Washington: In a pivotal legal development with wide-ranging implications for airline pricing and consumer protection, the full U.S. Court of Appeals for the Fifth Circuit has overturned a consumer-focused regulation that would have forced airlines to disclose extra travel fees at the very beginning of the ticket-buying process. The decision, rendered Tuesday in New Orleans, represents a significant victory for the airline industry and a setback for regulators seeking greater transparency in air travel costs.
The litigation stems from a rule issued in April 2024 by the U.S. Department of Transportation (USDOT), which sought to require that airlines and travel agents clearly show all ancillary fees such as checked baggage charges and change or cancellation fees at the very first stage of an online fare search. The intent behind the regulation was to eliminate so-called “junk fees” that can inflate the total cost of a flight well beyond the advertised base fare. Proponents argued that upfront disclosure would empower consumers to compare flight options more accurately and avoid surprise charges.
However, major U.S. carriers and their trade group, Airlines for America, challenged the rule, arguing that the Transportation Department lacked the statutory authority to impose such sweeping pricing mandates on private businesses. The airlines contended that existing law limits USDOT’s power to address unfair or deceptive practices on a case-by-case basis, but does not allow the department to craft broad regulatory schemes that reshape how fares are marketed and presented.
In January 2025, a three-judge panel of the Fifth Circuit initially upheld the regulatory effort, albeit while raising procedural concerns. But on Tuesday, the full court sitting en banc reversed that panel’s decision, concluding that the USDOT had exceeded its legal authority. The appellate judges agreed with the airlines that the agency’s regulatory reach was too expansive and that the rule could not stand under current statutory language. The full opinion explains that while the DOT may police deceptive practices, it cannot mandate wholesale structural changes to how fees are shown during ticket booking without clearer authorization from Congress.
Airline executives hailed the ruling as a necessary check on federal overreach, saying it prevents regulators from imposing costly and disruptive mandates that could ultimately be passed on to travellers. In legal filings, carriers had argued that forcing a redesign of pricing interfaces across multiple platforms would be burdensome and expensive, without delivering demonstrable benefits to passengers.
Consumer rights advocates, meanwhile, lamented the decision as a blow to transparency. Supporters of the original rule argued that many airlines already exploit opacity in pricing to make their services appear cheaper than they actually are, only to add significant charges late in the purchase process. These advocates said that visible ancillary fees would make competition fairer and save travellers money in the long term.
The ruling arrives amid a broader judicial trend of scrutinizing federal regulatory authority across sectors. In recent years, courts have taken a more assertive stance in limiting the scope of executive agencies’ power when statutory mandates are ambiguous or lack clear congressional direction. Analysts suggest that this decision could influence future attempts by U.S. regulators to address issues ranging from pricing transparency to consumer refunds and service protections.
For now, the appeals court’s decision effectively nullifies the April 2024 ancillary fee disclosure rule. Unless USDOT revises and reissues a similar regulation under clearer statutory grounds or Congress passes new legislation specifically granting such authority airlines will not be required by this federal rule to show all fees at the first stage of flight booking. The ruling is likely to be closely watched by consumers, lawmakers, and industry stakeholders as debates continue over the balance between regulatory oversight and commercial flexibility in the aviation market.