The United States Department of Transportation (DOT) has announced that it’s going to be investigating the frequent flyer programs of the four biggest airlines in the United States. I’m not sure what exactly to make of this…
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Nothing good can come from this.
My guess is that nothing meaningful will come from it either.
Airlines make lots of money from their associated credit card businesses. Frequent flier programs could be meaningfully changed to the negative without hurting the credit card businesses.
Can't wait for the DoT's investigation findings:
"Wow guys we found Delta is the most premium and profitable airline by a significant margin!!!"
Pete Buttigieg uses the Chase Trifecta.
Not profiling but travel gays do know their stuff.
Such as touting alliances and then not opening award inventory to partners. Or, AA charging 800k points (literally) for one-way business class from the US to Japan.
Ben, why would you use Delta for cover photo on this topic? Because they are the most Premium carrier I presume?
My parents were federal government employees for the majority of their careers, so I know a big nothing burger on the grill in DC when I see it.
This is DOT being performative to look busy and relevant during an election year. So Ma and Pa Kettle can feel like big government has their backs. At least, that's the intent within the department.
They can also look into the loyalty programs of the hotel groups. Look at how Choice keeps devaluing its points. Twice in a year?
How dare you suggest that SkyMiles (which are the most valuable FF currency; they should be rebranded as "SkyMillions") are anything less than the airline equivalent of solid gold! Delta is the most profitable business in the history of humanity!
Anybody who gets an airline credit card for points should get their head examined. Cash back cc is the only way to go.
I fear that nothing good will come of it, and something meaningful will come of it. Bad bad bad
Ma and Pa Kettle will expect some red meat. They hate the way Christmas week flights are already booked when they go on the website mid-November. Imagine a government solution to that "problem".
Bad bad bad
On average the government regulating things like this is rarely actually beneficial for US consumers. Look at how bad things have gotten for us.
However, I could see some valid protections in place. Like airlines being required to publish award charts, submit notice of devaluations along with getting government approval for them. And in my dreamland, have an award seat guarantee for every flight like AY, BA, or VS does. After all miles are useless without award space.
What we would not want is taxes, more fees, restrictions, etc. Which is usually what happens when the government gets involved in things tbh.
This of course is political fodder in a very political year. Airlines for the most part have moved to dynamic pricing when it comes to redemption, no different from the way they price fares. So airlines are suppose to do what? Hand over a bunch of algos on pricing to people like Nancy Pelosi, who probably can't handle sending an email?
Can we investigate the Fed as well? My cash isn't worth as much as it was a year ago with all the devaluations.
The time for them to do that was five, ten years ago when award tix were not dynamic. Now they mostly pegged to one cent per mile…so the bird had flown…
Anyone who fails to get the cards for the Welcome Bonuses needs to fly in the back. I'll do me.
If you're maximizing your points and redeeming for luxe flights at low cost, you're not the "customer" from the airline's point of view, or from the government's point of view. As @Santos said upthread, Ma and Pa Kettle is the constituency they're trying to pander to. If uninformed people define the problem, does anyone think we'll like the "solution"?
I'd say the most important issue the DOT needs to investigate are all these flight changes which are constantly occurring and are a near guarantee.
While you say:
With programs increasingly moving to dynamic award pricing, there’s also not really a practical way to enforce advance notice of changes to pricing. Just as airlines can price flights dynamically in cash, they can also do so with points.
I'm not really sure this is true - the programs are much more dynamic in award pricing than they used to be, no one (possibly exempting Delta but not even really there) prices flights as dynamically as they do with cash - there are still hidden award charts, and as long as those exist, I think you could practically require notice of changing: (1) the "saver" rate reflecting availability to partner programs and (2) the "maximum" rate charged for a particular route and class combo.
Of course I don't think there's any chance this happens; it's just not as impractical as you suggest.
Given the world leading transportation that we have in the United States, I believe this is a great use of Federal resources. We should also have more 48 mph Amtrak that runs at a $2B loss every year. Probably should investigate the Starbucks loyalty program as well. Sigh.
"Full disclosure — I’m a fan of Buttigieg."
