Airlines win challenge to appeals court ruling on consumer fee disclosures

By David Shepardson

WASHINGTON, Feb 3 (Reuters) – A federal appeals court on Tuesday agreed to set aside its ruling last year that the U.S. Transportation Department had authority to require airlines to ‍fully disclose fees upfront when passengers book flights.

The 5th U.S. Circuit Court of Appeals in New Orleans in an en banc decision vacated the USDOT rule and reversed a January 2025 decision by a three-judge panel, which had sent the rule back to USDOT but had blocked its enforcement.

Major airlines challenged ‌a consumer-friendly rule issued in April 2024 during the ‌Biden administration, which required airlines and ticket agents to disclose “ancillary fees” such as baggage charges during the booking process arguing federal law gave the Transportation Department no power to issue such rules.

The appeals court last year said USDOT ​had authority to write rules on unfair or deceptive practices by airlines but said the department had not complied with procedural rules ‍and sent it back to USDOT for ​review.

The Trump administration has taken other steps to abandon ​Biden administration airline consumer protection initiatives, including requiring passenger compensation for flight delays ‍caused by carriers.

American Airlines United Airlines Delta Air Lines  JetBlue and Alaska Airlines , along with trade groups Airlines for America and the International Air Transport Association, had argued the regulation would “upend the way airlines interact with their customers, at great cost, and with no demonstrated benefit.” Airlines ‍for America declined to comment.

Regulations issued by USDOT in April 2024 required airlines and ticket agents to disclose service fees alongside airfares to help consumers avoid unneeded ‍or unexpected fees. ‍In 2024, USDOT said consumers were overpaying $543 million in ​fees annually, generating additional revenue for airlines from passengers ​surprised ⁠by having to pay a “higher fee at the ‌airport to check a bag.”

Major airlines charge higher baggage fees if travelers do not pay in advance or wait until flight time. Several U.S. airlines boosted fees in 2024 for checked baggage. U.S. airlines collected $7.3 billion in baggage fees in 2024, up from $7.1 billion in 2023.

(Reporting by David Shepardson in Washington, Editing ⁠by Nick Zieminski)