American consumers hate hidden airline fees. Unfortunately, siding with airlines, the Fifth Circuit yesterday held that DOT likely lacked authority to issue a rule that would require airlines to more clearly disclose fees associated with checked and carry-on baggage, and cancelling or changing flights.
The order arose in a challenge to an April rule, discussed here, which required such fees to be disclosed during the booking process. As such fees represent a massive, increasing portion of airlines’ profit , industry associations and airlines promptly sought review in the Fifth Circuit, challenging the rule on a number of grounds. Yesterday, the Fifth Circuit granted a stay of the Rule pending appeal, holding that the challengers are likely to prevail on their argument that the statute does not allow the agency to issue industry-wide regulations regarding unfair and deceptive practices, but instead can only commence individual adjudications–calling into question regulations dating back to 1982, and splitting with 40 year-old Seventh Circuit caselaw–perhaps a relic of a time where courts assumed Congress intended for agencies to effectively regulate.
Of course, requiring agencies to investigate and adjudicate whether given airlines behavior is an unfair and deceptive practice leads to greater unpredictability for both business and consumers. But it is also much more time and resource consuming for the government, which industry is likely counting on.
Unfortunately, while the bipartisan FAA Reauthorization Act from earlier this year includes a number of pro-consumer provisions, a provision to explicitly authorize regulations like this one did not make it in.
