Appeals court blocks US airline fee disclosure rule By Reuters

By David Shepardson

WASHINGTON (Reuters) -A U.S. appeals court on Monday blocked the U.S. Transportation Department’s new rule requiring upfront disclosure of airline fees pending a full review of the regulation.

The DOT issued final rules in April requiring airlines and ticket agents to disclose service fees alongside the airfare, saying it would help consumers avoid unneeded or unexpected fees.

The court decision is a significant setback for the Biden administration that has taken a hard line on airline fee practices over the last three years.

A three-judge panel of 5th U.S. Circuit Court of Appeals granted the industry’s request to temporarily block the rules saying it “likely exceeds DOT’s authority and will irreparably harm airlines.” The court said the case would be scheduled for a hearing at the next available oral arguments hearing.

Major carriers including American Airlines (NASDAQ:), Delta Air Lines (NYSE:), United Airlines and others joined by trade group Airlines for America filed suit in May to block the rules that were to require carriers to disclose fee data to third-party ticket agents by Oct. 30 and on their own websites by April 30, 2025.

The industry argued the rule would require airlines to “spend millions to reengineer their websites, diverting resources from other projects.”

The airline group and DOT did not immediately comment Monday.

Transportation Secretary Pete Buttigieg has recently said he has concerns about the refund practices of airlines — notably Delta Air Lines — after cancellations triggered by a software update by global cybersecurity firm CrowdStrike (NASDAQ:) caused system problems for Microsoft (NASDAQ:) including many airlines.

DOT said in April consumers are overpaying $543 million in fees annually, and airlines are getting that additional revenue from consumers who are surprised by fees and “then need to pay a higher fee at the airport to check a bag.”

Major airlines charge higher fees to check bags if travelers do not pay in advance or wait until the time of the flight. Earlier this year, many large U.S. airlines boosted fees for checked baggage.

DOT also said the rule would end “bait-and-switch tactics some airlines use to disguise the true cost of discounted flights.” It prohibits airlines from advertising promotional discounts off a “low base fare that does not include all mandatory carrier-imposed fees.”

U.S. airlines collected $7.1 billion in baggage fees in 2023, up from $6.8 billion in 2022.