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Major U.S. Airlines Sue Biden Administration Over Junk Fees Rule

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Major U.S. airlines have filed a lawsuit against the Department of Transportation’s “junk fees” rule, arguing that it the rule is a regulatory overreach that would create more confusion for consumers.

Major airlines are suing the Biden administration over its latest rule that requires airlines to disclose all fees associated with buying a ticket. 

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Airlines for America, the trade group that represents major U.S. airlines, along with American, Delta, United, JetBlue, Alaska and Hawaiian filed a lawsuit with the Fifth Circuit Court of Appeals on Friday. 

The Department of Transportation released a final rule on “junk fees” April 24 that requires airlines to disclose the prices of checked baggage, carry-ons, changing a reservation or canceling one. As part of the new set of rules, airlines would also need to issue automatic refunds to passengers for significantly delayed or canceled flights.

The lawsuit does not challenge another new DOT rule that requires automatic refunds for some flight delays and cancellations.

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A4A said the new DOT rule on disclosures would create more confusion for consumers with too much information that would “only serve to complicate the buying process.”

“DOT’s attempt to regulate private business operations in a thriving marketplace is beyond its authority,” A4A said in a statement. “DOT has failed to establish that consumers are unable to obtain information about ancillary fees.”

The trade group said that it believed consumers are already aware of ancillary fees and that airlines already disclose such fees before ticket purchase. 

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“In addition to the disclosures required by existing DOT regulations, airlines engage in competitive advertising and emphasize ancillary fee discounts and benefits when they promote their loyalty programs,” A4A said. “The DOT ancillary rule is a bad solution in search of a problem.” 

The DOT said it would “vigorously defend” the rule.

“Many air travelers will be disappointed to learn that the airline lobby is suing to stop these common-sense protections,” a DOT spokesperson said in a statement to Skift.

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While the DOT rules on junk fees and automatic refunds were met with criticism from the airline industry, legal challenges could be difficult to win. Blaise Waguespack, a professor at Embry-Riddle, told Skift that the Airline Deregulation Act of 1978 gave the DOT significant power to regulate the economic activities of carriers.

“Unless there’s something specific put into FAA reauthorization that would say, ‘The DOT has no power to regulate cancellations in some way,’ it would seem to me the legal authority is going all the way back to the Deregulation Act,” he said, referring to the department’s automatic refunds rule.

The FAA Reauthorization Act, which is up for a vote in the House of Representatives this week, doesn’t include any language on disclosing ancillary fees.

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Airlines Sector Stock Index Performance Year-to-Date

What am I looking at? The performance of airline sector stocks within the ST200. The index includes companies publicly traded across global markets including network carriers, low-cost carriers, and other related companies.

The Skift Travel 200 (ST200) combines the financial performance of nearly 200 travel companies worth more than a trillion dollars into a single number. See more airlines sector financial performance. 

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Read the full methodology behind the Skift Travel 200.

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