US Appeals Court Rules Against Department of Transportation in Airline ‘Junk Fee’ Dispute

A US Appeals Court has ruled in favor of a group of airlines that have been seeking a stay on the implementation of a new rule that would require them to display ancillary service fees like checked baggage and seat costs upfront.

The Department of Transportation (DOT) introduced the new ‘junk fees’ final rule back in April despite opposition from some of the biggest airlines in the United States, including the likes of American, United and Delta Air Lines, as well as Frontier and Spirit Airlines.

The rule is designed to protect consumers from being lured into buying airfares that the Biden administration claims are advertised at an artificially low rate because they don’t include ancillary fees that passengers regularly add to their airfare.

The idea behind the rule is to help consumers find the best flight deal because they’ll be able to compare the complete cost of booking a flight in the very first step of the booking process.

Within days of the final rules being announced, American Airlines, Alaska Airlines, Delta Air Lines, Hawaiian Airlines, JetBlue, and United Airlines, along with industry lobby group Airlines 4 America, filed a motion in the U.S. Fifth Circuit Court of Appeals arguing that the DOT had overstepped its regulatory powers.

With just two days before the rule was set to come into force, the Appeals Court has granted a stay on implementation of the rule while the lawsuit against the DOT continues.

In their judgement, the panel of four judges concluded that the airlines had made “a strong showing that the Rule exceeds DOT’s authority” and that they have “submitted ample evidence detailing the irreparable harm they will suffer absent a stay”.

The judges pointed to the fact that airlines will have to recode their websites in order to comply with the rule, and the pressure group Airlines 4 America (A4A) believes that this ‘junk fee’ rule will cost airlines between $5 million and $10 million.

The airlines argue that the rule is “arbitrary, capricious, an abuse of discretion and otherwise contrary to law.” On Monday, the panel of judges dismissed DOT’s argument that the rule is no different from other rules it has promulgated.

The DOT is yet to respond to the judgement.