The Department of Transportation (DOT) has initiated an investigation into the rewards programs of the four largest U.S. airlines: American Airlines, Delta Air Lines, Southwest Airlines, and United Airlines. This move aims to safeguard consumers from practices that the DOT deems potentially unfair, deceptive, or anticompetitive. The inquiry will focus on the devaluation of earned rewards, hidden and dynamic pricing structures, and additional fees that may reduce competition and consumer choice.
Earlier this year, the DOT was already scrutinizing frequent flyer programs to identify potentially misleading or unfair practices. Historically, loyalty programs have significantly influenced airline valuations, often more than the airlines’ operational aspects. Airlines have frequently modified rewards programs with little notice, which has led to customer dissatisfaction. The DOT’s current investigation seeks to address these long-standing issues and bring more transparency to these programs.
Focus Areas of Investigation
Transportation Secretary Pete Buttigieg emphasized the importance of rewards programs to consumers, noting that many Americans view their accumulated rewards points as part of their savings. He highlighted that airlines control these points and can unilaterally change their value, which can be detrimental to consumers. Buttigieg’s goal is to ensure that these programs remain transparent and fair.
“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,” Buttigieg stated in the release.
Responses from Airlines
Southwest Airlines responded by highlighting the benefits of its Rapid Rewards program, which offers flexible travel policies and a high availability of reward seats. Delta Air Lines also acknowledged the inquiry and expressed its commitment to providing a meaningful rewards experience through its SkyMiles program. American Airlines and United Airlines directed inquiries to their trade association, Airlines for America (A4A), which defended the transparency and benefits of loyalty programs.
“At Southwest, we take great pride in our award-winning Rapid Rewards program, which includes flexible travel policies and unmatched availability of reward seats,” the airline stated.
Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra supported the DOT’s efforts, stressing the need to prevent deceptive devaluation tactics. He noted that many Americans pay high fees and interest rates to participate in these programs, only to have their rewards devalued with little warning.
“Airline valuations are increasingly driven by their points programs and lucrative partnerships with credit card companies, and Americans are paying high interest rates and fees to participate in these programs — yet these tempting points and rewards programs are often depreciated or changed with little notice,” Chopra mentioned in his statement.
This DOT investigation represents a significant step towards ensuring that airline reward programs are fair and transparent to consumers. By addressing key issues such as the devaluation of rewards and hidden fees, the DOT aims to create a more equitable system for travelers. As the investigation progresses, it will be essential to monitor the airlines’ responses and any potential regulatory changes that may arise.
