WASHINGTON – The frequent flier programmes of the four largest US air carriers – Delta Air Lines, American Airlines Group, United Airlines Holdings and Southwest Airlines – are being probed by the US Department of Transportation, the agency announced on Sept 5.
The department has asked the airlines to submit reports on their programmes within 90 days to give the US government a better understanding of how consumers “are impacted by the devaluation of earned rewards, hidden or dynamic pricing, extra fees, and reduced competition and choice”, it said in a statement.
The probe would be the first extensive US government look at the programmes that have expanded to produce billions of dollars for airlines annually, in some cases adding more revenue than flight operations.
While the potential consequences are unclear, federal regulators could demand changes that might disrupt these profit centres for both carriers and credit-card issuers, and remove a travel option valued by many consumers.
As part of the probe, the carriers will have to provide detailed information on their rewards programmes – which encompasses credit card, consumer incentive, loyalty and frequent flier programmes – including any changes made over the last six years, complaints received from customers and the impact of mergers on the programmes.
“Many Americans view their rewards points balances as part of their savings,” US Transportation Secretary Pete Buttigieg said in the statement. “But unlike a traditional savings account, these rewards are controlled by a company that can unilaterally change their value.”
Airlines for America, a trade group that represents major US carriers, said in a statement that millions of people enjoy the perks that they get from their loyalty programmes. “US carriers are transparent about these programmes, and policymakers should ensure that consumers can continue to be offered these important benefits,” the group said.
But the loyalty programmes have come under fire in recent months, with the Biden administration and lawmakers from both sides of the aisle raising concerns that carriers lure customers with promises of rewards only to strip fliers of those perks with little notice by making sudden changes to how points and miles accrue.
They have also raised concerns about whether the programmes give larger airlines an unfair advantage over smaller competitors.
Mr Buttigieg previewed his concerns with the loyalty programmes and co-branded cards, which help passengers boost rewards through spending, at a joint hearing with the US Consumer Financial Protection Bureau in May.
At the time, he raised two primary worries: that airlines were changing their programmes to make it more difficult for customers to earn perks – a decision that recently backfired on Delta, which was forced to rethink a 2023 overhaul following a deluge of complaints – and that the programmes were potentially being operated in a way “to block the entry or growth of smaller airline competitors”. BLOOMBERG