The Biden administration is scrutinizing the loyalty programs of the four largest U.S. airlines to investigate how they devalue consumers’ earned points and change the number of points required to book flights. Transportation Secretary Pete Buttigieg has requested reports from the CEOs of American, Delta, Southwest, and United on the policies, fees, and other features of their loyalty programs. Consumers have raised concerns that airlines increase the number of points needed for a free flight and restrict the availability of seats that can be purchased with points. Buttigieg emphasized the importance of ensuring that consumers receive the value promised to them from these programs, as they are often used to pay for vacations and trips to visit family.
Delta and Southwest have responded to the scrutiny, with Delta stating that loyalty from members is a top priority within its SkyMiles program and Southwest highlighting that its points never expire. Airlines for America, a trade group representing the four carriers targeted by Buttigieg, defended the loyalty programs, stating that millions of people benefit from them and policymakers should ensure that consumers can continue to enjoy these benefits. Frequent-flyer programs have evolved over the years, moving from being based on the number of flights taken or miles flown to being driven by spending using airline-branded credit cards, which has become a significant source of revenue for airlines.
The Transportation Department and the Consumer Financial Protection Bureau held a hearing in May to discuss airline loyalty programs, where they raised issues similar to those in Buttigieg’s letter to airline CEOs. Consumer advocates and officials from smaller airlines testified at the hearing, expressing concerns about the evolving nature of loyalty programs and the challenges faced by consumers in retaining their points. The Consumer Financial Protection Bureau reported a significant increase in complaints about credit card rewards, including those related to airline loyalty programs, indicating a growing issue in the industry. The scrutiny from the Biden administration aims to address these concerns and ensure transparency and fairness in the way airlines manage their loyalty programs.
Buttigieg has given the airlines 90 days to report on various aspects of their loyalty programs, including how point values are determined, any fees consumers are required to pay, and details of agreements with banks that buy miles. The order also asks airlines to disclose any changes made to their programs since July 31, 2018, and how each change has impacted the dollar value of reward points. This move by the Biden administration reflects a commitment to protecting consumer interests and ensuring that loyalty programs offered by airlines are transparent and fair. Airlines will need to provide detailed information to comply with the order and address the concerns raised by consumers and regulators regarding the management of loyalty programs.
