Federal court blocks Biden administration's airline fee regulation

A Transportation Department rule mandating that airlines clearly disclose additional fees is now at risk.

On Monday, a federal judge panel temporarily stopped the Biden administration's new regulation, stating that it likely "oversteps DOT's authority and could cause irreparable damage to airlines."

The ruling from the 5th U.S. Circuit Court of Appeals allows airlines to postpone significant changes in how they present pricing, fees, and fare rules until the matter is settled.

Regulation on price transparency

According to the rule, first introduced in April, airlines and third-party ticket sellers must promptly reveal essential ancillary fees the moment a flight's price is shown.

Scheduled to be implemented in late April 2025, the new regulations will require airlines to clearly disclose ancillary charges, such as fees for first and second checked bags, full-size carry-on bags, and fees for changes and cancellations. These must be displayed when a customer first views a fare.

Airlines will also need to use standard DOT language to clarify that passengers are entitled to a seat on a flight, even if they choose not to pay for seat selection.

Airlines and lobbying organizations file lawsuits

A coalition of six U.S. airlines and the leading industry lobbying group quickly filed a lawsuit against the Biden administration, describing it as a "poor solution searching for a problem" that would "mislead customers," arguing that the measure exceeds the DOT's authority. Alaska Airlines, JetBlue, and lobbying groups Airlines for America and the International Air Transport Association joined three major U.S. carriers—American Airlines, Delta Air Lines, and United Airlines—in the legal action.

The judges noted on Monday that the lawsuit presents "a compelling case that the Rule surpasses DOT's authority." They also agreed to suspend the DOT's regulation until a final decision is made.

Transportation Secretary Pete Buttigieg affirmed his commitment to advancing the DOT's efforts for price transparency reforms, despite the recent ruling from the appeals court.

"The airline industry lobby is attempting to stall this with lawsuits, but we will not waver in our commitment to protecting passengers," Buttigieg stated on the social media platform X. "Airlines are fundamentally incorrect to claim that simply having to disclose their fees would 'irreparably harm' them."

The Biden administration has adopted a tougher stance towards airlines to safeguard consumers in its broader battle against "junk fees." This includes implementing stricter refund policies recently formalized in the Federal Aviation Administration reauthorization bill that Congress passed in May. Additionally, the DOT launched a dashboard in 2022 to transparently showcase the commitments airlines have made to passengers during cancellations or significant delays within their control.

The current situation remains unchanged — for now

While the final outcome of the DOT's upfront pricing rule is still uncertain, its ongoing suspension means it won’t be enacted in the near future.

This implies that travelers should continue to scrutinize the fare rules of any flight they book, checking for various fees, including those for full-size carry-on bags, seat selection, and other ancillary charges often imposed by budget airlines, such as fees for printing boarding passes or speaking to customer service agents in person.

It's important to note that several airlines — including budget carriers — have already eliminated some of the ancillary fees that passengers have long criticized.

For example, JetBlue recently revealed that it will permit even basic economy ("Blue Basic") passengers to bring a full-size carry-on bag on board at no additional cost. Spirit Airlines and Frontier Airlines have eliminated change and cancellation fees for most ticket types, and Frontier has introduced significant changes to how it displays fees, fares, and its ancillary bundles — although the CEO clarified this spring that the decision was not prompted by the DOT.

However, it's important to highlight that most major U.S. airlines raised checked bag fees in the first half of 2024. According to data from the U.S. Department of Transportation, they collectively earned over $7 billion in 2023 solely from checked baggage fees.