DOT Investigates Rewards Programs of Major Airlines: American, United, Delta Under Scrutiny

The U.S. Department of Transportation (DOT) is closely examining the rewards programs of the nation’s top airlines, focusing on potential issues related to unfairness, deceptive marketing, or anticompetitive practices.

U.S. Secretary of Transportation Pete Buttigieg has formally requested that American, Delta, Southwest, and United Airlines provide detailed records of their rewards programs, as well as information about their policies and practices.

FOX Business reports,

The department is aiming to combat any deceptive or anticompetitive practices that may occur, such as the devaluation of earned rewards, hidden or dynamic pricing and extra fees, as well as reduced competition and choice.

Buttigieg joined the Director of the Consumer Financial Protection Bureau, Rohit Chopra, for a public hearing in May on airline and credit card programs. At the hearing, smaller U.S. airlines expressed some competition concerns as to how rewards programs are leveraged by the largest airlines.

“These programs bring real value to consumers, with families often counting on airline rewards to fund a vacation or to pay for a trip to visit loved ones,” Buttigieg said. “But unlike a traditional savings account, these rewards are controlled by a company that can unilaterally change their value. Our goal is to ensure consumers are getting the value that was promised to them, which means validating that these programs are transparent and fair.”

As part of a broader review of the airline industry, DOT officials have met with representatives from 11 U.S. airlines to assess their rewards programs and gather further insights.

The DOT explained that airline rewards points can be accumulated through various methods, including purchases made on the airline’s co-branded credit card, flights with the airline or its partners, and other activities designated by the airline or its credit card issuer.

These points can then be redeemed for various benefits, such as flights, upgrades, or third-party products and services. With certain programs, customers can also earn elevated status by reaching certain benchmarks such as accruing rewards points.

However, the value of these rewards is determined by the terms and conditions governing their use. Additionally, the DOT noted that many airlines reserve the right to change the terms of their rewards at their discretion.

In October 2023, Delta Air Lines CEO Ed Bastian revealed plans to modify the airline’s frequent flyer program. This came after backlash from loyal customers when earlier changes made achieving elite status for 2025 more difficult. Delta’s adjustments highlight some of the issues that have come under the DOT’s scrutiny, as customers voiced concerns over transparency and fairness in how rewards programs operate.

Delta Air Lines emphasized its commitment to customer loyalty, stating that “member loyalty means everything to us, and delivering a rewarding experience remains the top priority of Delta’s SkyMiles Program.”

Both Delta and United confirmed receiving the DOT’s inquiry and indicated they will cooperate with the investigation.

American, Delta, and United deferred additional comments to Airlines for America, the industry’s trade association. Southwest Airlines has yet to respond to requests for comment.