United Airlines’ s service will connect New York/Newark Airport (New Jersey) with Tenerife South Airport from 1 June 2024 until at least the end of March 2025.
10.05.2024 - 13:13 / skift.com / Spirit Airlines / Pete Buttigieg / Delta Air Lines / United Airlines / United S.Airlines / Meghna Maharishi / Rohit Chopra / Matt Klein
Have the loyalty programs of the biggest U.S. airlines grown so huge that smaller airlines can’t compete? That was one of the concerns during a hearing Thursday with the Department of Transportation and the Consumer Financial Protection Bureau.
Transportation Secretary Pete Buttigieg said he would be concerned if the Department of Transportation finds evidence of airlines operating their programs in a way that makes it more difficult for smaller carriers to enter the market.
“That would by definition be a competition concern,” Buttigieg said.
Buttigieg’s remarks come as the DOT announced in December that it would investigate whether airlines have devalued frequent flyer miles, which would make it more difficult for customers to book reward tickets.
However, Buttigieg said the DOT was still in the middle of its investigation and had not reached any conclusions yet.
CFPB director Rohit Chopra said his agency has found some initial evidence of airlines and credit card companies devaluing points and miles.
“More recently we’ve seen credit card rewards take center stage in the industry’s marketing blitzes particularly in the form of frequent flyer miles and other proprietary points programs,” Chopra said. “The largest and most dominant airlines play a massive role in this market.”
He said the CFPB discovered in an initial review that credit card companies and airlines can “quickly and dramatically” devalue points by making it more difficult to redeem them or limiting what items can be purchased with points.
The CFPB also found that airlines have been selling inflated points to consumers while credit card issuers receive those same points at a much lower price, Chopra said.
“This not only creates confusion about the true value of the points but also raises some questions about fairness,” he said.
The loyalty programs and credit cards of the four largest airlines — American, Delta, United and Southwest — took center stage at the hearing. But none of the Big Four airlines were present.
Southwest said it “remained engaged with the DOT on the issue.” Delta declined to comment. American and United did not immediately respond to a request for comment. Airlines for America, the trade group that represents some of the largest U.S. airlines, also declined to comment on why none of the bigger airlines were at the hearing.
Instead, the hearing featured executives from Spirit, Allegiant and Breeze, ultra-low-cost carriers with much smaller programs for loyalty and credit cards.
Matt Klein, Spirit’s chief commercial officer, said the airline competition is like a “three-legged stool,” with airline loyalty programs making up one part of that stool.
The second part includes market dominance in certain airports
United Airlines’ s service will connect New York/Newark Airport (New Jersey) with Tenerife South Airport from 1 June 2024 until at least the end of March 2025.
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