WASHINGTON- The U.S. Department of Transportation (DOT) has initiated an investigation into major airline frequent flyer programs, targeting potential illegal points devaluations and questionable accounting practices.
Transportation Secretary Pete Buttigieg announced the probe, emphasizing the significant role these programs play in consumer savings and travel plans.
Representative Image | Photo: By Glenn Beltz from Goleta, USA – DSC_6369, CC BY 2.0, https://commons.wikimedia.org/w/index.php?curid=44952816US Airlines Loyalty Program Investigation
Buttigieg highlighted the importance of reward points in the economy, noting that many Americans view their points balances as part of their savings. He stressed the DOT’s commitment to ensuring consumers receive the promised value from these programs, focusing on transparency and fairness.
The investigation targets the four largest U.S. carriers: American Airlines (AA), Delta Air Lines (DL), Southwest (WN), and United Airlines (UA).
Buttigieg sent letters to the CEOs of these airlines, requesting specific data to assess their rewards programs and identify potential competition or consumer protection issues.
The DOT’s concern stems from the financial impact of loyalty programs on airlines’ profitability. Buttigieg pointed out that the value of these programs can exceed that of flight operations in contributing to an airline’s bottom line.
The investigation aims to protect customers’ rewards from practices that could diminish their value, benefit, or availability. The DOT has ordered the airlines to file reports responding to specific questions about their loyalty programs.
Photo: Delta Air LinesWhat will be investigated?
The US DOT investigation into airline frequent flyer programs focuses on four key areas:
- The probe targets the devaluation of earned rewards,
- hidden and dynamic pricing practices,
- extra fees, and
- the impact of airline mergers on loyalty programs.
DOT aims to scrutinize how airlines potentially reduce or eliminate accrued value after travelers earn points or miles.
The investigation will examine pricing strategies for award flights that may obscure the true value of points or miles. Additionally, the DOT will assess fees charged for maintaining, redeeming, or transferring points, which could diminish their value.
The probe will also evaluate how airline mergers affect frequent flyer programs and point values. This comprehensive investigation seeks to address long-standing concerns about the opaque valuation of airline points and miles.
Consumer advocates have welcomed the DOT’s announcement. William J. McGee, senior fellow at the American Economic Liberties Project, expressed strong support for the investigation, emphasizing the need for transparency and fairness in loyalty programs.
The DOT has given airlines a 90-day deadline to submit all relevant documents. Airlines for America, representing major U.S. carriers, defended loyalty programs as a way to thank travelers and emphasized their importance to millions of customers.
What are your thoughts on the Big Four US Airlines loyalty program? Do you feel cheated? Let us know in the comments.
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