By David Shepardson and Rajesh Kumar Singh
WASHINGTON/CHICAGO (Reuters) – The U.S. Department of Transportation (DOT) said on Thursday it is launching an investigation into the four largest U.S. airlines that operate rewards and frequent flyer programs to ensure that consumers are not exposed to unfair, deceptive or anti-competitive practices.
Transportation Secretary Pete Buttigieg sent letters to American, Delta, Southwest and United Airlines ordering them to provide data and reports answering detailed questions about their rewards programs.
The ministry is investigating how consumers are affected by the devaluation of earned rewards, hidden or dynamic pricing, additional costs and reduced competition and choice.
Reuters first reported in December that the U.S. Department of Transportation (DOT) had begun investigating the frequent flyer programs of major U.S. airlines for possible deceptive or unfair practices.
DOT and the Consumer Financial Protection Bureau held a public hearing on airline loyalty programs in May, while some lawmakers have also taken a closer look at the programs.
Buttigieg said the department is seeking “more specific data to better understand the largest rewards programs and identify potential competition or consumer protection issues or risks.”
Customers often complain that airlines raise the bar for earning benefits associated with these programs. The U.S. Congress last year considered, but did not pass, a bill requiring airlines to provide 90 days’ notice before devaluing frequent flyer program points.
However, industry group Airlines for America said U.S. airlines are transparent about frequent flyer programs “and policymakers must ensure that consumers can continue to enjoy these important benefits.”
U.S. airlines relied on these programs, which have tens of millions of members, for revenue and to raise money during the COVID-19 pandemic, when demand for travel plummeted.
According to consulting firm On Point Loyalty, the loyalty programs of Delta, United and American were each worth more than $20 billion last year.
Delta says it has received the DOT’s request and will respond.
Southwest said the benefits of its flexible rewards program have helped the airline double the average number of seats booked with points. United and American declined to comment.
(Reporting by David Shepardson in Washington and Rajesh Kumar Singh in ChicagoEditing by Chris Reese and Sandra Maler)
