DOT Investigating Airlines' Rewards Programs

The U.S. Department of Transportation had launched an investigation into rewards programs at the four largest airlines over “potential unfair, deceptive, or anticompetitive practices.”

As part of the investigation, U.S. Secretary of Transportation Pete Buttigieg has sent letters to American Airlines, Delta Air Lines, Southwest Airlines, and United Airlines ordering them to provide records and submit reports with detailed information about their rewards programs, practices, and policies.

DOT’s probe is focused on the ways consumers participating in airline rewards programs are impacted by the devaluation of earned rewards, hidden or dynamic pricing, extra fees, and reduced competition and choice.

“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 U.S. Transportation Secretary Pete 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,” Buttigieg added.

Airline rewards points are typically earned by making purchases with the airline’s co-branded credit card, by flying on the airline or its partners, or by other activities specified by the airline or its credit card partner.

Rewards points can be redeemed for flights, upgrades, ancillary services, or third-party products and services. In many rewards programs, customers can also earn status by reaching certain benchmarks by accruing rewards points, taking qualifying flights, and/or hitting spending targets. Rewards customers receive complimentary perks like bonus miles, service upgrades, or lounge access that increase in number and value with each status level.