Airlines Win Court Fight Over Fee-Disclosure Rule
5th Circuit strikes down Biden-era airline pricing transparency requirement.
(Washington, D.C.) Reuters reported on Tuesday (Feb. 3) that a federal appeals court overturned a U.S. Department of Transportation (USDOT) rule that would have required airlines to clearly disclose extra fees — such as baggage and service charges — during the ticket booking process.
Image of a JetBlue Airbus A320, a Southwest airlines Boeing 737 and an American Eagle Embraer ERJ-175 at La Guardia Airport in New York City on Jan. 9, 2024 courtesy of CHARLY TRIBALLEAU, AFP Via Getty Images via USA Today.
The ruling marks a major victory for airlines and industry trade groups that challenged the regulation, per Reuters.
The full U.S. Court of Appeals for the 5th Circuit found that USDOT failed to follow proper federal procedures when issuing the rule, reversing an earlier decision that had allowed it to move forward, according to Reuters.
The fee-disclosure rule was part of the Biden administration’s broader push to increase transparency in airline pricing and was finalized in April 2024. Major carriers including American Airlines (NASDAQ: AAL), United Airlines (NYSE: UAL), Delta Air Lines (NYSE: DAL), JetBlue (NASDAQ: JBLU), and Alaska Airlines (NYSE: ALK), along with industry groups Airlines for America and the International Air Transport Association, filed suit to block the regulation. Justia U.S. Law reports that the airlines argued USDOT lacked the legal authority to impose such detailed pricing requirements.
Justia also notes that while an earlier three-judge panel said the department had some authority to regulate unfair or deceptive practices, it raised concerns about how the rule was created. The full appeals court went further, vacating the regulation and removing the fee-disclosure requirement for now.
Supporters of the rule said it would have helped travelers avoid surprise charges, with USDOT previously estimating that passengers overpaid by hundreds of millions of dollars each year under current fee practices. However, Reuters reports that the court ultimately sided with airline industry concerns over the department’s rulemaking process.
