Dive Brief:
- U.S. airlines are suing to block a new rule by the Department of Transportation requiring airlines to provide greater transparency regarding the fees they charge customers. United, Delta, American, JetBlue, Alaska and Hawaiian, along with industry lobby Airlines For America, filed the suit last Friday in the U.S. Fifth Circuit Court.
- DOT issued final guidance last month that airlines must tell consumers upfront what fees they charge for checked and carry-on bags as well as cancelations and changes to reservations.
- Airlines For America said airlines already disclose their fees to consumers. “The ancillary fee rule by the Department of Transportation will greatly confuse consumers who will be inundated with information that will only serve to complicate the buying process,” Airlines For America said in an email to CX Dive.
Dive Insight:
While DOT says its rule will protect customers from “surprise junk fees,” airlines argue that the agency is overstepping its authority and creating a problem that doesn’t exist.
“DOT’s attempt to regulate private business operations in a thriving marketplace is beyond its authority,” Airlines For America said.
DOT’s rule requires extra service fees to appear alongside the full fare advertised by an airline, so customers can better compare costs. DOT estimates the rule will save customers over $500 million annually.
Airlines have increased fees for checked baggage — and made a sizable profit.
Airline profits from baggage fees increased by 30% from 2018 to 2022, according to the Bureau of Transportation Statistics. In 2022, airlines made more than $6.8 billion from baggage fees.
Delta, American and United each raised bag fees this year.
Bag fees are quite profitable, as airlines don’t have to pay the federal excise tax rate on add-ons, “which means they save a bunch on taxes,” Katy Nastro, a travel expert at Going, told CX Dive.
Southwest did not join other large U.S. airlines in the suit, telling the AP that it largely does not impact them. The carrier allows customers to check two bags for free and allows customers to change flights for free.
