The Department of Transportation (DOT) has announced an investigation into frequent flyer programs offered by airlines, raising concerns over potentially unlawful devaluation of points and other accounting practices that may not benefit consumers.

Transportation Secretary Pete Buttigieg remarked, “Points systems such as frequent flyer miles and credit card rewards play a crucial role in our economy, with many Americans treating their rewards as a form of savings. These programs mean a lot to consumers, often essential for families planning vacations or visiting friends and relatives. However, similar to a traditional savings account, these rewards are managed by companies that have the authority to alter their worth. We aim to guarantee that consumers receive the promised value, which involves confirming that these programs are both transparent and equitable.”

In letters sent to the CEOs of major airlines, including American Airlines, Delta Air Lines, Southwest Airlines, and United Airlines, Buttigieg noted that loyalty programs may have a significant financial impact on airlines, potentially even more than their actual flight operations.

“The Department is seeking detailed data to gain a better understanding of the largest rewards programs and to identify any competition or consumer protection issues,” the letter indicated. “Our aim with this investigation is to make sure consumer rewards are shielded from practices that might reduce their value, benefits, or availability.”

The DOT plans to examine four key areas of frequent flyer programs:

• The devaluation of earned rewards – which involves how airlines can diminish or revoke the value of points or miles after they have been earned.
• Hidden and changing pricing – the way airlines may alter the price of award flights, which can obscure or modify the stated dollar value of points or miles.
• Additional fees – how airlines impose charges to maintain, redeem, or transfer points, which the DOT argues can effectively lower the actual worth of rewards.
• Decrease in competition and options – the effects of airline mergers on frequent flyer programs and the resultant impacts on the value of points or miles.

Consumer advocates have consistently criticized the unclear valuation of airline miles and points and welcomed the DOT’s directive.

“Economic Liberties strongly endorses the DOT and Secretary Buttigieg’s order, so that matters concerning consumer protection, competition, and transparency within the airlines’ frequent flyer programs can finally be addressed,” stated William J. McGee, a senior fellow for aviation and travel at the American Economic Liberties Project. “The guidance around these programs has become increasingly opaque, making it challenging to ascertain the real value of miles and points. It’s crucial for the major four airlines to fully adhere to this order to ensure fairness in loyalty programs.”

Airlines have been given a timeframe of 90 days to provide all requested documents connected to the DOT’s investigation. Airlines for America, the organization representing most U.S. airlines, stated that loyalty programs are beneficial for travelers.

“Due to intense competition among airlines for customers, loyalty programs serve as a method for airlines to express gratitude to their travelers,” said a statement from the group. “Millions of consumers appreciate being part of various loyalty programs, enabling them to earn rewards for travel or additional perks. U.S. carriers are open about their programs, and lawmakers should ensure that these important benefits continue for consumers.”

The DOT has not yet disclosed any potential penalties or enforcement actions stemming from this investigation.

Zach Wichter is a travel reporter for YSL News based in New York.