DALLAS — Federal officials are looking into the rewards programs of the four largest airlines in the country, including Fort Worth-based American Airlines and Dallas-based Southwest Airlines.
The U.S. Department of Transportation asked American Airlines, Southwest Airlines, Delta Air Lines and United Airlines to provide records and reports on their rewards programs within 90 days, according to a Thursday announcement.
The probe is “focused on the ways consumers participating in airlines rewards programs are impacted by the devaluation of earned rewards, hidden or dynamic pricing, extra fees and reduced competition and choice,” according to the U.S. DOT.
“The rewards programs of the largest four U.S. carriers – American Airlines, Delta Air Lines, Southwest Airlines and United Airlines – play an outsized role in shaping the policies, practices and participation in the airline rewards market due to their size, scale, scope and membership,” a letter from U.S. Transportation Secretary Pete Buttigieg to the airline CEOs reads. “Accordingly, as part of our review, the Department is seeking more specific data to better understand the largest rewards programs and identify potential competition or consumer protection issues or risks.”
The carriers will have to provide detailed data on their rewards programs, which encompasses credit cards, consumer incentives, loyalty and frequent flyer programs, as part of the probe.
“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,” said Buttigieg. “These programs bring real value to consumers, with families often counting on airline rewards to fund a vacation or to pay for a trip to visit loved ones. But unlike a traditional savings account, these rewards are controlled by a company that can unilaterally change their value. 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.”
The issue was the subject of a joint hearing Buttigieg attended in May along with Consumer Financial Protection Bureau Director Rohit Chopra. Smaller airlines expressed concern during that meeting about the larger airlines’ programs and federal officials have met with 11 U.S. airlines to discuss their rewards programs as part of a larger industry-wide review.
The Consumer Financial Protection Bureau reported receiving more than 1,200 complaints involving credit card rewards in 2023, a more than 70% increase over pre-pandemic levels.
The trade group Airlines for America said U.S. airlines are transparent about their frequent flier programs “and policymakers should ensure that consumers can continue to be offered these important benefits,” Reuters reported.
Southwest told Reuters that its flexible rewards program benefits resulted in the carrier doubling the industry average of seats booked with points, while United and American declined to comment.
