Federal Appeals Court Strikes Down Airline Fee-Disclosure Rule

Action: On February 3, the US Court of Appeals for the Fifth Circuit vacated the US Department of Transportation (DOT) rule intended to require airlines to disclose ancillary fees upfront when passengers book flights. Major airlines and some industry groups challenged the regulation, arguing that the rule exceeded DOT’s authority and violated the Administrative Procedure Act’s (APA) notice-and-comment requirement.

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• The case, Airlines for America v. Department of Transportation, concerns “Enhancing Transparency of Airline Ancillary Service Fees,”¹ an April 2024 rule to strengthen consumer protections regarding fees for baggage and charges for changing or canceling a flight, requiring airlines to “clearly disclose passenger-specific or itinerary-specific fees for these services to consumers” for flights to or from any US airport, including international flights.
• In 2024, DOT estimated that consumers overpay an estimated $543 million in fees each year, generating additional revenues for airlines from fees such as a higher fee at the airport to check a bag.² US airlines collected $7.3 billion in baggage fees in 2024, up from $7.1 billion in 2023.
• Airlines for America (A4A), the trade group representing major US airlines including American Airlines, Delta, JetBlue, and United, argued that DOT exceeded its statutory authority in issuing the rule because 49 U.S. Code § 41712 empowers DOT only to investigate unfair practices on a case-by-case basis and does not grant broader prescriptive rulemaking authority.³
• The Fifth Circuit’s decision to vacate the rule supplements a January 2025 decision which sent the rule back to DOT but blocked its enforcement.⁴ In the earlier decision, the court held DOT did not provide airlines an opportunity to comment on the data justifying the rule because the data was not available during the notice-and-comment period of rulemaking. On February 3, the Fifth Circuit decided this omission violated the APA and warranted throwing out the full rule.
• What this means for business: The Fifth Circuit’s ruling is another example of how major Supreme Court decisions on administrative law, including more restrictive standards for agencies to have authority to issue rules, can have significant effects on business models across industries. For businesses buying large volumes of airline travel, the decision means less price transparency for purchasers. Businesses may need to place greater emphasis on negotiating baggage and change or cancellation terms in corporate travel agreements to avoid unexpected charges and better manage costs.⁵

1. “Enhancing Transparency of Airline Ancillary Service Fees,” Federal Register, April 30, 2024. 

2. David Shepardson, Airlines win challenge to appeals court ruling on consumer fee disclosures, Reuters, February 3, 2026. 

3. https://www.law.cornell.edu/uscode/text/49/41712 ?

4. https://caselaw.findlaw.com/court/us-5th-circuit/116878370.html ?

5. https://www.bloomberglaw.com/public/desktop/document/AirlinesforAmervDeptofTransDocketNo24602315thCirMay142024CourtDoc/3?doc_id=X1P9F8A7CI99TDAGAUR8NI9KHG7 ?