Major U.S. airlines are initiating legal action against a new rule from the U.S. Transportation Department that mandates upfront disclosure of airline fees, marking the latest clash between air carriers and the Biden administration.
The industry's lobbying group, Airlines for America, along with American Airlines, Delta Air Lines, United Airlines, JetBlue Airways, Hawaiian Airlines, and Alaska Airlines, filed a lawsuit in the U.S. Fifth Circuit Court of Appeals in Louisiana late on Friday, as per a copy of the suit seen by Reuters.
The Transportation Department recently issued final rules requiring airlines and ticket agents to disclose service fees alongside airfares, arguing that it would assist consumers in avoiding unexpected fees. However, the airline group contends that the rule would cause confusion among consumers and asserts that the department is exceeding its authority by attempting to regulate private business operations in a competitive market.
The airlines' lawsuit characterizes the rule as "arbitrary, capricious, an abuse of discretion, and otherwise contrary to law."
In response, the Transportation Department stated that it "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 department estimates that consumers overpay $543 million in fees annually, with airlines benefitting from passengers' surprise fees.
To address these concerns, the rule mandates that fees for baggage or flight changes must be disclosed the first time fare and schedule information is provided on an airline's online platform, without the use of hyperlinks. It also aims to prevent airlines from using "bait-and-switch tactics" by advertising discounts off a low base fare that excludes mandatory carrier-imposed fees.
Southwest Airlines, which expressed support for certain aspects of the rule, did not join the lawsuit.
The airlines collected nearly $6.8 billion in baggage fees in 2022 and $5.5 billion in the first nine months of 2023. The rule also requires airlines to inform consumers that seats are guaranteed and not required to be purchased separately, with a notice stating: "A seat is included in your fare. You are not required to purchase a seat assignment to travel."
Despite this legal challenge, the airlines have not contested a separate rule finalized by the Transportation Department last month that would require automatic cash refunds for canceled flights when passengers choose not to rebook. President Joe Biden supported this mandate, aiming to protect passengers from surprise fees and delays in refunds.