The Department of Transportation is taking a closer look at airline loyalty programs. They want to make sure these programs are fair for travelers.
The DOT is checking into the four biggest airline rewards programs in the United States.
This review goes back six years. The DOT wants airlines to explain any changes that made their rewards less valuable.
They’re trying to stop airlines from using tricks or unfair practices with frequent flyer miles. It’s a big step to protect people who use these programs.
What’s up with airline rewards?
The government is taking a closer look at frequent flyer programs. They’re asking the big airlines to share info about how their rewards work.
This includes American, Delta, Southwest, and United.
The Department of Transportation wants to make sure these programs are fair and easy to understand. They’re worried about some things:
- Points losing value over time
- Hidden or changing prices
- Extra fees
- Less competition between airlines
Airlines have until December 4th to send in their reports. The government will use this info to see if the programs are treating customers right.
Pete Buttigieg, who’s in charge of transportation, said rewards points are a big deal for many people. Some folks even think of them like savings.
Families often use these points for vacations or to visit relatives.
But there’s a catch. Unlike money in a bank, airlines can change how much points are worth whenever they want. The government wants to make sure people are getting what they were promised.
This all started after the Department of Transportation met with 11 airlines to talk about their rewards programs. They’re looking at the whole industry to see what’s going on.
Here’s what they want to know more about:
- How fair the programs are
- If they’re easy to understand
- If you can predict how they’ll work
- How much competition there is between different programs
It’ll be interesting to see what comes out of this review and if it leads to any changes in how airline rewards work.
What’s in the DOT’s Letter?
Earned Reward Changes
The DOT wants to know how airlines have changed their rewards in the last six years. They’re looking at things like making it harder to get free flights or upgrades.
Airlines might do this by asking for more points or adding new rules. The DOT also cares about limits on who can use points and when they expire.
They want to see if airlines are making it tougher to get perks that used to be free.
Here are some ways airlines might make rewards less valuable:
- Asking for more points for the same flight
- Adding new rules for using points
- Putting time limits on when points can be used
- Making it harder to get special status
- Taking away free perks unless you have a higher status
Tricky Pricing Tactics
Airlines now often base rewards on ticket prices instead of flight distance. This can make it hard for customers to figure out what their points are really worth.
The DOT wants airlines to explain:
- How much one reward point is worth in dollars
- What you can get with points (flights, upgrades, etc.)
- How much it costs to buy points directly from the airline
This info will help people understand if they’re getting a good deal when they use their points.
Extra Costs for Rewards
Airlines make a lot of money from extra fees. Now they’re adding fees to their rewards programs too.
The DOT wants to know about every fee linked to rewards programs. They’re asking airlines to:
- List all the fees
- Explain why they charge each fee
- Show how much these fees cost the airline
- Explain any price differences
The DOT wants to see if airlines are charging fair prices for these extras.
Less Choice Due to Mergers
Rewards programs are big money-makers for airlines. When airlines merge, it can affect these programs.
The DOT is worried that mergers might:
- Give customers fewer choices
- Make rewards less valuable
- Cause people to lose points or status
To check this, the DOT is asking airlines about:
- How they’ve handled mergers in the past
- Their partnerships with other rewards programs
- How they react when other airlines change their programs
This part is extra important right now because Alaska Airlines and Hawaiian Airlines want to merge. The DOT’s findings could affect whether this merger happens.
What Airlines Need to Do
Four big airlines got this letter:
- American Airlines
- Delta Air Lines
- Southwest Airlines
- United Airlines
They have three months to answer all the DOT’s questions. The DOT will use this info to see if airlines are treating customers fairly.
Why This Matters
The DOT is doing this because:
- They had a big meeting about airline rewards in May
- Smaller airlines said the big ones might be using rewards unfairly
- The big airlines didn’t show up to explain their side
How are airlines responding?
The big airlines are standing their ground when it comes to their loyalty programs. They say these programs are fair and give customers good value.
Delta Air Lines thinks its frequent flyers are super important. The company wants to make sure SkyMiles members get rewards they’ll like.
Airlines for America speaks for many big airlines. They point out that flyers have lots of choices for loyalty programs.
This means airlines have to make their programs competitive and clear.
Southwest Airlines is proud of its Rapid Rewards program. They say it’s flexible and easy to use.
Customers can book lots of reward flights with their points. Southwest lets people keep their points forever, no matter how they earned them.
Some experts think loyalty programs are actually getting better for customers. A study found that reward points are worth more now than a few years ago.
Here’s a quick look at what some airlines are saying:
Airline | What they’re saying |
---|---|
Delta | “Our members’ loyalty means everything to us” |
Southwest | “We take great pride in our award-winning Rapid Rewards program” |
American & United | Letting Airlines for America speak for them |
Airlines seem ready to work with the government on this review. They want to show that their programs are good for customers.
But they also want to protect these important parts of their business.