Airlines sue U.S. Transportation Department over charge disclosure mandate

Numerous airlines are slamming the U.S. Department of Transportation over its mandate requiring them to more clearly display so-called hidden “junk fees” and have filed a lawsuit challenging the new rule.

The DOT mandate finalized on April 24 would require travel agents and airlines to disclose upfront if customers are going to be charged for reservation changes, flight cancellations, or baggage-check fees. Airlines would also have to show any extra costs on the web page where they show price quotes for flights. The rule would help save airline customers over $543 million annually, according to the DOT, and is scheduled to go into effect on July 1.

U.S. airline lobbying group Airlines for America and airlines United, American, Delta, JetBlue, Alaska, and Hawaiian filed the lawsuit challenging the rule on Friday at the 5th U.S. Circuit Court of Appeals. It argues that the rule “exceeds the Department’s authority” and “that it is arbitrary, capricious, an abuse of discretion, and otherwise contrary to law.”

Airlines for America argued the agency’s mandate will “greatly confuse consumers who will be inundated with information that will only serve to complicate the buying process,” the industry trade group told Fortune in a statement. “The DOT ancillary rule is a bad solution in search of a problem.” 

The DOT is refuting Airlines for America’s claims, saying airline customers will be disappointed by its attempt to remove transparency from the flight booking process.

“We will vigorously defend our rule protecting people from hidden junk fees and ensuring travelers can see the full price of a flight before they purchase a ticket,” the DOT told Fortune in a statement. 

Changes years in the making

U.S. democrats have led the charge to stymie rising airline fees for years, with Sens. Edward J. Markey and Richard Blumenthal introducing the Forbidding Airlines from Imposing Ridiculous (FAIR) Fees Act in 2016 and then reintroducing it three years later, arguing that fees were essentially airlines profiteering during a time of lower fuel costs and success across the aviation industry.

President Joe Biden has tried since the beginning of his term to cement rules on airlines’ hidden fees, particularly after those fees rose exponentially over the past two decades. Per a fact sheet from the FAIR Fees Act of 2019, the 10 largest global airlines raked in $35.2 billion in fees in 2018, compared to just $1.2 billion in 2007. The issue became even more urgent during the pandemic, when travelers concerned about sharing cabin space grew more sensitive to seat selection fees. The DOT introduced a rule in July 2021 that would require refunds for defunct online internet and severely delayed baggage.

In addition to saving customers’ money, the Biden administration argued increased transparency would help grow competition in the aviation industry. Airlines for America said the need to boost competition was unnecessary and “robust competition in the U.S. airline industry has generated unprecedented levels of affordability and accessibility, benefiting the customer at every level.”

“My administration is also cracking down on the airlines,” Biden said in September 2022. “You should know the full cost of your ticket right when you’re comparison shopping to begin with where you’re — what airline you’re going to fly with so you can pick the ticket that actually is the best deal for you.”

Pressure mounted on airlines when 40 state attorneys general signed a letter to Congress that same month, demanding legislation to crack down on hidden costs.

“Americans are justifiably frustrated that federal government agencies charged with overseeing airline consumer protection are unable or unwilling to hold the airline industry accountable and to swiftly investigate complaints,” the letter said.

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