The Biden administration is currently reviewing the frequent-flyer programs of the four major U.S. airlines and how these programs have led to the devaluation of points earned by consumers, as well as the frequent changes in points or miles required to book flights.
According to the Associated Press, U.S. Transportation Secretary Pete Buttigieg wrote to the CEOs of American Airlines, Delta Air Lines, Southwest Airlines, and United Airlines on Thursday, asking each of them to submit a report outlining their airline loyalty program policies, fees, and other features.
Consumers have often complained that airlines have increased the amount of points needed for free flights and limited the number of seats available for purchase with points.
Buttigieg stated that loyalty programs provide value to consumers, with some relying on them to pay for vacations and family visits.
“However, unlike traditional savings accounts, these rewards are controlled by a company that can unilaterally change their value,” he said in a statement released by the Department of Transportation. “Our goal is to ensure that consumers receive the value promised to them, which means confirming that these programs are transparent and fair.”
Delta Air Lines said that loyalty among members of its frequent-flyer program “means everything” and is a top priority for the company.
Southwest Airlines emphasized that their points never expire and that they allow more seats to be booked with points compared to other airlines.
Airlines for America (A4A), a trade organization representing these four airlines, stated that millions of people enjoy participating in these loyalty programs.
A spokesperson for the organization said, “U.S. airlines are transparent about these programs, and policymakers should ensure that these important benefits continue to be provided to consumers.”
While frequent-flyer programs were traditionally based on the number of flights or miles flown, in recent years, they have been driven by consumer spending on credit cards affiliated with airline brands. Revenue from credit card issuers has become an important source of income for airlines.
The Department of Transportation and the Consumer Financial Protection Bureau held a hearing in May on airline programs, where many of the issues addressed in Buttigieg’s letter to the CEOs of the four major airlines were raised, although representatives from these airlines were not present at the hearing.
The Consumer Financial Protection Bureau reported in a prepared report for the hearing that the agency received over 1200 complaints about credit card rewards last year, an increase of over 70% from before the pandemic. Many hotels, retailers, and other businesses also offer credit card loyalty programs.
Buttigieg has instructed the four airlines to report on various matters within 90 days, including how point values are determined, any fees consumers must pay, and details of their transactions with banks that purchase miles from the airlines and use them to incentivize credit card spending.
The directive requires airlines to list any changes in their programs since July 31, 2018, and how each change has affected the value of reward points.