US Appeals Court Blocks Airline ‘Junk Fee’ Disclosure Rule Over Procedural Error But Lawsuit Remains Open

A US appeals court has blocked a Biden Administration-era rule that would have forced airlines to display ‘junk fees’ like how much it would cost to check a bag or cancel a ticket prominently on their websites during the first step of a flight booking.

The Department of Transportation (DOT) initially proposed the rule in 2022, and following a lengthy public comment period, the final rule, known as Enhancing Transparency of Airline Ancillary Service Fees, was published in April 2024.

Within days, American Airlines, Alaska Airlines, Delta Air Lines, Hawaiian Airlines, JetBlue, and United Airlines, through industry lobby group Airlines for America, sought to block the rule by filing a lawsuit in the U.S. Fifth Circuit Court of Appeals.

The lobby group argued that President Biden’s DOT had not only overstepped its regulatory power but that the disclosure rule would “do more harm than good,” costing the airline industry around $34 billion.

Despite the lawsuit, the DOT refused a request to delay the implementation of the rule, which was meant to take effect in July 2024. The appeals court, however, initially ruled in favor of Airlines 4 America, authorizing a stay in the rule’s implementation until the court process had concluded.

On Tuesday, a panel of three judges ruled that the DOT was not only acting within its regulatory power to issue the junk fee rule but that the rule did not breach the provisions of the Airline Deregulation Act.

In fact, the airline lobby group didn’t prevail in its main arguments against the rule, but the judges found that the DOT had broken procedural rules by using data from a study published after the public comment period had finished to justify the junk fee disclosure requirements.

When creating a final rule, the DOT is allowed to use supplementary data to expand on its reasons for introducing a rule. In this case, however, the court was told that the DOT was relying on a study that had not been available during the public comment period.

“DOT should have allowed Petitioners the opportunity to comment on the study,” the judges wrote in their opinion published on Tuesday. The study remains contentious as it suggests a probability of net societal benefits of just 53%.

The judges concluded that unlawful agency action would often result in the court vacating the rule, but in this case, the judges allowed the stay in implementation to remain in force while the DOT addressed the court’s concerns.

Of course, with President Trump now in power, it remains to be seen whether the DOT will want to pursue this final rulemaking.