U.S. Secretary of Transportation Pete Buttigieg speaks to reporters at O'Hare International Airport on Sept. 1, in Chicago.Scott Olson/Getty Images
The Biden administration says it is examining the four largest U.S. airline frequent-flyer programs and how they devalue points that consumers have earned and frequently change the number of points or miles needed to book flights.
Transportation Secretary Pete Buttigieg wrote to the CEOs of American, Delta, Southwest and United on Thursday, asking each for a report on policies, fees and other features of their loyalty program.
Consumers often complain that airlines raise the number of points needed to earn a free flight and limit the number of seats that can be purchased with points.
Mr. Buttigieg said loyalty programs bring value to consumers, and people count on them to pay for vacations and trips to visit family.
“But unlike a traditional savings account, these rewards are controlled by a company that can unilaterally change their value,” he said in a statement issued by the Transportation Department. “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.”
Delta said loyalty of members in its frequent-flyer program “means everything to us, and providing a meaningful rewards experience is the top priority within Delta’s SkyMiles Program.”
Airlines for America, a trade group that represents all four carriers targeted by Mr. Buttigieg, said millions of people enjoy participating in the loyalty programs.
“U.S. carriers are transparent about these programs, and policy makers should ensure that consumers can continue to be offered these important benefits,” a spokesperson for the group said.
Frequent-flyer programs were once based on the number of flights taken or miles flown. In recent years, however, they have been fuelled by spending that consumers conduct using airline-branded credit cards. Income from the credit-card issuers has become an important source of airline revenue.
The Transportation Department and the Consumer Financial Protection Bureau held a hearing in May on the airline programs, at which they raised many of the issued covered in Mr. Buttigieg’s letter to airline CEOs. Witnesses included consumer advocates and officials from three smaller airlines, but no representatives of the big four airlines that are covered by the new inquiry.
The consumer-protection board said in a report for the hearing that it received more than 1,200 complaints about credit-card rewards last year, an increase of more than 70 per cent from prepandemic levels. Many hotels, retailers and other businesses also offer loyalty programs with credit cards.