WASHINGTON (Reuters) - The U.S. Transportation Department is finalizing on Tuesday new rules that require upfront disclosure of airline fees and mandate refunds for delayed baggage or inoperative services like onboard Wi-Fi.

The rules, which were nearly three years in the works, will require airlines and ticket agents to tell consumers upfront about baggage or change and cancellation fees. The department said consumers are expected to save $543 million annually in excess airline fees.

The new rules require airlines and ticket agents to disclose extra service fees alongside the full fare, the first time fare and schedule information is displayed online.

The government will also require airlines to refund baggage fees if bags are not delivered within 12 hours of domestic flights arriving or 15 to 30 hours of their international flight arrivals, as well as for services that do not work or are not provided. Airlines must promptly and automatically issue refunds if flights are canceled.

"Airlines should compete with one another to secure passengers' business-not to see who can charge the most in surprise fees," said U.S. Transportation Secretary Pete Buttigieg.

Airlines for America, a trade group representing major carriers, said airlines "offer transparency and vast choice to consumers from first search to touchdown. U.S. airlines are committed to providing the highest quality of service, which includes clarity regarding prices, fees and ticket terms."

In May, President Joe Biden said USDOT was writing new rules to require airlines to compensate passengers with cash for significant flight delays or cancellations when the carriers are responsible. But almost a year later, USDOT has still not issued a formal proposal.

Airlines will be required to explain fee policies before ticket purchases and share fee pricing and policies with other companies that display fares.

Under the new rules, airlines will be required to tell consumers seats are guaranteed and passengers need not pay seat selection fees. Carriers are prohibited from advertising promotional discounts that do not include mandatory carrier-imposed fees.

Last month, a U.S. Senate Committee said it was stepping up its investigation into billions of dollars in yearly airline fees, noting between 2018 and 2022, total revenue across major U.S. airlines from baggage fees increased from $4.9 billion to $6.8 billion.