WASHINGTON, July 29 (Reuters) - A U.S. appeals court

blocked on Monday the U.S. Transportation Department's new rule

on upfront disclosure of airline fees pending a full review of

the regulation, dealing a significant setback to the Biden

administration.

Final rules issued by the DOT 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, as

part of an effort to tackle such fees over the last three years.

However, the rule "likely exceeds DOT's authority and will

irreparably harm airlines", a three-judge panel of the Fifth

U.S. Circuit Court of Appeals said, while granting the

industry's request for a temporary block.

The case will be scheduled for a hearing at the next

available session for oral arguments, it added.

American Airlines ( AAL ), Delta Air Lines ( DAL ), United

Airlines, JetBlue ( JBLU ), Alaska Airlines were

among the airlines, joined by trade group Airlines for America

and the International Air Transport Association, which sued in

May to block the rules.

The rules set carriers an Oct. 30 deadline to disclose fee

data to third-party ticket agents, and on their own websites by

April 30, 2025.

The industry said the rule would require airlines to "spend

millions" to re-engineer their websites, diverting resources

from other projects.

The airline group declined to comment on Monday's ruling.

A DOT spokesperson said it would continue to defend the

rule, adding, "Nothing in the court's decision prevents airlines

from voluntarily complying with this common sense rule that

simply requires them to keep their customers fully informed."

Transportation Secretary Pete Buttigieg has recently voiced

concern about the refund practices of airlines - notably Delta

Air Lines ( DAL ) - after cancellations triggered by a software

update by global cybersecurity firm CrowdStrike ( CRWD ) caused

system problems for Microsoft ( MSFT ), including many airlines.

In April, DOT said consumers were overpaying $543 million in

fees annually, generating additional revenue for airlines from

passengers surprised by fees who found they needed 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. Many large U.S.

airlines boosted fees this year for checked baggage.

The rule would end "bait-and-switch tactics some airlines

use to disguise the true cost of discounted flights," added the

DOT, which bars airlines from advertising promotional discounts

off a low base fare that excludes mandatory carrier fees.

U.S. airlines collected $7.1 billion in baggage fees in

2023, up from $6.8 billion in 2022.