Appeals Court Blocks Airline ‘Junk Fee’ Rule
Skift Take
Key Points
- A U.S. appeals court struck down the DOT's rule requiring airlines to disclose all fees upfront, citing overreach.
- Airlines argued the rule would create confusion and incur high costs, leading to a lawsuit.
- Despite the ruling, the DOT continues to push for consumer protection against surprise fees.
Summary
A U.S. appeals court blocked the Department of Transportation's rule mandating airlines to disclose all fees upfront, including those for checked baggage and reservation changes. The court ruled that the DOT likely exceeded its authority, prompting a review. Airlines argued the rule would create confusion and incur high costs. Despite the setback, the DOT remains committed to protecting consumers from surprise fees. Additionally, airlines have raised prices for ancillary services like checked baggage, citing higher operating costs.
A U.S. appeals court struck down the Department of Transportation’s rule that would require airlines to disclose all fees upfront, pending a full review of the rule.
The DOT released a final rule in April that would mandate airlines to disclose “junk fees” associated with purchasing airfare. Airlines and ticketing agencies would have to inform passengers of the fees associated with checked baggage, carry-ons, along with changes and cancellations to a reservation.
Airlines would also need to end “bait-and-switch” discount practices, prohibiting carriers from advertising a discount that’s based solely off low airfare and doesn’t disclose other mandatory fees.
A three-judge panel on the Fifth Circuit Court of Appeals said Monday that the rule “likely exceeds the DOT’s authority and would irreparably harm airlines.”
The case will be heard during the next available oral argument panel, the ruling said.
“DOT will continue defending our rule that protects consumers from surprise fees that can unexpectedly jack up the price of air travel,” the DOT said in a statement. “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.”
Transportation Secretary Pete Buttigieg said the department "will not back down."
An Overreach for the DOT?
Airlines for America, along with American, Delta, United, JetBlue and Hawaiian filed a lawsuit against the DOT over the junk fee rule in May, arguing that the junk fee rule was a regulatory overreach that would create more confusion for customers.
Airlines for America also argued that carriers would need to “spend millions” to update their websites, diverting resources away from other initiatives.
The appeals court said that only Congress could give the DOT the authority to institute such a rule, and the current FAA Reauthorization Act makes no mention of disclosing junk fees.
The lawsuit didn't concern automatic refunds, which were also part of the DOT's final rule in April. Automatic refunds are mentioned in the latest iteration of the FAA bill.
The ruling is a major setback for the Biden administration, which has taken a hawkish stance when it comes to passenger rights. Under President Joe Biden, the DOT also created a passenger rights dashboard and has been pushing airlines to guarantee free family seating.
Airlines Raise Checked Baggage Fees
The department’s crackdown on fee disclosures also comes as airlines have started raising prices for some ancillary services, like checked baggage. American, United, JetBlue and Frontier have raised checked baggage prices, citing the need to keep up with higher operating costs.
Airlines made around $7.1 billion from baggage fees in 2023, an increase from $6.8 billion in 2022, according to DOT data. The DOT argued that the junk fee disclosure rule would save passengers $543 million per year.
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Photo Credit: American Airlines, a member of the trader group A4A, was one of the carriers that filed the lawsuit against the DOT's junk fee rule. American Airlines / American Airlines
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