The Biden administration reviews the frequent flyer programs of major U.S. airlines

According to news on September 6, 2024, the Biden administration has launched a review of the frequent flyer programs of the four major U.S. airlines. Transportation Secretary Pete Buttigieg sent letters on Thursday to the chief executives of American Airlines, Delta Air Lines, Southwest Airlines, and United Airlines, asking each company to submit reports on the policies and fees of their loyalty programs.

Consumers often complain that airlines increase the number of points required to redeem for free flights and limit the number of seats available for purchase with points. Buttigieg pointed out that loyalty programs should bring value to consumers. Because they are different from traditional savings accounts and are controlled by companies. Companies can unilaterally change their value. The goal is to ensure that the programs are transparent and fair.

Delta Air Lines said member loyalty is of utmost importance, and its frequent flyer program takes providing a meaningful reward experience as its top priority. Southwest Airlines emphasized that points never expire and there are more seats available for booking with points. The Airlines for America association said millions of people like to participate in loyalty programs and airlines are transparent about these programs.

Frequent flyer programs were once based on the number of flights or flight mileage. Now they are driven by consumers' spending with airline-branded credit cards. Credit card revenue has become an important source of revenue for airlines.

The Department of Transportation and the Consumer Financial Protection Bureau held a hearing on airline programs in May and raised many of the issues in Buttigieg's letter. Although consumer advocates and officials from three small airlines testified, the four major airlines did not send representatives. Erin Whitt of the Consumer Federation of America said frequent flyer programs have gone sour and is glad to see the Department of Transportation review.

The Consumer Protection Committee reported that it received more than 1,200 credit card reward complaints last year, an increase of more than 70% compared to before the pandemic. Buttigieg ordered airlines to report within 90 days on how they determine point values, fees, and details of transactions with banks, and list changes to the programs since July 31, 2018 and their impact on the dollar value of reward points.