The U.S. Department of Transportation launched an inquiry into the four largest U.S. airlines’ rewards programs to protect customers from potential unfair, deceptive, or anti competitive practices.
As part of the probe, U.S. Secretary of Transportation Pete Buttigieg sent letters to American Airlines, Delta Air Lines, Southwest Airlines, and United Airlines ordering them to provide records and submit reports with detailed information about their rewards programs, practices, and policies.
DOT said its inquiry is focused on the ways consumers participating in airline rewards programs are impacted by the devaluation of earned rewards, hidden or dynamic pricing, extra fees, and reduced competition and choice.
“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,” said U.S. Transportation Secretary Pete Buttigieg. “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. 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.”
The value of rewards is set by the terms and conditions that govern their use and benefit. But many airlines reserve the right to change the terms, and therefore the value of rewards at their discretion.
Given the proliferation of rewards programs in air travel, DOT has initiated a review to examine the fairness, transparency, predictability, and competitiveness of airlines’ rewards programs. DOT said it will take action against airlines if the inquiry finds unfair or deceptive practices and unfair methods of competition in air transportation or the sale of air transportation.
As part of the Department’s review, Secretary Buttigieg has ordered the four largest airlines to submit information that will allow DOT to better understand and identify potential competition or consumer protection issues or risks.
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