The Department of Transportation (DOT) has launched a probe into the four largest frequent flyer programs in the United States, which are operated by American Airlines, Delta Air Lines, Southwest Airlines, and United Airlines, over fears that they could be ‘unfair,’ ‘deceptive’ and ‘anticompetitive.’
The inquiry is just the latest investigation by the DOT into consumer air travel rights, which has also included efforts to make airlines display the complete cost of a flight, including ancillary add-ons up front (although this marquee policy is currently stuck in the courts).
The probe was announced by Transportation Secretary Pete Buttigieg on Thursday after he sent a letter to the CEOs of the four airlines asking them to forward reports with extensive information about their frequent flyer programs.
As it stands, there is no evidence that the airlines named by the DOT are operating frequent flyer programs that could be unfair or deceptive, but even in the final days of the Biden administration, Buttigieg is clearly looking to lock in his credentials as a champion of consumer protection.
Announcing the inquiry, Buttigieg commented: “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 added: “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.”
The problem, however, is that while consumers might view frequent flyer programs as a form of savings account, these programs don’t act like a normal savings account.
Airlines have the power to suddenly and arbitrarily devalue awards, potentially leaving consumers feeling short-changed and facing out-of-pocket costs that they weren’t expecting.
Frequent flyer programs are, without doubt, big money earners for airlines, but in a bid to boost their bottom lines, travelers have frequently complained that airlines will suddenly increase costs or reduce the value of points.
The Department of Transportation is the only government agency with the necessary power to investigate the fairness of frequent flyer programs, so the aim of this inquiry, the Department says, is to look into the “fairness, transparency, predictability, and competitiveness” of various frequent flyer programs.
American, Delta, Southwest, and United have been asked by the DOT to submit a raft of information concerning four main areas of how they operate their frequent flyer programs. These are:
- How airlines can suddenly devalue points that have already been earned by travelers
- Whether the value of points is masked through hidden or dynamic pricing
- Whether airlines add additional fees to using or even retaining frequent flyer points
- And whether airlines are being anti-competitive when they merge frequent flyer programs in the event of an acquisition.
At this stage, the inquiry is only in the evidence-gathering stage, and given the fact that a Presidential Election is just a few months away, it will be interesting to see whether the DOT moves forward with its probe under the new administration.
Conclusion
The timing of this inquiry seems pretty odd, given the fact that the current administration is very much in its twilight era. Whether there will be the political will to continue the probe after November’s Presidential Election remains to be seen and the named airlines could well drag out their submission of evidence to see how this progresses.
What this more looks like is the Department of Transportation under the Biden administration trying to cement its position as a champion of consumer rights in the run-up to the hotly contested election.
