The United States government is currently in the process of implementing a five year reauthorization for the Federal Aviation Administration (FAA). There are lots of things being proposed, and it’s anyone’s guess which of these will actually be implemented in the final version of the bill.
The Senate Commerce Committee is proposing an interesting protection that would prevent no-notice frequent flyer program devaluation.
In this post:
Airlines may have to give 90 days notice of devaluations
The Senate Commerce Committee’s FAA reauthorization proposal would ban frequent flyer programs from making no-notice devaluations.
This proposal includes requiring airlines to provide 90 days of notice before any devaluation of frequent flyer program benefits:
REDUCTION IN BENEFITS. An air carrier may not reduce or devalue the benefits, rewards, points, or other accrued value of an existing account holder of a frequent flyer program unless the air carrier provides such account holder not less than 90 days notice of such reduction or devaluation.
For what it’s worth, here’s how frequent flyer programs are defined, for these purposes:
In this section, the term ‘frequent flyer program’ means a program in which an air carrier promises or offers benefits, rewards, points, or other accrued value for tickets purchased from the air carrier.
The proposal also includes a requirement for airlines to give passengers notice before vouchers or credits expire:
INITIAL NOTIFICATION. Upon the issuance of any flight voucher or flight credit, an air carrier or ticket agent, where applicable, shall notify the recipient of such voucher or credit of the expiration date of the voucher or credit.
SUBSEQUENT NOTIFICATION. Not less than 30 days before the expiration date of any flight voucher or flight credit issued by an air carrier or ticket agent, the air carrier or ticket agent shall make a reasonable attempt to notify the recipient of such voucher or credit of the expiration date of the voucher or credit.
Let me emphasize that this is far from a sure bet as of now, as this would need to appear in the final Senate bill, be approved by Congress, and then be implemented.
Would these protections be good for consumers?
In an ideal world, airlines would consistently provide significant advance notice of any frequent flyer program changes. That seems like common courtesy, especially since a loyalty program is intended to be a long-term relationship.
What’s being proposed here is almost like the golden rule of frequent flyer programs — the government is encouraging programs to act the way that they should, which is far from the current reality. We frequently see no-notice devaluations that really undermine the concept of what these programs should be.
With that in mind, what do I make of this proposal? While I of course am very supportive of it on the surface, I question if this would actually change anything.
In theory, this would help most with points devaluations, since those are most often done without advance notice (conversely, airlines do generally announce other major program changes in advance). This proposal essentially incentivizes airlines to eliminate award charts. After all, if you have dynamic award pricing, there’s no such thing as a devaluation… at least I’m sure that’s what airlines would claim. I don’t think that would be great for consumers, since it would just cause more airlines to eliminate their award charts.
Furthermore, I do have concerns about the government increasingly regulating frequent flyer programs, and what that could eventually mean for taxing these benefits. While we often get frustrated by how much control airlines have over these programs, I think the government regulating them is also a slippery slope that could eventually lead to points and other benefits being a currency that should be taxed.
So while I like the idea behind this, I’m just not sure that this would do a whole lot to help consumers. Meanwhile I think requiring airlines to inform customers that vouchers are expiring soon would be a great move.
Bottom line
The Senate Commerce Committee is proposing that frequent flyer programs not be able to implement devaluations without providing at least 90 days of advance notice.
While that sounds like a great change and is how I’d love to see all programs do business, I fear that this will just lead to more programs eliminating award charts, which wouldn’t be great for consumers. Meanwhile there’s also a proposal for airlines to have to provide advance notice of any vouchers or credits expiring, which I think would be a positive development.
What do you make of these proposals?
Agree that the airlines will modify their programs accordingly such as to do away with award charts and such as having dynamic pricing. It is interesting that this is just for airlines and not ANY type of loyalty program. This could extend much further such as restaurants and other retail, hotels, etc. Is it just for US carriers or does it extend to anyone flying to/from the US and how would it be enforced? If...
Agree that the airlines will modify their programs accordingly such as to do away with award charts and such as having dynamic pricing. It is interesting that this is just for airlines and not ANY type of loyalty program. This could extend much further such as restaurants and other retail, hotels, etc. Is it just for US carriers or does it extend to anyone flying to/from the US and how would it be enforced? If an airline was punished for violating it would be great if their loyal members received some benefit rather than a fine or something in the government's favor.
It’s always amazing to see the people still brainwashed by Reagan 40 years later. Not all government regulation is trash, and not all government involvement is doomed to fail / ruin commerce. It’s just easy to point out the stuff that doesn’t work rather than the stuff that does.
Regulating FFPs would actually be a very good idea. They are currently an unregulated currency (that are taxed already @Ben) and should be controlled to...
It’s always amazing to see the people still brainwashed by Reagan 40 years later. Not all government regulation is trash, and not all government involvement is doomed to fail / ruin commerce. It’s just easy to point out the stuff that doesn’t work rather than the stuff that does.
Regulating FFPs would actually be a very good idea. They are currently an unregulated currency (that are taxed already @Ben) and should be controlled to some extent. Consumer protection is the weakest form of regulation and probably not enough.
