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It's never fun to write about a frequent flyer program devaluation. And it's even less fun to watch your own balance of airline miles suddenly be made worth less without notice. In response to traveler concerns about the latter — plus several others relating to how airlines manage their loyalty programs — the U.S. Department of Transportation (DOT) announced an investigation into U.S. airlines.
Here's what the investigation potentially means for you.
Why Is the DOT Investigating Frequent Flyer Programs?
Late last week, the DOT shared a press release announcing its intention to investigate the frequent flyer programs belonging to four major U.S. airlines for “potential unfair, deceptive, or anticompetitive practices.”
In short, the DOT is asking American Airlines, Delta, Southwest, and United to do some explaining about the following:
- Devaluations made over the past six years — and the reason for them.
- How they determine award availability and price it (dynamically pricing or otherwise).
- What frequent flyer miles are worth and what they cost to mint.
- The rationale for fees and extra charges for consumers to redeem rewards.
- How they monitor, analyze, and react to competing rewards programs.
The airlines have just over 12 weeks to respond and provide the requested information. After that, it's unclear what steps — if any — the DOT will take to resolve what it deems “unfair, deceptive, or anticompetitive.”
What Does the DOT Investigation Into Frequent Flyer Programs Mean for You?
The DOT's investigation likely means very little for you in the near term. A fair bit of time will pass before the airlines are required to turn in documents, and it could take even longer for the DOT to parse through what's submitted.
Moreover, it's anyone's guess how much time the government will need to decide what is and isn't fair and make recommendations on the legislation necessary to crack down appropriately.
Over a longer timeline, we can make educated guesses about what regulations could look like. Perhaps airlines will need to be transparent about what your miles are worth and give advance notice of program changes. Some international airlines clearly communicate devaluations ahead of time, so a simple requirement to let consumers know about happenings isn't that far-fetched. Cathay Pacific is an example that comes to mind with how it professionally handled its Asia Miles devaluation last year.
Comparatively, U.S. airlines (some, not all) prefer to take the rug-pull approach. United Airlines is an appropriate example. After yanking its award charts several years ago, Mileage Plus devaluations have been frequent and fierce. After hiking partner first class awards by up to 100% in April 2024, United skyrocketed partner business-class pricing by up to 200% in May 2024.
All to say, there's nothing to worry about in the short term. If anything, airlines might try to get ahead of the scrutiny and become more transparent or refrain from making big changes while under the microscope. At least, that's how airlines are handling the DOT's other investigation into refund practices and fee transparency. Noticed how much extra information you'll see when booking a flight on American nowadays?
Final Thoughts
The DOT is investigating some of the most prominent U.S.-based frequent flyer programs. The goal? To uncover whether or not practices behind dynamic pricing, devaluations, and management borders on being unfair, anticompetitive, or deceptive.
Thoughts abound on what this could mean going forward. It really is anyone's guess, and it's hard not to think about the unintended consequences.
There's so much we don't know, so we won't speculate further until the DOT shares more. But to that end, we contacted the DOT to inquire what prompted the scrutiny and what it feels is appropriate for frequent flyer programs. After all, devaluations and dynamic pricing aren't new phenomena.
Moreover, airlines write their terms and conditions in a way that gives them the right to change their programs at will. So, what leeway does the government have to challenge the rules that new registrants agree to upon signing up? Hopefully — for the sake of all of our mileage balances — the DOT can find an angle. Time will tell.
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