WASHINGTON — Airline rewards programs are popular among frequent flyers.
But now, several of them are being scrutinized by the federal government. The U.S. Department of Transportation wants to make sure they’re fair, and that you’re getting the rewards you deserve.
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“We need to make sure any practices related to those points and miles are fair and above board,” Sec. Pete Buttigieg, U.S. Department of Transportation, said.
Currently, the Transportation Department is examining the rewards programs for American Airlines, Delta Air Lines, Southwest Airlines, and United Airlines. The agency has requested information from these carriers about their reward programs, practices, and policies.
“I say this not just as a policymaker but as a passenger, a lot of us love our points and miles and they’ve almost become part of our savings, but they don’t have the same protections that cash savings in a bank do,” Buttigieg said.
Buttigieg said they want to know how customers are impacted by the various aspects of these programs, like the potential devaluation of earned rewards, hidden pricing, and extra fees.
Read: Transportation & consumer agencies review fairness of airline & credit card reward programs
“We’ve heard complaints and concerns about a lack of transparency or the sort of bait and switch where you’re told if you get this credit card or do this, you’re getting a trip to Hawaii but when you try to actually book it, is just impossible,” he said.
According to the Department of Transportation, the four airlines have until December 4 to submit all the requested information as part of this probe.
Airlines For America represents the four carriers involved in this DOT probe.
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In a statement, the trade group said there’s competition among airlines for customers, these loyalty programs are a way to “thank” travelers.
“U.S. carriers are transparent about these programs, and policymakers should ensure that consumers can continue to be offered these important benefits,” Airlines For America said in a written statement.
“These rewards programs are basically currencies unto themselves,” Ted Rossman, Senior industry analyst at Bankrate, said.
Rossman said there are two major categories for travel rewards programs: the ones directly connected to a specific airline or a more general travel card. He said both have their advantages.
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“If you’re really loyal to a certain airline, maybe you should go all in on their card,” Rossman said. “But if you’re more of a free agent who kind of, you know, maybe you don’t travel that much, or when you do, it’s more price or schedule dependent, and you’re not that loyal, then you’re better off with a general purpose card.”
While airline loyalty programs can be beneficial, Rossman warns the rewards are often tied to spending.
“So you earn more miles when you spend more but also the more expensive the ticket, the more miles it’s going to take to get the free ticket,” he said.
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Additionally, Rossman added that travel rewards are usually more complicated than cash-back rewards.
“We’ve actually found in our research that cash back credit card rewards are Americans’ favorite benefit because it’s very simple, it’s straightforward, it’s universal,” Rossman said. “I mean, who couldn’t use more cash, right?”
Full statement from Airlines for America (A4A):
“Consumers have the power of choice when selecting an airline for a trip, and carriers want to reward travelers for their return business and brand loyalty. Because there is fierce competition among airlines for customers, loyalty programs are a way carriers can say ‘thank you’ to travelers. Millions of people enjoy being a part of various loyalty programs, which allow them to accumulate rewards to apply toward travel or other benefits. U.S. carriers are transparent about these programs, and policymakers should ensure that consumers can continue to be offered these important benefits.”
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