Have airline loyalty programs been too naughty this year? The DOT thinks maybe …

December 30, 2023

Airline loyalty programs under scrutiny

by Brian Kelly

It’s no secret that airlines are making more money selling miles to banks than flying airplanes. United Airlines spun off its MileagePlus program into a subsidiary worth $22 billion … and approximately 1% of the U.S. gross domestic product gets put on a Delta Air Lines cobranded American Express card. This shift from frequent flyer programs to frequent buyer programs is brilliant for airlines: Instead of getting money from a consumer only when they fly, airlines can make money every time they buy something. People need to eat a lot more than they need to travel (even me!).

So it comes as no shock to me that the Department of Transportation opened an investigation recently into potentially deceptive practices of loyalty programs. Airlines frequently change their programs — often with minimal to no advance notice.

While the rules of the programs state the airlines have the right to do this, their evolution into “banks” might actually get them into hot water with a government focused on getting consumer wins — especially in a critical election year. Who doesn’t want more protection from an industry known for less-than-transparent practices?

However, I would caution everyone trumpeting this as a huge win for consumers. As always with the government, there could be unintended consequences to its seemingly good-natured laws and regulations. Take, for instance, the wildly misguided Credit Card Competition Act that would effectively destroy credit card rewards in the U.S. under the guise of helping consumers.

By the way, if you haven’t done so already, please email your senators asking them to oppose this points-apocalypse legislation by going to protectyourpoints.com — it only takes 60 seconds.

Overall, I think some more protections around negative changes to programs would be a positive for consumers — especially since so many of us are saving up for dream trips but then constantly have the goal posts moved by programs. But I also don’t think over-regulation by the government will solve the issue — but maybe, for once, it’ll get it just right?

Have a great weekend,

BK

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