DOT to Probe Loyalty Programs of 4 Largest U.S. Airlines

05.09.2024 - 23:51 / skift.com / Pete Buttigieg / Delta Air Lines / United Airlines / Meghna Maharishi / Rohit Chopra

The Department of Transportation officially launched an inquiry Thursday into whether the loyalty programs of the four largest U.S. airlines have engaged in unfair, deceptive or noncompetitive practices.

The department said its probe would focus on how frequent flyer programs are impacted by the devaluation of miles, hidden and dynamic pricing, extra fees, along with reduced competition and choice.  

Transportation Secretary Pete Buttigieg sent a letter to American Airlines, Delta Air Lines, United Airlines and Southwest Airlines requesting them to provide records and reports about their loyalty programs, practices and policies. 

Skift has contacted the four airlines involved for comment.

“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,” Buttigieg said in a statement. “But unlike a traditional savings account, these rewards are controlled by a company that can unilaterally change their value.”

The DOT also expressed concerns that mergers within the industry could lead to less competition and choice among loyalty programs. When two airlines merge, a combined loyalty program could create issues for customers if they lose rewards, value or status in the transition, the department said. 

The letter Buttigieg sent to the airlines includes a lengthy questionnaire. One asks airlines to detail each change they’ve made to their loyalty programs since 2018. Another asks airlines how the dollar value of a mile has changed in the last six years.

Southwest said that its Rapid Rewards program has led it to have double the average of seats booked with points.

“At Southwest, we take great pride in our award-winning Rapid Rewards program, which includes flexible travel policies and unmatched availability of reward seats,” Southwest said in a statement.

Delta acknowledged that it received the DOT’s inquiry.

“Our Members’ loyalty means everything to us, and providing a meaningful rewards experience is the top priority within Delta’s SkyMiles Program,” a Delta spokesperson said.

American said it has increased the value of AAdvantage miles and that it believed its award chart for redemptions was transparent to consumers.

United declined to comment on the matter.

The DOT first announced in November that it would investigate the fairness of loyalty programs. It also hosted a panel with the Consumer Financial Protection Bureau in May. The four largest airlines were notably not present for that panel. 

CFPB director Rohit Chopra said in May that the agency found airlines were selling inflated points to consumers while credit card issuers would receive the same points at a much lower price. 

“This not only creates