Major U.S. Airlines Challenge Biden Administration’s Fee Disclosure Rule in Court

Major U.S. airlines are suing the U.S. Transportation Department over a new rule requiring upfront disclosure of airline fees, marking the latest clash between air carriers and the Biden administration. The lawsuit was filed by Airlines for America, a trade group representing major U.S. airlines, along with American Airlines, Delta Air Lines, United Airlines, JetBlue Airways, Hawaiian Airlines, and Alaska Airlines.


The U.S. Department of Transportation (USDOT) issued final rules last month requiring airlines and ticket agents to disclose service fees alongside the airfare, stating that it would help consumers avoid unneeded or unexpected fees. The department believes that the new rule would result in many consumers paying less for fees when traveling by air. The agency estimates that consumers are overpaying $543 million in fees annually, and airlines are getting that additional revenue from consumers who are surprised by fees and then need to pay a higher fee at the airport to check a bag.


However, the airline group argues that the department's rule would confuse consumers and that its attempt to regulate private business operations in a thriving marketplace is beyond its authority. The airlines' lawsuit calls the rule "arbitrary, capricious, an abuse of discretion and otherwise contrary to law". They believe that airlines already provide consumers with complete disclosure of all fees associated with air travel before they purchase a ticket. The rule also requires airlines to inform consumers that seats are guaranteed and that they are not required to pay extra. The department also said the rule will end "bait-and-switch tactics some airlines use to disguise the true cost of discounted flights." It prohibits airlines from advertising promotional discounts off a "low base fare that does not include all mandatory carrier-imposed fees".

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Interestingly, Southwest Airlines, which expressed support for provisions in the USDOT proposal, did not join the lawsuit. U.S. airlines collected nearly $6.8 billion in baggage fees in 2022, and $5.5 billion in the first nine months of 2023. This lawsuit represents a significant development in the ongoing tension between the airline industry and the Biden administration. The outcome of this legal battle could have far-reaching implications for the way airlines operate and how consumers are informed about the costs associated with air travel. As this situation continues to unfold, it will be interesting to see how the courts rule and what impact this will have on the airline industry and consumers alike.

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