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Airline loyalty programs investigated as consumer complaints rise

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Airline loyalty programs investigated as consumer complaints rise
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Pete Buttigieg Transportation Secretary | Wikipedia

In recent years, the value of airline loyalty programs has decreased significantly, as illustrated by a 36% increase in the average price of a loyalty seat among six major airlines since 2019, according to a study by IdeaWorksCompany.

Transportation Secretary Pete Buttigieg has taken action by sending requests to the four largest US airlines—American Airlines, Delta Air Lines, United Airlines, and Southwest Airlines—seeking detailed reports on their loyalty programs. Buttigieg expressed that, “These programs bring real value to consumers, with families often counting on airline rewards to fund a vacation or to pay for a trip to visit loved ones, but unlike a traditional savings account, these rewards are controlled by a company that can unilaterally change their value.”

Moreover, the Department of Transportation (DOT) has launched an investigation into how frequent flyer programs are being managed, particularly in connection with the devaluation of miles and the lack of transparency regarding pricing. Airlines are being asked to detail changes made to their loyalty programs since 2018 and explain how the value of a mile has evolved over the last six years. The DOT is particularly concerned about issues arising from mergers within the industry, which might lead to less competition and customer benefits being diminished.

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Airlines have traditionally rewarded loyal customers with perks such as priority boarding, access to lounges, and other upgrades. However, changes in loyalty programs have shifted benefits towards high spenders, making it harder for casual travelers to achieve rewards. This shift has caused dissatisfaction among customers like Sean Brown, who remarked on the changes by saying, “Unfortunately, there's been a pretty seismic shift in the industry. That has really not sat well with me.”

The use of dynamic pricing, where the cost of a seat can change rapidly, has further complicated the value proposition of loyalty programs. American Airlines switched to this model in 2023, allowing for unpredictable reward values. Buttigieg, addressing this issue, stated, “One of the biggest concerns is devaluation. So the points are worth something one day and something else. Another is some of the hidden pricing where the value of rewards is unpredictable or is concealed.”

Despite these trends, there are exceptions, such as American Airlines’ AAdvantage program. Reportedly, the cost of seats earned through rewards has decreased by 21% on average since 2019, offering better value compared to other airlines like Delta and United.

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