The U.S. Department of Transportation is planning to take a close look into the world of award travel, starting with a formal investigation announced yesterday that will focus on the ‘Big Four’ programs from American, United, Delta and Southwest.
The programs, all of which have dedicated fans as well as legions of skeptics, all have clauses allowing the airlines to make changes in the programs more or less at will, often devaluing the worth of accumulated points. They are also a major source of income for the airlines, which make billions by selling points in bulk to credit-card issuers who distribute them to users of co-branded cards.
Transportation Secretary Pete Buttigieg said the focus will be on the “fairness, transparency, predictability, and competitiveness of airlines’ rewards programs.” In his letter to the airlines, Buttigieg pointed out that “These programs can shape how customers interact with airlines and many Americans reportedly have point balances substantial enough that they amount to part of their savings.”
The letter included an order to the airlines to share detailed data on earning and redeeming awards, how valuations are set, fees that passengers pay and the specifics of the agreements with cobranded credit card partners. It also requires the airlines to detail and explain every change made to their rewards programs between July 31, 2018, and this summer.
The award travel community has also recently come under scrutiny from another direction: Senators Durbin and Marshall have been pushing a bill that has the intention of increasing competition among payment networks with the hope that it would reduce the amount merchants pay for the services; if passed, it would significantly reduce the revenue out of which card issuers offer loyalty program points.
