Federal authorities want to make sure airlines don’t deprive customers of their hard-earned points.
The Transportation Department announced Thursday that it is investigating the rewards programs of the four largest U.S. airlines — American, Delta, Southwest and United — to ensure the companies are not being unfair, deceptive or anticompetitive with their frequent flyers.
The ministry said it would examine how participants in “airline rewards programs are affected by the devaluation of earned rewards, hidden or dynamic pricing, additional fees and reduced competition and choice.”
“Points systems like frequent flyer miles and credit card rewards have become such an important part of our economy that many Americans consider their rewards points balance to be part of their savings,” Transportation Secretary Pete Buttigieg said in a press release.
“These programs provide real value to consumers, as families often rely on airline rewards to fund vacations or travel to visit loved ones,” Buttigieg continued. “But unlike a traditional savings account, these rewards are controlled by a company that can unilaterally change their value. Our goal is to ensure that consumers get the value they promise, and that means validating that these programs are transparent and fair.”
The ministry said airlines reserve the right to change the terms of their programs whenever they want, meaning they can shift the goalposts and add hurdles at any time by restricting points, limiting who can use the points, changing expiration dates and removing free perks.
As part of the investigation, the ministry ordered the four airlines to provide a large amount of documents.
Specifically, airlines must provide information about how their policies have changed in recent years and how those changes have affected customers; identify the dollar value of each point; describe their practices related to dynamic pricing; detail fees associated with their rewards programs; and disclose documents showing how airline mergers have affected rewards programs.
Airlines for America, a trade organization representing the four major airlines, said in a statement that “millions of people enjoy being part of a variety of loyalty programs, which allow them to earn rewards that can be applied toward travel or other benefits.”
“U.S. carriers are transparent about these programs, and policymakers should ensure that consumers can continue to benefit from these important benefits,” the organization said.
Asked about the issue, United and American Airlines pointed to the Airlines for America statement. The other two airlines, Delta and Southwest, stressed that they value customer loyalty.
“Our members’ loyalty is paramount to us, and delivering a meaningful rewards experience is the top priority of Delta’s SkyMiles program,” Delta said in a statement. “We have received the DOT’s request and will respond accordingly.”
“At Southwest, we are very proud of our award-winning Rapid Rewards program, which includes flexible travel policies and unmatched availability of award seats,” the airline’s spokesperson wrote in a statement to BI.
Selling frequent flyer miles to credit card companies so they can be offered as rewards to holders of co-branded cards like Delta’s AMEX SkyMiles and American’s AAdvantage Citi Mastercard has become a lucrative source of additional revenue for airlines in recent years.
In 2023, Delta Air Lines earned $6.8 billion from American Express, while American Airlines earned $5.2 billion from its Citi Mastercard and other partners.
Last year, Delta found itself in a difficult spot with its frequent flyers when the airline overhauled its rewards-earning formula, making it harder for customers and co-branded credit card holders to achieve elite status. The airline also drew criticism from consumers when it severely limited lounge access for AMEX cardholders, a key perk for those who pay hundreds of dollars in annual fees for the card.
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