Federal probe targets airlines’ frequent flyer programs

The Biden administration is investigating frequent flyer programs run by the four largest U.S. airlines — American, Delta, Southwest, and United — over concerns that these programs devalue the points consumers earn and frequently change the number of points or miles needed to book flights. Transportation Secretary Pete Buttigieg sent letters to the CEOs of the airlines, requesting detailed information on policies, fees, and other features of their loyalty programs.

Buttigieg’s inquiry follows complaints from passengers that airlines often increase the number of points required for a free flight and restrict the availability of seats that can be purchased with points.

The investigation also addresses how credit card rewards programs have become central to airline loyalty schemes, with consumers earning points by spending on airline-branded credit cards. These programs have become a major revenue source for airlines, through partnerships with credit card companies.

Delta Airlines said providing a “meaningful rewards experience” remains a top priority, while Southwest Airlines highlighted the flexibility and availability of seats in its loyalty program, Rapid Rewards. The trade group Airlines for America, which represents all four carriers, responded that millions of people benefit from these programs and emphasized that U.S. airlines are transparent about their policies.

The Transportation Department, along with the Consumer Financial Protection Bureau, held a hearing in May to discuss many of these issues. The hearing included testimony from consumer advocates, who argued that frequent-flyer programs are not always transparent and can disadvantage consumers.

Erin Witte, of the Consumer Federation of America, pointed out that loyalty programs were initially designed to reward consumers for their allegiance but have evolved into schemes that can reduce the value of earned points.

Buttigieg has asked the airlines to report within 90 days on how they determine point values, any applicable fees, and the specifics of their credit card partnerships. Airlines are also required to disclose any changes to their programs since 2018, particularly those that affected the value of reward points. The investigation seeks to ensure that these programs are transparent, fair, and provide the promised benefits to consumers.