U.S. appeals court blocks airline fee disclosure rule
Adds airlines decline comment, department comment; paragraphs 7,8
By David Shepardson
WASHINGTON, July 29 (Reuters) -A U.S. appeals court blocked on Monday the U.S. Transportation Department's new rule on upfront disclosure of airline fees pending a full review of the regulation, dealing a significant setback to the Biden administration.
Final rules issued by the DOT in April required airlines and ticket agents to disclose service fees alongside the airfare, in a move to help consumers avoid unneeded or unexpected fees, as part of an effort to tackle such fees over the last three years.
However, the rule "likely exceeds DOT's authority and will irreparably harm airlines", a three-judge panel of the Fifth U.S. Circuit Court of Appeals said, while granting the industry's request for a temporary block.
The case will be scheduled for a hearing at the next available session for oral arguments, it added.
American Airlines AAL.O, Delta Air Lines DAL.N, United Airlines UAL.O, JetBlue JBLU.O, Alaska Airlines ALK.N were among the airlines, joined by trade group Airlines for America and the International Air Transport Association, which sued in May to block the rules.
The rules set carriers an Oct. 30 deadline to disclose fee data to third-party ticket agents, and on their own websites by April 30, 2025.
The industry said the rule would require airlines to "spend millions" to re-engineer their websites, diverting resources from other projects.
The airline group declined to comment on Monday's ruling.
A DOT spokesperson said it would continue to defend the rule, adding, "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."
Transportation Secretary Pete Buttigieg has recently voiced concern about the refund practices of airlines - notably Delta Air Lines DAL.N - after cancellations triggered by a software update by global cybersecurity firm CrowdStrike CRWD.O caused system problems for Microsoft MSFT.O, including many airlines.
In April, DOT said consumers were overpaying $543 million in fees annually, generating additional revenue for airlines from passengers surprised by fees who found they needed to pay a "higher fee at the airport to check a bag."
Major airlines charge such higher fees if travelers do not pay in advance or wait until flight time. Many large U.S. airlines boosted fees this year for checked baggage.
The rule would end "bait-and-switch tactics some airlines use to disguise the true cost of discounted flights," added the DOT, which bars airlines from advertising promotional discounts off a low base fare that excludes mandatory carrier fees.
U.S. airlines collected $7.1 billion in baggage fees in 2023, up from $6.8 billion in 2022.
Reporting by David Shepardson; Editing by Michael Perry and Clarence Fernandez
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
