US Department of Transportation investigates airline loyalty programs

DALLAS — The U.S. Department of Transportation (DOT) has launched an investigation into the loyalty programs of the four largest U.S. airlines – American Airlines (AA), Delta Air Lines (DL), United Airlines (UA) and Southwest Airlines (WN).

The DOT’s investigation follows previous concerns raised by the Consumer Financial Protection Bureau about inflated points sales and fairness issues within these programs. The investigation, announced Thursday, will examine whether these programs engage in unfair or deceptive practices, including issues related to mile devaluation, hidden fees, dynamic pricing and reduced competition.

Transportation Secretary Pete Buttigieg stressed that loyalty programs provide value to consumers and help families afford travel. But unlike traditional savings accounts, airlines can change the value of rewards at will, raising concerns about transparency and fairness. The Transportation Department is also studying how airline mergers could reduce competition and limit customer choice within loyalty programs.

Accordingly Skift.comLoyalty programs are a significant source of revenue for airlines. DL’s SkyMiles program, in partnership with American Express, generated $1.9 billion in the second quarter. The same is true of UA’s MileagePlus program, which is valued at $22 billion.

The airlines were asked to provide detailed records of program changes since 2018, including changes in mileage value. WN defended its Rapid Rewards program, while DL stressed the importance of customer loyalty. UA declined to comment and AA expressed confidence in the transparency of its rewards system.

Trade group Airlines for America said loyalty programs provide significant benefits to millions of Americans and that U.S. airlines are transparent about their practices. The U.S. Department of Transportation’s investigation is designed to ensure consumers continue to receive fair value from these programs.