Biden administration rule for airline fees halted by federal court

A U.S. Department of Transportation regulation requiring airlines to more transparently disclose add-on fees appears to be in peril.

On Monday, a panel of federal judges temporarily halted the Biden administration's new regulation, noting that they felt the rule "likely exceeds DOT's authority and will irreparably harm airlines."

The decision, made by the 5th U.S. Circuit Court of Appeals, means airlines can hold off on making sweeping changes in how they display prices, fees and fare rules — at least until the case is resolved.

Price transparency regulation

Under the rule, first unveiled in April, airlines and third-party ticket sellers would have to immediately disclose crucial ancillary charges the first time a flight's price is displayed.

Set to take effect in late April 2025, the new guidelines would force carriers to disclose ancillary charges more clearly, such as those for first and second checked bags, full-size carry-on bags, and change and cancellation fees. These would have to be displayed when a customer first sees a fare.

Airlines would also have to use DOT boilerplate language to ensure passengers understand that they're entitled to a seat on a flight, even if they don't pay for seat selection.

Airlines, lobbying groups sue

A group of six U.S. airlines and the industry's top U.S. lobbying group swiftly sued the Biden administration, calling it a "bad solution in search of a problem" and one that would "confuse customers," and argued that the measure went beyond the DOT's authority. Alaska Airlines, JetBlue and industry lobbying groups Airlines for America and the International Air Transport Association joined the three legacy U.S. carriers (American Airlines, Delta Air Lines and United Airlines) in the suit.

The lawsuit made "a strong showing that the Rule exceeds DOT's authority," the judges wrote Monday. They also agreed to put the DOT's regulation on hold until a final outcome is reached.

Transportation Secretary Pete Buttigieg vowed to continue the DOT's push for price transparency changes despite Monday's appeals court ruling.

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"The airline industry lobby is trying to tie this up with lawsuits, but we will not back down from protecting passengers," Buttigieg wrote on the social media platform X. "Airlines are simply wrong to argue that merely having to disclose their fees would 'irreparably harm' them."

The Biden administration has taken a harder line with airlines to protect consumers as part of a larger fight against "junk fees." This includes issuing stricter refund rules that were recently codified in the Federal Aviation Administration reauthorization bill passed by Congress in May. The DOT also rolled out a dashboard in 2022 that transparently displays guarantees airlines have made to passengers in past events of cancellations or significant delays within carriers' control.

The status quo remains — for now

While the ultimate fate of the DOT's upfront pricing rule technically still hangs in the balance, its current suspension means it won't take effect anytime soon.

That means you should continue to look closely at the fare rules of any flight you book, checking for everything from extra fees for full-size carry-on bags and seat selection to other ancillary charges found on some budget carriers, such as extra fees for printing a boarding pass or speaking with a customer service agent in person.

It is worth noting that a host of airlines — including budget carriers — have already done away with some ancillary charges long lamented by passengers.

JetBlue, for instance, recently announced it would allow even basic economy ("Blue Basic") customers to bring a full-size carry-on bag on board with no extra charge. Spirit Airlines and Frontier Airlines have both ditched change and cancellation fees for most tickets, and Frontier announced sweeping changes to how it presents fees, fares and its ancillary bundles — though the carrier's CEO noted this spring that the move was not motivated by the DOT.

However, it's worth noting that most major U.S. airlines hiked checked bag fees during the first half of 2024. In fact, according to data from the U.S. Department of Transportation, they collectively made more than $7 billion in 2023 just from checked baggage.

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