U.S. DOT Investigates Airline Loyalty Programs

DALLAS — The U.S. Department of Transportation (DOT) has initiated 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 inquiry follows earlier concerns the Consumer Financial Protection Bureau raised regarding inflated point 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 the devaluation of miles, hidden fees, dynamic pricing, and reduced competition.

Transportation Secretary Pete Buttigieg emphasized that loyalty programs offer value to consumers, helping families afford travel. However, unlike traditional savings accounts, airlines can alter the value of rewards at will, raising concerns about transparency and fairness. The DOT also scrutinizes how airline mergers could reduce competition and limit customer options within loyalty programs.

According to Skift.com, loyalty programs are a significant revenue source for airlines, with DL’s SkyMiles program generating US$1.9 billion in partnership with American Express in the second quarter. Similarly, UA’s MileagePlus program is valued at US$22 billion.

The airlines have been asked to provide detailed records of program changes since 2018, including how the value of miles has shifted. WN defended its Rapid Rewards program, while DL highlighted the importance of loyalty to its customers. UA declined to comment, and AA expressed confidence in the transparency of its award system.

Airlines for America, a trade group, stated that loyalty programs provide meaningful benefits to millions of Americans and that U.S. carriers are transparent about their practices. The DOT's investigation aims to ensure that consumers continue to receive fair value from these programs.