The Department of Transportation (DOT) has launched an inquiry into the rewards programs of the four largest U.S. airlines, saying it aims to protect customers from practices that are potentially unfair, deceptive or anticompetitive.
Transportation Secretary Pete Buttigieg sent letters to American Airlines, Delta Air Lines, Southwest Airlines and United Airlines ordering them to provide information about their rewards programs, practices and policies, the DOT said in a Thursday (Sept. 5) press release.
The letters request information and documents relating to devaluation of earned rewards, hidden and dynamic pricing, extra fees and reduction in competition and choice, according to the release.
Buttigieg said in the release that rewards programs bring real value to consumers and that Americans view their rewards points balances as part of their savings.
“But unlike a traditional savings account, these rewards are controlled by a company that can unilaterally change their value,” Buttigieg said in the release. “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.”
Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra said in a Thursday statement that the DOT’s inquiry is a key step to prevent “deceptive devaluation tactics that can plague these alternative currencies held by tens of millions of families.”
“Airline valuations are increasingly driven by their points programs and lucrative partnerships with credit card companies, and Americans are paying high interest rates and fees to participate in these programs — yet these tempting points and rewards programs are often depreciated or changed with little notice,” Chopra said in his statement.
Reached for comment by PYMNTS, Southwest Airlines provided a statement saying its Rapid Rewards program helps millions of customers meet their personal travel needs.
“At Southwest, we take great pride in our award-winning Rapid Rewards program, which includes flexible travel policies and unmatched availability of reward seats,” the statement said. “Our commitment to providing customers with Rapid Rewards points that never expire, regardless of how they’re earned, has led us to have double the industry average of seats booked with points.”
Delta Air Lines said in a statement emailed to PYMNTS that it received the DOT’s inquiry and will respond accordingly.
“Our members’ loyalty means everything to us, and providing a meaningful rewards experience is the top priority within Delta’s SkyMiles program,” the statement said.
American Airlines and United Airlines referred PYMNTS to the trade association Airlines for America (A4A) for comment.
A4A said in a statement emailed to PYMNTS that consumers have choice when selecting an airline, carriers want to reward travelers for their return business, and loyalty programs are a way for carriers to say “thank you” to travelers.
“Millions of people enjoy being a part of various loyalty programs, which allow them to accumulate rewards to apply toward travel or other benefits,” the A4A statement said. “U.S. carriers are transparent about these programs, and policymakers should ensure that consumers can continue to be offered these important benefits.”
It was reported in December that the DOT was closely examining the frequent flyer programs of major U.S. airlines, aiming to identify potential deceptive or unfair practices.
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