The U.S. Department of Transportation has launched a probe into the airline reward programs for the four largest U.S. carriers, the agency announced Thursday.
DOT Secretary Pete Buttigieg sent letters to the CEOs of American Airlines, Delta Air Lines, Southwest Airlines and United Airlines, “ordering them to provide records and submit reports with detailed information about their rewards programs, practices, and policies.”
The agency said it is focused on how people who participate in these programs are affected by the “devaluation of earned rewards, hidden or dynamic pricing, extra fees, and reduced competition and choice.”
“[U]nlike a traditional savings account, these rewards are controlled by a company that can unilaterally change their value,” Buttigieg said in a statement. “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 industry lobbying group Airlines for America said in a statement that “consumers have the power of choice when selecting an airline for a trip, and carriers want to reward travelers for their return business and brand loyalty. Because there is fierce competition among airlines for customers, loyalty programs are a way carriers can say ‘thank you’ to travelers. … U.S. carriers are transparent about these programs, and policymakers should ensure that consumers can continue to be offered these important benefits.”
The deadline for each carrier to respond with the requested loyalty program information is Dec. 4, according to DOT.
Reports surfaced last December that DOT was looking into frequent-flyer programs for potentially deceptive or unfair practices. These programs and their affiliated credit cards also have been the target of the Credit Card Competition Act, which aims to change regulations for competition in credit card transactions and could “kill rewards programs” if it was passed, according to United CEO Scott Kirby on a third-quarter 2023 earnings call.
