Airline pricing appeal denied by Supreme Court

By Lawrence Hurley

WASHINGTON (Reuters) - The Supreme Court on Monday declined to hear a challenge to a federal government rule that requires airlines to advertise the full cost of tickets.

Allegiant Travel Co, Southwest Airlines Co and Spirit Airlines Inc had all challenged the U.S. Department of Transportation's regulation, which prohibits airlines from leaving taxes and government fees out of their advertised rates.

A three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit upheld the rule in July on a 2-1 vote.

The airlines say the regulation infringes upon their free speech rights.

It requires that any price shown in an advertisement must be "the entire price to be paid by the customer," the Department of Transportation said.

Airlines can give a separate breakdown of taxes and other costs, but it must be in a smaller size than the total cost and not "displayed prominently," the agency said.

The airlines' lawyer, Paul Clement, said in court papers that the Obama administration introduced the rule at a time when it was calling for "new, higher taxes on airline passengers."

He noted that some airlines had explicitly criticized the taxes in their advertisements.

In seeking the high court's review, the airlines also said the federal government was seeking to assert authority in contravention of the 1978 law that deregulated the industry.

The Obama administration said in court papers that it could issue the rule under its authority to ban unfair or deceptive practices.

The rule "constitutes a reasonable exercise of the department's longstanding authority to prevent consumer confusion in airfare advertising," Solicitor General Donald Verrilli wrote.

In a statement on Monday, U.S. Transportation Secretary Ray LaHood said the rule "was put into place to ensure that passengers are treated with respect when they travel."

The department "will continue to work to ensure that airlines treat their customers fairly," he added.

Spokesmen for Spirit and Southwest said the airlines, which have been complying with the rule since it was introduced, were disappointed with the high court's decision not to intervene.

Allegiant did not immediately respond to a request seeking comment.

The Business Travel Coalition, an advocacy group for business travelers, welcomed Monday's development, saying in a statement it removed "the last airline-imposed barrier" to what it hopes will be further rulemaking that would pave to way for "true comparison shopping of the all-in price" of tickets.

The case is Spirit Airlines v. Department of Transportation, U.S. Supreme Court, No. 12-656.

(Reporting by Lawrence Hurley; Editing by Kevin Drawbaugh, Lisa Von Ahn and Kenneth Barry)

Source: http://news.yahoo.com/supreme-court-not-hear-airline-appeal-over-ad-141901439.html

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