This is a waste of Government resources and time. So how many $125k a year Gov employees are going to be tasked on this? Buttigieg knows he can't do anything before the election or even before the transfer of power (to whoever wins in Nov). Again, why didn't he/they do something 3.75 years ago??? When airlines were actively watering down their programs and redemptions? Useless bureaucrats doing useless things for their own personal gain.
An investigation will not be anywhere close to finishing before November. Put the tinfoil away
Maybe because SkyPesos are the most worthless of the major 4 airline currencies and Delta has devalued them by the most in recent times??? Pay attention.
Good luck with that...even if the Dems get another term, Pete is leaving that job FAST. He doesn't want his name to be tarnished so that he can run against Kamala in the future.
They said nothing about it being finished before the election. It's still a valid point the Gov waited until now to start this and is clearly virtue signaling to a group of people. Definitely part of the current "bread and circuses" time we are living in.
Not sure if you’re being serious or not, Ted, but cash back cards are kinda lame. It would be very hard to come out “behind” by using points unless you make all your transactions via portals instead of point transfers… or routinely drop 200,000 on Delta One flights.
The only cash back card I find remotely compelling is Amex Blue Preferred… 6% on groceries is pretty nice. But even then… in most cases 4% points with Gold will yield better results than 6% cashback.
Require airlines to announce devaluations 6 months in advance and be done with it.
Even with dynamic pricing, "devaluation" can still be rigorously defined.
Lots of negative comments. I can agree with some of them...
...but if it just results in transparency that's fine. Consumers making informed decisions is good, especially given how tricky or impossible it is to fully understand dynamic pricing (well, for some, but that matters).
Regulation would be a disaster though...no place for government for that.
I'm rather surprised Alaska Airlines wasn't included in here, considering their merger with Hawaiian will raise all kinds of questions on how they will consolidate the value of both programs. And after the merger, they'll definitely be close to the other four in size, I would think? Plus Alaska's program is generally regarded as being one of the best in the industry.
Heh heh. American credit card sluts worried that your card whoring might attract the attention of the tax man.
Simple solution. Just require airlines to either announce devaluations a few months in advance, and/or put a cap on how much they can devalue miles when they do. I’m still smarting from United’s devaluation about a year ago. 50% is crazy.
I can usually get a 8-12% return on credit cards when redeeming for premium flights, but MAYBE 2% cashback if I'm lucky on a credit card, so I think my head examination is just fine. If you don't know how things work just say that, I'll send you a drink back to basic economy from my seat up front.
Agreed, this is transparently obvious political posturing and you'd really have to be some kind of credulous nong to not see it.
I'm as queer as a three-dollar-bill and I take it as a compliment. thanks @Tim
yeah, why didn't they ruin everything earlier, instead of waiting until now to ruin everything?
It's not the tax man I'm worried about. Here are my worst fears:
"more choice"
"more transparency"
"simpler interface"
"easier to understand"
and the worst...
"Remiagined program that benefits more members than ever before"
By definition an Award Program Sweet Spot is an opportunity that nearly nobody knows about, present company excepted. Let's hope this blows over.
Here is a prime example of people moaning and whining why isn't the govt doing more on issue xyz. And when they do the public cries why can't the govt stop interfering or I want all the problems solved concurrently, quickly and with ease. None of those things can happen of course but people who cries about a problem and offers no solution, that's their MO. Personally, I think regulation will benefit us more than harm especially with point chasers. Points are currency. As far as I know no other currency has one entity that controls it decide on a 20% devaluation overnight without warning so why should the airlines. I would rather have a tax on points than to be a devaluation victim. Or airlines saying whatever they feel like when they devalue. Ana for example said they will increase award cost but will drop tax. We'll that didn't happen. They bumped a ticks to Japan from 85k to 107k but that tax did not drop by 1 penny. And we all have seen ual, aa and delta do the same. At least with the threat of regulations airlines will at least pause any new devaluation schemes.
What, exactly, do you expect the Department of Transportation of the Government of the United States of America to do to the loyalty program, available worldwide to all people, of All Nippon Airlines, a company headquartered in Japan? I am not an American and I do not live in the United States of America. If your government makes demands upon my country's flag carrier (Air Canada) to report data to DOT, or send tax money to Washington, I fully expect my government and AC to give them the finger.