I am against any government involvement in our lives...AT ALL! If you are dumb enough to purchase miles that the seller can easily control the value of.... you get what you deserve. No need to look at Washington to resolve stupid things that do not matter at all.
I would rather the government stay out of it. They screw up everything they touch.
It will never pass. Our current political system protects corporations at the expense of individuals. We are one of the few countries where almost half the population votes against its economical interest. Against workers rights, healthcare, education, infrastructure, water regulations, gun reforms and the list goes on!! While other countries are investing in infra and future, half of our country is trying to defend a criminal who broke every rule. Definition of primitive tribalism! Driven...
It will never pass. Our current political system protects corporations at the expense of individuals. We are one of the few countries where almost half the population votes against its economical interest. Against workers rights, healthcare, education, infrastructure, water regulations, gun reforms and the list goes on!! While other countries are investing in infra and future, half of our country is trying to defend a criminal who broke every rule. Definition of primitive tribalism! Driven by hatred at the expense of destroying the system. They want to de-regulate everything and give corporations the upper hand.
Until ppl realize that hatred leads no where and that the strong hold that corps+Churches+lobbyists+corrupt politicians have over our policies and future, things won’t change.
Every word you wrote above applies to the current POTUS and his supporters.
@Regis - ur comment proves the point. No comment. This generation is destroying the system.
It's pretty sad that such proposals should need to be legislated when the airlines should have been doing both already as normal good business practice.
United can raise points prices dynamically anyways. This is certainly true for business class seats which require a fortune in points these days.
I’m downgrading and canceling my AMEX cards because the annual fee isn’t worth it. Can’t find any business or first seats for points on airlines like ANA.
How about calling United out in the bill for their recent devalution. Can we call them MileagePengos, similar to SkyPesos?
The problem is, the airline themselves controls the supply, Award charts and Miles are meaningless unless there's space. Airline could argue no space for all flight in award chart and yet open up dynamic pricing.
Well, since most changes in FF programs are dubbed "enhancements" I'm sure the airlines will say that this rule doesn't apply to them. Devaluation you say? Never heard of it!!
The more likely scenario, if this goes ahead, is airlines would freeze all award redemptions for 90 days after announcing the devaluations.
A freeze would be a devaluation.
Way too much volatility in these programs, along with poor and overpriced redemptions make airline miles, for most programs, a ridiculously bad value at this time. I haven’t purchased miles or put any purchases on a cobranded airline card for a long time. Even with a 90 day notice, they could manipulate redemption thresholds to neutralize the impact. If the government decides to tax miles, that would be a further gut punch.
As earning (and, increasingly, redeeming) miles is pegged to the dollar value of a ticket, the concern over "no-notice devaluations" seems unwarranted. Should we also ask the Fed to provide a 90-day notice of interest rate changes that might impact inflation?
Incorrect. Southwest devalued their mauled which are pegged to the dollar value of a ticket.
It’s a zero sum game like always. Any additional regulation in one area will cause degradation in others. We’d probably see something like reinstating some fees or tacking on fuel surcharges on award tickets.
Airline bottom lines will be under the microscope by shareholders with these new pilot contracts
FF programs have become so evil that it is time for punishment. Besides, rich fat cats are so smug with elite status. There should be very high taxes with miles. Almost ban these programs.
Similarly, as Senator Durbin proposes, we should destroy credit card rewards as was done with debit card rewards. Only the rich fat cats benefit from credit card rewards. And, you're reading this blog because . . . ?
Senator Durbin is correct because credit card rewards are extortion. The fees charged to small businesses are higher for rewards cards and covers more than the added rewards. Businesses are hostage to this extortion because they must take credit cards and cannot just take non-rewards cards.
"Furthermore, I do have concerns about the government increasingly regulating frequent flyer programs, and what that could eventually mean for taxing these benefits."
Exactly. Be very wary of the government starting to regulate frequent flyer programs.
Want to slow the pace of miles devaluation? Stop promoting credit cards that flood the market with miles.
How about forbidding any kind of change to benefits or devaluation if said airline accepted public bailout money in the last 10 years?
In every single bailout, the US Government has made a ton of money. The RTC bailout in the 1990s saw it profit by billions and billions. If the government didn't bail on out AIG in 2009, millions of retirees would have lost their retirement annuities - which would have been way worse. The common belief that the government is throwing money away is hogwash.
Bailouts are fine. The airlines should be required to provide some sort of public benefit in return though.
Which airline even has an award chart any more?
Some, like AA, still have partner award charts (which is all I'd ever use AA miles on anyway).
Precisely. It is not a devaluation, just dynamic prices...
Joke. This is politicians trying to protect their own fat mileage account balances. They don't care about the consumer. Same as resort fees, this will never happen/make a difference. Keep dreaming.
LOL!
I can’t wait to see United try to claim that MileagePlus isn’t a frequent flyer program.
Mileage Plus, AAdvantage, and Skymiles are not frequent flyer programs. The miles earned from travel is now low and miles are really earned from credit cards.
Exactly right… totally agree, not FF programs any more…#Sad #corpGreed