Court Vacates Airline Fee Disclosure Rule, Preserving Industry Revenue Stream
A federal appeals court has vacated a Department of Transportation rule that would have required airlines to disclose ancillary fees upfront when passengers book flights, marking a setback for consumer transparency initiatives. The 5th U.S. Circuit Court of Appeals in New Orleans, in an en banc decision, reversed a January 2025 ruling by a three-judge panel, effectively eliminating the fee-disclosure requirement that was finalized in April 2024 under the Biden administration (REUTERS). The court determined that the Department of Transportation violated federal administrative law when it imposed the rule requiring airlines to disclose additional fees upfront for items such as checked bags (Biden).
The lawsuit challenging the rule was filed in May 2024 by Airlines for America, the International Air Transport Association, the National Air Carrier Association, and multiple U.S. airlines, and the rule was stayed in July 2024, so carriers did not have to implement it while litigation proceeded (ADEPT). Major carriers including American Airlines, United Airlines, Delta Air Lines, JetBlue, and Alaska Airlines, along with industry groups Airlines for America and the International Air Transport Association, filed suit to block the regulation (NEWS). The Fifth Circuit in July 2024 granted the industry's request to temporarily block the measure from taking effect as it considered the suit (Biden).
The airlines argued USDOT lacked the legal authority to impose such detailed pricing requirements (NEWS). According to court documents, the major carriers and the trade group Airlines for America contend the rule forces the industry to use specific language in a specific way to reveal ancillary costs (Biden). American Airlines, United Airlines, Delta Air Lines, JetBlue, and Alaska Airlines, along with trade groups Airlines for America and the International Air Transport Association, had argued the regulation would "upend the way airlines interact with their customers, at great cost, and with no demonstrated benefit" (REUTERS).
The vacated rule required carriers to communicate extra charges upfront for checked luggage, carry-on bags and canceling or changing reservations (Biden). Regulations issued by USDOT in April 2024 required airlines and ticket agents to disclose service fees alongside airfares to help consumers avoid unneeded or unexpected fees (REUTERS). The fee-disclosure rule was part of the Biden administration's broader push to increase transparency in airline pricing and was finalized in April 2024 (NEWS).
The full U.S. Court of Appeals for the Fifth Circuit held that DOT did not satisfy Administrative Procedure Act notice and comment requirements because the public did not have an opportunity to comment on a study that DOT treated as critical to the rule (ADEPT). The court said DOT relied on that study to justify its cost benefit analysis, and that procedural defect compromised the entire regulation, so the remedy was vacatur of the full rule (ADEPT). The court held DOT didn't give airlines an opportunity to comment on the data justifying the rule since the data wasn't available during the notice-and-comment period (Biden).
"This case has evolved into a different arena since a year ago when we issued the panel opinion that I wrote," Judge Haynes said (Biden). The en banc Fifth Circuit panel included Judges Haynes, Southwick, and Douglas—who served on the three-judge panel in 2025—agreed with vacatur in a concurring opinion (Biden). The appeals court last year said USDOT had authority to write rules on unfair or deceptive practices by airlines but said the department had not complied with procedural rules and sent it back to USDOT for review (REUTERS).
A three-judge Fifth Circuit panel ruled in January 2025 that DOT must provide a fresh opportunity to comment on the rule (Biden). An earlier three-judge panel said the department had some authority to regulate unfair or deceptive practices, but it raised concerns about how the rule was created (NEWS). The full appeals court went further, vacating the regulation and removing the fee-disclosure requirement for now (NEWS).
The Fifth Circuit noted that DOT, now under a different administration, indicated an intent to redesign or rescind the approach, so the practical environment can still shift, just not on the timeline this rule would have created (ADEPT). The Trump administration has taken other steps to abandon Biden administration airline consumer protection initiatives, including requiring passenger compensation for flight delays caused by carriers (REUTERS).
Supporters of the rule said it would have helped travelers avoid surprise charges, with USDOT previously estimating that passengers overpaid by hundreds of millions of dollars each year under current fee practices (NEWS). In 2024, USDOT said consumers were overpaying $543 million in fees annually, generating additional revenue for airlines from passengers surprised by having to pay a "higher fee at the airport to check a bag" (REUTERS). Major airlines charge higher baggage fees if travelers do not pay in advance or wait until flight time (REUTERS).
The financial implications for airlines are significant. U.S. airlines collected $7.3 billion in baggage fees in 2024, up from $7.1 billion in 2023 (REUTERS). Several U.S. airlines boosted fees in 2024 for checked baggage (REUTERS). The 'Enhancing Transparency of Airline Ancillary Service Fees' wasn't issued in compliance with the Administrative Procedure Act's notice-and-comment requirement (Biden).
The legal representation in this case includes prominent law firms. Skadden, Arps, Slate, Meagher & Flom, LLP and McDermott Will & Emery, LLP represent the airlines (Biden). The US Department of Justice had asked the full Fifth Circuit to vacate the rule during oral argument in January, backing airlines and a trade industry group (Biden). The case is Airlines for America v. Dept. of Transportation, 5th Cir., No. 24-60231, 2/3/26 (Biden).
The full U.S. Court of Appeals for the 5th Circuit found that USDOT failed to follow proper federal procedures when issuing the rule, reversing an earlier decision that had allowed it to move forward (NEWS). The Fifth Circuit airline fee disclosure rule was vacated, which means the April 2024 regulation titled "Enhancing Transparency of Airline Ancillary Service Fees" is no longer in effect (ADEPT). The US Court of Appeals for the Fifth Circuit said the rule must be vacated (Biden).
Major airlines challenged a consumer-friendly rule issued in April 2024 during the Biden administration, which required airlines and ticket agents to disclose "ancillary fees" such as baggage charges during the booking process arguing federal law gave the Transportation Department no power to issue such rules (REUTERS). Without the required disclosure of ancillary fees upfront, airlines can continue their current fee practices, which USDOT had previously identified as problematic for consumers seeking to make informed purchasing decisions.