Federal probe targets airline frequent flyer programs
By Pete Muntean, CNN
(CNN) — Airlines’ highly lucrative – and sometimes mysterious – frequent flyer and credit card rewards programs are now subject to an unprecedented federal consumer protection probe.
The Department of Transportation told executives of the country’s four major airlines on Thursday to divulge details and data surrounding the policies and practices of how passengers can accrue and spend miles.
“Our goal with this inquiry is to ensure that customer rewards are protected from any practices that would diminish their value, benefit, or availability,” says the letter to the CEOs of American Airlines, Delta Air Lines, Southwest Airlines and United Airlines, which now have 90 days to respond to the Department of Transportation.
The DOT’s probe is focused on how consumers could be affected by the devaluation of earned rewards, extra fees, hidden or dynamic pricing and reduced competition and choice.
The department aims to protect customers from “potential unfair, deceptive, or anticompetitive practices,” it said in a news release.
In Thursday’s announcement, Transportation Secretary Pete Buttigieg said airline miles “have become such a meaningful part of our economy that many Americans view their rewards points balances as part of their savings.”
Industry group Airlines for America said in a statement that consumers “have the power of choice” when selecting airlines for their travels and carriers offer loyalty programs as a way to reward travelers for their “return business and brand loyalty” in a fiercely competitive environment.
“Millions of people enjoy being a part of various loyalty programs, which allow them to accumulate rewards to apply toward travel or other benefits,” Airlines for America said. “U.S. carriers are transparent about these programs, and policymakers should ensure that consumers can continue to be offered these important benefits.”
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