The Biden administration is currently reviewing the loyalty programs of the four largest U.S. airlines to address concerns about the devaluation of points and frequent changes in the number of points or miles required for booking flights. Transportation Secretary Pete Buttigieg reached out to the CEOs of American, Delta, Southwest, and United to request a detailed report on their policies, fees, and other features of their loyalty programs.
Consumers have often expressed frustration over airlines increasing the number of points needed for a free flight and imposing restrictions on the availability of seats that can be purchased with points. Buttigieg highlighted the value that loyalty programs bring to consumers, emphasizing their importance in financing vacations and family visits while cautioning that these rewards are subject to unilateral changes by the companies.
Delta stated that the loyalty of its frequent-flyer program members is of utmost importance, with a strong commitment to providing a rewarding experience within the SkyMiles Program. Airlines for America, a trade group representing the four carriers under scrutiny, emphasized the popularity and transparency of loyalty programs, advocating for policymakers to ensure the continued availability of these benefits to consumers.
Originally based on flight frequency or miles traveled, frequent-flyer programs have evolved to prioritize spending through airline-affiliated credit cards, which has become a significant revenue stream for airlines. A joint hearing held by the Transportation Department and the Consumer Financial Protection Bureau in May raised similar concerns to those outlined in Buttigieg’s letters, with consumer advocates and officials from smaller airlines participating but not from the major airlines under investigation.
Over 1,200 complaints about credit card rewards were received by the consumer-protection board last year, representing a notable increase of over 70% from pre-pandemic levels. In addition to airlines, many hotels, retailers, and businesses offer loyalty programs through credit cards, contributing to the growing concerns about the transparency and fairness of such reward systems.
