American Airlines Take Regulator To Court Over New Fee Rules

Airlines in the United States including Delta, American Airlines, United, and others are locked in a legal battle with DOT over new fee disclosure rules.

These airlines have filed a lawsuit against the United States Department of Transportation (DOT) over a new mandate requiring upfront disclosure of airline fees. This represents the latest conflict between air carriers and the Biden administration.

The lawsuit, filed by the Airlines for America lobbying group along with American Airlines, Delta Air Lines, United Airlines, JetBlue Airways, Hawaiian Airlines, and Alaska Airlines, was submitted to the U.S. Fifth Circuit Court of Appeals in Louisiana late on Friday, according to a document reviewed by Reuters.

Why Are Airlines Upset

At the centre of the matter is the DOT, which had introduced regulations mandating that airlines and ticket agents disclose service fees alongside airfare, aiming to help consumers avoid unexpected charges.

Two days ago, the airline group stated that the new rule would confuse consumers and claimed that the department’s attempt to regulate private business operations exceeds its authority.

The lawsuit says the new rule is “arbitrary, capricious, an abuse of discretion, and otherwise contrary to law.”

DOT Response

In response to the lawsuit, the DOT has said that it would “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.”

DOT highlighted that consumers are overpaying $543 million in fees annually, with airlines gaining additional revenue from fees that surprise passengers, who then have to pay higher charges at the airport to check bags.

Major airlines in the US have increased fee for checked baggage if passengers do not prepay or wait until the time of the flight. Earlier this year, many airlines raised their fees for checked baggage.

The DOT’s rules stipulate that fees for baggage or flight changes must be clearly disclosed the first time fare and schedule information is provided on the airline’s online platform, not through a hyperlink.

The department also stated that the rule would end bait-and-switch tactics used by some airlines to obscure 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.

The airline group described the rule as “a bad solution in search of a problem,” asserting that airlines already fully disclose all fees associated with air travel before ticket purchase.

Southwest Airlines, which supports certain provisions in the USDOT proposal, did not join the lawsuit.

In 2022, U.S. airlines collected nearly $6.8 billion in baggage fees, and $5.5 billion in the first nine months of 2023.

The new rule requires airlines to inform consumers that seats are guaranteed and that no extra payment is needed for seat assignments. Airlines must include a notice stating, “A seat is included in your fare. You are not required to purchase a seat assignment to travel.”

Airlines have not contested a separate rule finalized last month by the DOT that mandates automatic cash refunds for canceled flights when passengers opt not to take a new flight.

President Joe Biden emphasized last month that “Too often, airlines drag their feet on refunds or rip folks off with junk fees,” arguing that the mandate will protect passengers from surprise fees.