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Fairness of frequent flyer programs put in the spotlight at hearing in Washington
09.05.2024 - 22:41 / thepointsguy.com / Pete Buttigieg / Rohit Chopra
Are frequent flyer programs fair to their members?
That was the subject of a Thursday hearing in Washington, D.C., held jointly by the U.S. Department of Transportation and the Consumer Financial Protection Bureau.
The hearing, announced last month following reports in late December that the DOT was investigating frequent flyer programs, was positioned as a fact-finding, informational event rather than a formal investigation.
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"The joint hearing is an opportunity for DOT and CFPB to gather more information for determining if additional action is needed to ensure fair competition in these industries and a fair and transparent experience for passengers and cardholders," the agencies said in a statement last month announcing the hearing.
Along with remarks by Transportation Secretary Pete Buttigieg and CFPB director Rohit Chopra, the hearing featured remarks and a panel discussion with several airline and banking industry representatives.
But there was one group that was conspicuously absent from the hearing: the largest airlines and banks that control the biggest frequent flyer programs.
Instead, participants included:
At least one of the "big four" U.S. airlines — American Airlines, Delta Air Lines, United Airlines and Southwest Airlines — was not invited to participate, an airline source familiar with the matter confirmed to TPG.
A representative for the DOT told TPG that every airline except for American and United had been invited — those two were omitted because they were originally scheduled to have representatives appear at a conflicting congressional hearing at the same time but where they did not ultimately appear. Delta and Southwest declined to share why they were not present.
The point of the two agencies' focus on frequent flyer programs and credit card rewards is primarily geared toward making sure that consumers get the value they expect and are treated fairly, the two agency heads said.
The rewards have evolved and expanded significantly since they were first introduced in the 1980s, with some consumers factoring in their savings in points and future rewards potential into their broader financial decision making.
"Point systems like frequent flyer miles, and credit card points have become a meaningful part of our economy," Buttigieg said during opening statements. "It's clear that these programs contain a considerable amount of value, and like anything of value transacted in our economy, it's important that it's handled fairly."
"These programs have evolved from many years ago, from rewards for the airlines' most loyal customers to a multibillion-dollar currency market where credit card companies and airlines
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