A centerpiece of the Biden administration’s transportation policy has been quashed by an appeals court after a lengthy legal battle that saw some of the biggest airlines in the United States go head-to-head with the Department of Transportation.
The idea behind the policy was to give consumers a clearer picture of airline ticket prices when searching comparison websites like Expedia, but airlines vehemently objected to the DOT’s attempt to make them display ‘junk fees’ up front.
‘Junk fee’ rule was a key pillar of the Biden administration’s transportation policy
Back in 2022, the Biden administration’s Department of Transportation, then run by Pete Buttigieg, proposed wide-sweeping new regulations known as the Enhancing Transparency of Airline Ancillary Service Fees rule, which would have dramatically changed how consumers shop for air fares.
Rather than being shown the lowest possible base fare on price comparison websites, airlines would have been required to show all of the extra fees that could be added to the ticket up front.
The idea behind the rule was to give consumers a better idea of the total cost of the ticket, rather than an unbundled price that didn’t include common extras, like checked bags, seat assignments, or changing or cancelling a booking.
After being subject to a lengthy comment period, the final rule was published in April 2024, with the intent that it would go live on July 1 of that year.
Airlines reacted with fury to the rules
Major airlines across the United States reacted with fury to the proposed ‘junk fees’ regulations, and came together through a lobby group known as Airlines 4 America (A4A) to fight the rulemaking in court.
AFA, which represents the likes of American Airlines, Alaska Airlines, Delta Air Lines, Hawaiian Airlines, JetBlue, and United Airlines, filed a motion in the U.S. Fifth Circuit Court of Appeals to request a stay on implementation of the rule.
Just two days before the rule was meant to take effect, the court granted the stay on the grounds that there was potential evidence the DOT had exceeded its rulemaking authority.
Court blocks rulemaking but lawsuit continued
By January 2025, the parties were back in court, and this time, a panel of three judges concluded that the DOT had, in fact, acted within its regulatory power when it issued the junk fee regulation.
However, the court found that in making its final rulemaking, the DOT had relied on a study that wasn’t available during the public comment period. As a result, airlines and other interested parties never had an opportunity to challenge or question the validity of this study.
Rather than immediately vacating the rulemaking, the judges gave the DOT time to respond to its concerns, and the stay in implementation of the rulemaking remained in force.
DOT now accepts that it violated the law and the rule has been quashed
It’s perhaps unsurprising that the DOT priorities have changed somewhat since the end of the Biden administration, and when the parties returned to court in January, the DOT didn’t attempt to address the court’s concerns.
In fact, the DOT accepted that its procedural violation “may have affected the agency’s determinations about the Rule’s content and scope.”
The panel of judges noted: “Given that DOT relied upon the study to justify its cost–benefit analysis, the procedural defect compromised the entire regulation. Thus, we must vacate the entire Rule.”
What this decision means for travelers
The conclusion of this lawsuit essentially means that airlines can continue displaying airfares as they have been doing for quite some years.
Unbundled fares, which display the lowest possible fares, will continue to show up on airline and third-party booking websites, and consumers will have to carefully review and compare different ancillary fees for the services they require to ensure they are getting the best deal.
That being said, two of the judges in this case pointed out that the Trump administration is looking into its own rulemaking, noting:
“The Department of Transportation is an agency under a different president and with a different approach and thoughts than it was at the time of the rule that the panel opinion addressed.”
“The Department assured the court it is creating a new proposed rule, and it agreed that we could vacate the rule that was what the panel addressed.”
