Major airlines and an industry trade association requested a federal appeals court to block a new Department of Transportation rule mandating upfront disclosure of additional fees when booking flights.
Airlines Opposing Fee Disclosure
The trade group Airlines for America, Alaska, American, Delta, Hawaiian, JetBlue, and United Airlines, who act as challengers, contend that the Department of Transportation overstepped its legal bounds when it issued the rule in late April. The petition that was submitted to the US Fifth Circuit Court of Appeals last Friday for review has also been described as "arbitrary, capricious," and an "abuse of discretion."
Airlines for America expressed in a statement to CNBC on Monday that the rule will confuse consumers and complicate the buying process. They asserted that airlines already provide consumers with full disclosure of all fees associated with air travel before ticket purchase. They argued that the Department of Transportation's (DOT) attempt to regulate private business operations in a thriving marketplace exceeds its authority and that its ancillary rule was a flawed solution in search of a problem.
Biden's Airline Fee Disclosure
The airline fee disclosure rule was introduced by the Biden Administration in September 2022. Under this rule, airlines and online travel agencies are mandated to disclose fees for seat selection, checked baggage, and other add-ons upfront, together with the airfare, instead of adding the costs at checkout based on a customer's selections to strengthen passenger protections following a turbulent summer travel season.
Airlines now charge travelers for additional perks previously included in the ticket price, such as advanced seat selection fees, even for seats without extra legroom. During a speech at a White House Competition Council meeting, the president detailed the Transportation Department's newly proposed rules, emphasizing that everyone should know the total ticket cost right when comparing shopping.
Transportation Secretary Pete Buttigieg stated in a news release that the proposed rule would require airlines to be transparent with customers about the fees they charge to help travelers make informed decisions and save money.
However, Airlines for America, representing major US carriers, countered that airlines are already transparent regarding ticket fees. They emphasized that A4A member passenger airlines, despite being competitors, already provide transparency to consumers throughout the entire booking process. They further stated that US airlines are dedicated to delivering high-quality service, encompassing prices, fees, and clarity of ticket terms.
Carriers and online travel agencies have revamped their websites in recent years to emphasize the specifics of basic economy tickets, which are the airlines' most restrictive but also cheaper fares. Airline executives have expressed their desire for passengers to opt for more flexible standard economy fares instead of these primary economy tickets.
The Biden administration's proposal comes less than two months after the Transportation Department sought stricter standards for when airlines are obligated to refund travelers for delays.
