Transportation Department Probes Big Four Loyalty Programs
Joe Cortez September 05, 2024
hand holding loyalty card isolated over white background
The U.S. Department of Transportation announced an inquiry into America’s four biggest airlines on September 5, 2024, ordering information about their loyalty programs to protect customers from “potential unfair, deceptive, or anticompetitive practices.”
Transportation Department Evaluating “Fairness, Transparency, Predictability, and Competitiveness”
In announcing the probe of American Airlines AAdvantage, Delta Air Lines SkyMiles, Southwest Airlines Rapid Rewards, and United Airlines MileagePlus, Transportation Secretary Pete Buttigieg said while many flyers rely on their airline rewards for their travel, it’s important to ensure fairness across the board.
“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,” Buttigieg said in a statement. “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 Transportation Department is demanding each airline submit information in four key categories to learn more about how they do business with the public. The first area investigates the devaluation of points, which can come in the form of charging more points for award flights, adding blackout dates, limiting who can use points, or adding expiration dates.
The agency also wants to know about hidden and dynamic pricing, along with extra fees charged by the airline to book award travel. Regulators are concerned that without transparency between the dollar value of points as it applies to air travel, flyers don’t truly know the value of their points as they collect and use them. Moreover, additional fees associated with using and maintaining their points could create additional devaluation for flyers.
Finally, the DOT is asking airlines to provide information about their previous mergers, and how airlines integrated merged rewards programs, partnerships, and “how they monitor, analyze, and/or react to other airlines’ competing rewards program.”
The Transportation Department is requesting information from the four carriers by December 4, 2024. The airlines have not provided a public response to the probe’s requests.
Spend thousands on Delta and their partner, American Express, only to be told you don't "own" the miles, and by the way, when you die, those miles are gone.
That's very common, even beyond just miles. For example, if you have lifetime status at a hotel, when you die that status is gone. In any event, it's what you agreed to when you signed up.
Hotels do the same thing, Marriot being the worst.. 30k points for a one night stay at a mid tier hotel ..makes the points earned nonsense
Hotels, like the airlines, base rewards on availabilty, date of arrival and status of the hotel. If the hotel is near capacity, you will need more points to stay there. Like airlines, the higher your status, the more likely you will receive upgrades and special offers.
As someone who redeemed literally millions of miles in the 1992-2017 period, I'm sure glad I did then because they're worth far less now. The biggest devaluation implemented unilaterally would have to be removing the charts. Delta is particularly bad with this. For every short hop that may be priced less, like Des Moines in winter at 7,000, there's far more added miles expense in longer trips, which can be six figures each way even in basic economy. I think Sec. Pete will find that's a big net-negative for customers, who didn't ask for the change. (Just look at Hawaii then and now) The root of this, though, is NOT ENOUGH COMPETITION among the legacy carriers anymore and the airlines "matching" each other in customer-unfriendly changes in a race to the bottom that started around 2017. It's so bad now that I and many others have given up on loyalty and stopped trying to accumulate miles. What was once the greatest marketing program ever invented for incentivizing business that would not have occurred otherwise is now barely even a factor in deciding which airline to take.
I agree with RustyC. Airline "loyalty" programs are now pretty much irrelevent in choosing which airline/flights to fly.
It used to be both fun and useful. I am writing from Paris having gotten an amazing redemption on Air France but all other options were 350,000 to 600,000 miles round trip. Who the hell has that kind of point bank ongoingly. When I started this game years ago, you could easily get US-Europe for 125,000 pp round trip. Amazingly, I paid 135,000 AA miles each for First Class NY to Bangkok RT on Cathay Pacific. And it was predictable - you knew by history when tickets were released. You could play and win this game. Imagine your bank or broker pulling the crap the airlines have with impunity. I too usually fly in the US First Class and pay for it, minimizing the world of status and miles. On the other hand, kids can't afford houses anymore so maybe inflation was inevitable. But it all strikes be as a shell game.
They should be probing the ULCC programs instead. They'd totally find that the ULCCs are misrepresenting the value of their programs.