US government investigates airline loyalty programs

The Biden administration said it is investigating the four largest U.S. airline frequent flyer programs and how they reduce the value of points earned by consumers and often change the number of points or miles required to book flights.

Transportation Secretary Pete Buttigieg wrote Thursday to the CEOs of American, Delta, Southwest and United, asking each for a report on policies, fees and other aspects of their loyalty programs.

Consumers often complain that airlines increase the number of points needed to receive a free flight and limit the number of seats that can be purchased with points.

Buttigieg said loyalty programs benefit consumers and people count on them to pay for vacations and trips to visit family.

“But unlike a traditional savings account, these rewards are controlled by a company that can unilaterally change their value,” the Department of Transport said in a statement. “Our goal is to make sure consumers get the value they’re promised, which means confirming that these programs are transparent and fair.”

Frequent flyer programs used to be based on the number of flights taken or miles flown. In recent years, however, they have been fueled by spending that consumers make on airline-branded credit cards. Income from credit card issuers has become a major source of revenue for airlines.