Transportation Secretary Pete Buttigieg appearing on Fox News Photo: X video screenshot
Out Transportation Secretary Pete Buttigieg has launched a Department of Transportation (DOT) inquiry into the frequent flier rewards programs of the four largest U.S. airlines: American Airlines, Delta Air Lines, Southwest Airlines, and United Airlines.
The inquiry has asked the airlines for detailed information so that the DOT can examine how participating consumers are “impacted by the devaluation of earned rewards, hidden or dynamic pricing, extra fees, and reduced competition and choice,” the DOT wrote in a statement.
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While the DOT is investigating and can take action against airlines for unfair or deceptive business practices, the DOT hasn’t accused any of the aforementioned airlines of such dealings.
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“Points systems like frequent flyer miles and credit card rewards have become such a meaningful part of our economy that many Americans view their rewards points balances as part of their savings. These programs bring real value to consumers, with families often counting on airline rewards to fund a vacation or to pay for a trip to visit loved ones,” Buttigieg said. “But unlike a traditional savings account, these rewards are controlled by a company that can unilaterally change their value. Our goal is to ensure consumers are getting the value that was promised to them, which means validating that these programs are transparent and fair.”
Airline rewards programs typically reward customers who frequently use a particular airline or make purchases with an airline-branded credit card. These earned “miles” or “points” can typically be redeemed for free or discounted travel, upgrades, airport lounge access or third-party goods and services.
The problem with such programs is that airlines can impose new restrictions, like blackout and expiration dates, additional purchase requirements, and other limitations on who can redeem the rewards, how and when. Airlines can also devalue the rewards systems — essentially requiring consumers to pay more or receive less for their earned benefits — or also tack on extra fees for redeeming them. Similar changes can also affect many consumers when airlines merge, causing two different rewards programs to combine into a single new system.
As part of the DOT’s inquiry, it has asked airlines to describe any changes to its rewards programs over the last six years, the average dollar value of each program’s accrued points or miles, and a side-by-side comparison of any customer fees compared to business costs that the airlines use the fees to cover.
This isn’t the first time that the DOT has examined airline practices under Buttigieg. In April, the DOT began requiring airlines to disclose extra costs for baggage, canceling tickets as well as for canceled or severely delayed flights. Last December, the DOT) secured enforceable commitments from the 10 largest U.S. airlines to cover travelers expenses for things like rebooking, meals and other costs connected to flight delays and cancellations.