When you get a credit card, it's not a wedding. It's a cotillion ball. Don't leave until you've danced with all of them.
> Probably should investigate the Starbucks loyalty program as well.
This, but unironically. They pretty much act like a bank or financial institution with billions of dollars of people's money and little oversight.
Impossible when the currency varies. Perhaps they could establish a MRV (minimum redemption value) and then have to notify when this goes down. Even this is a dangerous move, as airlines could also introduce a maximum redemption value and kill all sweet spots. If they don't, they can set the value at 0.00000000001 cent per mile, as you may recall seeing on printed coupons, due to other nonsense red tape BS legislation.
It's always funny to see points and miles enthusiasts described as whores or gamers or hackers or freeloaders. When the entire pursuit is simply abiding by the Ts & Cs of established programs from gigantic corporations in an intelligent and opportunistic manner. They made the rules, not us.
Aside from mistake fares (which are so avoidable if some airlines had any kind of competency) this kind of engagement is exactly what marketing departments wanted and legal teams have vetted.
If you can't or won't participate, good on you. It's your life. But if you think any government stepping in to tip the scales on a free market system solely based on leisure has any kind of benefit for the average person, you're pretty misguided.
Pete Buttigieg is very smart. Maybe will let Airlines know they cannot continue to devaluate our earned points and Miles.
There is incredible irony here!
The federal government is going to investigate travel miles / points?!? Loo-oo-dicrous!
Anyone with a basic knowledge of economics knows that if you create a flood of fiat currency then you will get inflation. It's guaranteed to happen if the airlines do it and it's guaranteed to happen if the federal government does it.
Both have done it. Flooding their customers with easily obtained miles / points created rapidly growing demand to use them for rewards. Huge numbers of points / miles chasing a finite number of seats / rooms led inexorably to inflated prices (in points / miles). It's just as true for cranking the federal printing presses as has been done the last few years.
But as Bugs would have said "These government maroons don't understand either the results of their own actions or those of the airlines".
Sorry Bob. Arbitrary and massive devaluations of currency have been done by many governments for, literally, millenia. The Romans debased their coins by adding base metals in with the gold and silver. Hyperinflation caused by governments printing money has happened time after time.
An especially egregious example is Germany in the 1920s. At its height literally wheelbarrow loads of paper Marks were needed to buy a small amount of food.
I have a 1,000,000 Yugoslavian Dinar note from 1992. We were there shortly after a (government ordered) devaluation. They printed new bills but left the old ones in circulation. The Yugoslavs were simply told to mentally remove three zeros from the old notes. That was 1,000% deflation overnight.
There are a multitude of additional examples.
Asking the feds to fix this is the same as putting an alcoholic in charge of fixing the distillery. The only real fix is to shut down the printing press.
given that airline selling points and constantly devaluating points, this should be investigated !!! Hope it leads to a fair outcome to the customers. No more devaluation for no reason!!!
Actually, if you recall, the DOT has been quite busy especially with airlines in the past couple of years given the SWA Christmas meltdown from a couple of years ago and this past summer's Crowdstrike application upgrade issue with MSFT that impacted Delta for several weeks. Let's not forget the train derailment in Pennsylvania and the bridge collapse in Maryland. I think DOT's been pretty busy. Regarding this topic transparency is a good and devaluing points overnight never gives consumers the opportunity to use their points unless you are charging $100,000+/year on a credit card. That MIGHT get you one RT flight for two people even if you're getting double miles on spend categories.
It would be nice to have some consumer protection guard rails in place: points that don’t expire and a mandatory notice period (say 90 days) before devaluations would be the first two that come to mind
My home carrier air new zealalnd is known to block star alliance award space showing on other partner programs. No way of proving it though as it’s not regulated in our country.
I actually made money over Covid lockdowns with my air miles. I couldn’t use them when the pandemic was on and then when flying started up again cash fares were sky high and I was able to book flights much cheaper with points.
Or else enforce them to have published award charts and minimum notification of changes.
I hate when the government gets involved but the biggest issue is airlines are selling the points. They cal sell the points and then immediately devalue the currency ! Sounds criminal to me.