rights, especially in the aviation sector.
Another new regulation from the Department of Transportation now requires airlines to issue automatic, prompt refunds to travelers whose flights are canceled or significantly delayed.
Previously, airlines set their rules about redress, confusing consumers about when they were entitled to their money back. Travelers were also often required to chase airlines for refunds by filling out online forms or calling customer service lines. Airlines have not challenged these rules.