Pete Buttigieg launches investigation into 4 largest airlines’ “unfair” or “deceptive” reward programs
Transportation Secretary Pete Buttigieg appearing on Fox News Photo: X video screenshot
Out Transportation Secretary Pete Buttigieg has launched a Department of Transportation (DOT) inquiry into the frequent flier rewards programs of the four largest U.S. airlines: American Airlines, Delta Air Lines, Southwest Airlines, and United Airlines.
The inquiry has asked the airlines for detailed information so that the DOT can examine how participating consumers are “impacted by the devaluation of earned rewards, hidden or dynamic pricing, extra fees, and reduced competition and choice,” the DOT wrote in a statement.
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While the DOT is investigating and can take action against airlines for unfair or deceptive business practices, the DOT hasn’t accused any of the aforementioned airlines of such dealings.
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“Points systems like frequent flyer miles and credit card rewards have become such a meaningful part of our economy that many Americans view their rewards points balances as part of their savings. Subscribe to our newsletter to stay connected to your community. But unlike traditional savings accounts, these rewards can be changed by the company. 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.”
Airline rewards programs typically reward customers who frequently use a particular airline or make purchases with an airline-branded credit card. The “miles” and “points”, which are earned, can be redeemed to get free or discounted flights, upgrades, access to airport lounges, or other third-party products and services. The airlines can also reduce the value of rewards programs, requiring customers to pay more for their benefits or even add extra fees. As part of its inquiry, the DOT asked airlines to provide details of any changes made to their rewards programs in the past six years. It also requested that they compare the dollar values of points and miles earned by each program with the costs that airlines incur to operate. The DOT started requiring airlines in April to disclose additional costs for baggage and cancellation of tickets, as well as for canceled flights or severe delays. Last December, the DOT) secured enforceable commitments from the 10 largest U.S. airlines to cover travelers expenses for things like rebooking, meals and other costs connected to flight delays and cancellations.
In November 2022, the DOT required six airlines to pay $600 million in refunds to “hundreds of thousands of customers who had been denied them.”
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