The government can require airlines to show consumers a total ticket price that includes taxes and fees in print and online ads, the U.S. Court of Appeals said on Tuesday, rejecting an industry challenge to a series of consumer protection regulations.
The Department of Transportation, which issued the regulations last year, has the authority to regulate "unfair and deceptive" airline industry practices, the three-member panel said in its ruling.
The ruling also covers two other regulations: A requirement that airlines allow consumers who purchase tickets more than a week in advance the option of canceling their reservations without penalty within 24 hours after purchase, and a ban on airlines increasing the price of tickets or baggage fees after tickets have been bought.
The rules had been challenged by Spirit and Southwest airlines, with the support of two major airline industry trade associations.
"It's a big victory for consumers, mainly because it affirms the transportation department's authority in these areas," said Kevin Mitchell, chairman of the Business Travel Coalition, Radnor.
Mitchell said that when it comes to airline pricing and marketing, consumers' only protection at the federal level comes from the Department of Transportation.
"State consumer protection laws do not apply, and the Federal Trade Commission does not have that authority either," he said. "That's why this ruling is so darned important."
Mitchell said the court's ruling also "paves the way" for rules expected to be made in November. They will require that airlines not only disclose the all-in price of air fares in ads and on their Web sites but also report all-in prices to third-parties, meaning travel agencies and travel Web sites.
"That way, real comparative shopping will be restored," said Mitchell.
Before the new regulations, airlines could advertise a base airfare and separately disclose taxes and fees, which consumers would have to add together to arrive at a total price. Under the new regulations, airlines can still break down the price of a ticket to show taxes and fees, but the total price must be displayed in the largest type size and be the most prominent price in the ad or on the web page.
The airlines argued that there was nothing deceptive about listing taxes separately, …