By Jonathan Stempel
(Reuters) -A federal appeals court on Thursday said it will reconsider its recent holding that the U.S. Department of Transportation had authority to require airlines to fully disclose fees upfront when passengers book flights.
In a brief order, the 5th U.S. Circuit Court of Appeals in New Orleans said its 17 active judges will sit “en banc” to review the January 28 decision by a three-judge panel.
Several major airlines are challenging a consumer-friendly rule issued in April 2024 during the Biden administration, which required airlines and ticket agents to disclose “ancillary fees” such as baggage charges during the booking process.
Alaska Airlines, American Airlines, Delta Air Lines, JetBlue, United Airlines and three trade groups including Airlines for America objected, saying federal law gave the Transportation Department no power to issue such rules.
The appeals court put the rule on hold in July 2024.
In its January decision, the court said the Transportation Department had authority to write fee disclosure rules that address “unfair or deceptive practices” by airlines.
It nonetheless said the agency should have let airlines comment on a study it used to assess the fee rule’s potential impact.
The appeals court returned the matter to the Transportation Department, instead of vacating the rule.
In seeking en banc review, the airlines said adopting the rule would “upend the way airlines interact with their customers, at great cost, and with no demonstrated benefit.”
The Transportation Department opposed a rehearing, saying the appeals court “properly exercised its discretion” in remanding the rule.
Lawyers for the airlines did not immediately respond to requests for comment. Airlines for America declined to comment.
Neither the Transportation Department nor the U.S. Department of Justice immediately responded to requests for comment.
The 5th Circuit is one of the most conservative federal appeals courts. It did not say when it will hear oral arguments.
The case is Airlines for America et al v Department of Transportation, 5th U.S. Circuit Court of Appeals, No. 24-60231.
(Reporting by Jonathan Stempel in New York; Editing by Jamie Freed)
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