Delta, Southwest And Other Airlines In Hot Waters With US Transportation Department For Unfair Rewards Programs – American Airlines Gr (NASDAQ:AAL), Delta Air Lines (NYSE:DAL)

The U.S. Transportation Department (DOT) is delving into the rewards and frequent flyer programs of the four largest U.S. airlines. The investigation aims to ensure consumers are treated fairly and not disadvantaged by these programs.

What Happened: The DOT has launched an inquiry into the rewards programs of American Airlines Group Inc. AAL, Delta Air Lines, Inc. DAL, Southwest Airlines Co. LUV, and United Airlines Holdings Inc. UAL. The airlines are required to provide records and comprehensive reports on their rewards programs.

The probe seeks to comprehend the impact on consumers due to the devaluation of earned rewards, concealed or fluctuating pricing, additional fees, and diminished competition and choice. This move follows a public hearing conducted in May by the DOT and the Consumer Financial Protection Bureau on airline loyalty programs.

Transportation Secretary Pete Buttigieg has expressed the department’s need for more detailed data to fully understand these rewards programs and pinpoint any potential competition or consumer protection issues.

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Trade group Airlines for America has defended U.S. airlines, stating that they are transparent about their frequent flyer programs. The group highlighted the significance of these programs, which were vital for airlines to generate revenue and secure funds during the COVID-19 pandemic.

Commenting to Reuters, Delta acknowledged the DOT’s inquiry and will respond in due course. Southwest defended its flexible rewards program.

Why It Matters: This investigation comes on the heels of recent changes to the rewards programs of these airlines. In September 2023, Delta faced backlash from customers following an overhaul of its loyalty program. The airline’s CEO, Ed Bastian, promised adjustments in response to the criticism.

In March, United Airlines introduced a new feature in its MileagePlus program, allowing members to pool their miles with family and friends. This move made United the first major U.S. carrier to offer such an option.

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This story was generated using Benzinga Neuro and edited by Pooja Rajkumari