FOUR major airlines have come under fire over the fairness of their rewards programs.
As an investigation is underway, consumers fear changes to the rewards programs and hikes in the cost of travel.
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The four largest airlines – American, Delta, Southwest, and United – are being targeted for the operations of their rewards programs.
The Department of Transportation, or DOT, launched an investigation into the programs over “potential unfair, deceptive, or anticompetitive practices.”
Pete Buttigieg, the US Secretary of Transportation, sent letters to the four companies requesting they provide records with details about their rewards programs, practices, and policies.
The DOT hopes to eliminate deceptive practices, such as devaluing earned rewards, hidden or dynamic pricing, extra fees, or reduced competition and choice.
Buttigieg attended a public hearing in May on airline and credit card programs, at which smaller US airlines expressed concern about how the larger airlines were leveraging the rewards programs.
“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,” he 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.”
As part of an industry review, DOT officials have also met with 11 US airline companies to look into their rewards programs.
The department noted that airline rewards points can be earned in multiple ways, such as making purchases with the airline’s co-branded credit card, flying with the airline or its partners, or through other activities outlined by the airline or its credit card partner.
The rewards points can be redeemed for a variety of perks, including flights, upgrades, or third-party products and services.
Under select programs, customers can also increase their status by reaching certain goals, such as earning rewards points.
However, the value of the rewards depends on the terms and conditions that apply to their use.
The department also pointed out that many airlines have the right to change the terms of their rewards at any point.
For example, in October 2023 Delta’s CEO announced the company would update its frequent flyer program after changes making it more difficult to earn 2025 elite status angered customers.
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.”
Pete Buttigieg
COST CONCERNS
Many consumers are worried about what the investigation means for the future of airline rewards programs and the cost of travel.
One customer on Facebook feared that airlines would limit the availability of rewards points to only higher-cost flights.
“This could force airlines into not offering points for some flights. In other words, you pay a premium fare if you want points. This could end up costing the consumer money,” they wrote.
Another consumer worried about the investigation’s potential impact on low-cost carriers such as Frontier.
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“Makes me wonder what will happen at Frontier as a result of this federal probe,” they said. “There is so much variability in things like bag fees, early booking fees, and base fares. For bag fees, you actually have to specify route, date, and departure time to get the fee chart.”
One Facebook user noted that if the investigation led to new rules from the DOT, all airlines would need to follow them – not just American, Delta, Southwest, and United.
They suspected the department may create new rules regarding inconsistent or hidden bag fees as well as vastly different base fares for the same flight routes.
Southwest is set to ditch a perk that sets it apart from United and Delta.
Plus, the carrier may bring back a popular promotion that means free travel.