A U.S. appeals court on Tuesday blocked the Department of Transportation’s (USDOT) regulation requiring upfront disclosure of airline service fees, which was set to take effect in 2024, citing procedural errors. While the ruling acknowledged that the department has the authority to regulate “unfair or deceptive practices” by airlines, it emphasized that USDOT failed to submit a study on fee disclosure rules for airline industry review, thereby violating procedural requirements.
Rule Sent Back for Review
The court sent the regulation back to the Department of Transportation, giving it an opportunity to correct the procedural issue and reassess the rule. USDOT has not yet announced whether it will proceed with the regulation. The rule would have required airlines and ticket agents to disclose all service fees alongside ticket prices. However, following lawsuits from airlines and trade groups, the rules were put on hold pending legal review.
Airlines Support the Decision
American Airlines and other major carriers welcomed the court’s decision. American Airlines argued that the regulation would “unnecessarily complicate the consumer purchasing process with excessive information.” Industry representatives also claimed that the regulation would impose millions of dollars in costs to redesign airline websites.
USDOT and Consumer Complaints
The Department of Transportation justified the regulation by stating that its goal was to “protect consumers from unnecessary or unexpected fees.” The agency reported that in 2023, passengers paid an extra $543 million due to unexpected baggage fees. Additionally, major airlines generated a total of $7.1 billion in baggage fee revenue last year, a significant increase from $6.8 billion in 2022.
USDOT also stated that the rule aimed to eliminate certain “bait-and-switch tactics” used by some airlines to obscure the true cost of discounted flights.
Future Debates
With the fate of the regulation still uncertain, some U.S. senators have launched an investigation into whether low-cost airlines are manipulating seat prices. This development is expected to further intensify debates over competition and transparency in the airline industry.
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