Appeals court blocks US airline fee disclosure rule

By David Shepardson

WASHINGTON (Reuters) -A U.S. appeals court on Monday blocked a new U.S. Department of Transportation rule that requires advance 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 along with the airfare, saying this would help consumers avoid unnecessary or unexpected fees.

The court ruling is a significant setback for the Biden administration, which has taken a hard line on airline tax practices over the past three years.

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

Major airlines, including American Airlines, Delta Air Lines, United Airlines and others joined by trade group Airlines for America, sued in May to block rules requiring airlines to disclose rate data to third-party ticket agents until October 30th onwards. their own websites by April 30, 2025.

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

The airline group and DOT did not immediately comment Monday.

Transportation Secretary Pete Buttigieg recently said he is concerned about the refund practices of airlines — particularly Delta Air Lines — after cancellations triggered by a software update from global cybersecurity firm CrowdStrike caused system problems for the airline. Microsoft, including many airlines.

The DOT said in April that consumers are overpaying more than $543 million in fees annually, and airlines are earning this additional revenue from consumers who are surprised by the fees and “then have to pay a higher fee at the airport to check in.” baggage.”

Major airlines charge higher fees to check bags if travelers don’t pay in advance or wait until their flight time. Earlier this year, many major U.S. airlines raised fees for checked baggage.

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

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 Sandra Maler and Michael Perry)