Adds airline group response, letter from senators

By David Shepardson

WASHINGTON, Jan 28 (Reuters) - A U.S. appeals court on Tuesday blocked the Biden administration's 2024 rule requiring upfront disclosure of airline service fees, saying the Transportation Department had not complied with procedural rules.

The court ruling said the department had authority to write fee disclosure rules that specifically address "unfair or deceptive practices being conducted by airlines." However, the court also said the department should have allowed airlines an opportunity to comment on a study used by USDOT that looked at the impact of the fee disclosure rules.

The court sent the rule back to USDOT to give it a chance to address the procedural error. The department, which has been under control of the Trump administration since Jan. 20, did not immediately comment on whether it plans to proceed.

Regulations issued by USDOT in April required airlines and ticket agents to disclose service fees alongside the airfare, in a move to help consumers avoid unneeded or unexpected fees, but they were put on hold pending a legal challenge.

Airlines including American Airlines AAL.O, Delta Air Lines DAL.N, United Airlines UAL.O, JetBlue JBLU.O and Alaska Airlines ALK.N, joined by trade group Airlines for America and the International Air Transport Association, sued in May to overturn the rules.

Airlines for America praised the ruling, saying the regulation "embodies regulatory overreach that would confuse consumers who would be inundated with information that would only serve to complicate the buying process."

The Biden rules had set an October 2024 deadline for airlines to disclose fee data to third-party ticket agents, and on their own websites by April 2025.

The industry previously said the rule would require airlines to "spend millions" to re-engineer their websites.

In April, USDOT said consumers were overpaying $543 million in fees annually, generating additional revenue for airlines from passengers surprised by having to pay a "higher fee at the airport to check a bag."

Major airlines charge such higher fees if travelers do not pay in advance or wait until flight time. Several U.S. airlines boosted fees last year for checked baggage.

The rule would end "bait-and-switch tactics some airlines use to disguise the true cost of discounted flights," added USDOT.

U.S. airlines collected $7.1 billion in baggage fees in 2023, up from $6.8 billion in 2022. Last week, three senators asked if two low-cost airlines were manipulating seat pricing.

(Reporting by David Shepardson; Editing by Leslie Adler and Nia Williams)

((David.Shepardson@thomsonreuters.com; 2028988324;))