What ever happened to the DOT Audit of U.S. Frequent Flyer Programs?

Readers may recall that PEYD covered the story some time ago of a rabbi who had sued Northwest claiming the forfeiture of his mileage account and elite status was illegal. In a unique turn of events, the court decided that the case was not able to proceed due to the federal law protecting U.S. Airlines from being sued. Even more interesting, was the courts lack of clarification as to whether the rabbi’s claim was valid. What no one anticipated was that a Florida Congressman would be the one who would chose to take this issue up with the Department of Transportation (DOT) as a result of the fallout with his own personal experiences.
Over a year ago, Alan Grayson (D-FL) began an initiative to unearth the nature of how U.S. airlines structure the redemption policies of their frequent flyer reward programs. The DOT looked into the matter which resulted in an audit of the industry’s reward systems as a whole. Their official report was recently released and we wanted to share their findings with our readers.
The audit report’s summary somewhat perplexing headline read: “Improvements needed in DOT’s process for identifying unfair or deceptive practices in airline frequent flyer programs.”
In the DOTs report, they clearly state that changing the terms and conditions of an airline’s Frequent Flyer program without reasonable and just notice is an unfair and deceptive practice, yet somehow, at the conclusion of this “audit” the DOT stated, “The DOT’s reviews of passenger complaints related to frequent flyer terms and conditions, however, have not proven sufficient in determining whether airlines have engaged in unfair and deceptive practices.”
Below is the full text of the DOT’s findings:
Improvements Needed in DOT’s Process for Identifying Unfair or Deceptive Practices in Airline Frequent Flyer Programs
Designed to promote travel and secure customer loyalty, frequent flyer programs are extremely popular, with approximately 630 million participants worldwide and more than 300 million members enrolled in U.S.-based programs. In a July 2014 letter and subsequent conversations with our office, Representative Alan Grayson expressed concerns about practices associated with these programs, including how far in advance members are notified about service changes, the devaluation of awards and benefits over time, and the availability of award seats. As the U.S. Department of Transportation (DOT) is authorized to investigate unfair and deceptive practices in air transportation, we initiated an audit to review its monitoring of airline frequent flyer programs. In particular, we looked at DOT’s oversight of air carriers’ disclosure agreements and its process for reviewing passenger complaints. We also examined airlines’ practices regarding the availability of award seats and the valuation of frequent flyer miles.
We found that DOT conducts oversight of air carriers’ frequent flyer program disclosures as part of its compliance inspections, and that airlines include frequent flyer rules in their customer service plans, as the Department requires. However, DOT’s reviews of passenger complaints are insufficient to determine whether airlines engage in unfair and deceptive practices. For example, from 2012 to 2014, consumers filed 76 complaints about frequent flyer programs at U.S. airlines, but none of those complaints were forwarded to DOT attorneys for review. Yet our review of 36 of these complaints showed that 4 (11 percent) warranted additional review. In addition, while award seats are available for most flights, it is unclear how many miles are redeemed at different award levels, as airlines do not publicly disclose this information. Finally, airlines do not fully explain their process for determining award-seat availability to the traveling public.
We made two recommendations to help DOT improve its process for identifying unfair or deceptive practices in frequent flyer programs. DOT concurred with both recommendations, and we consider them resolved but open pending the Department’s completion of its planned actions. We also encouraged airlines to provide consumers with more transparency regarding frequent flyer seat availability when feasible.
What’s interesting is that our friends over at Dan’s Deals have also recently brought to light evidence contrary to the findings of the DOT report by running a cursory sample of frequent flyer redemption with the AAdvantage program, American Airlines’ frequent flyer program.
When attempting to utilize American Airlines’ rewards program for travel dates set at 7/13 – 12/31 the offers available were abysmal.
-From NYC to Los Angeles there were 99 available dates on United, 107 available dates on Delta, and only 3 available dates on American. All 3 of American’s dates were Saturdays.
-From NYC to San Francisco there were 107 available dates on United, 104 available dates on Delta, and only 2 available dates on American.
-From NYC to San Diego there were 133 available dates on United, 109 available dates on Delta, and only 2 available dates on American.
-From NYC to Las Vegas there were 75 available dates on United, 125 available dates on Delta, and only 2 available dates on American. Both of American’s dates were Saturdays.
So it would seem that somehow the DOT’s report was in fact not as comprehensive as it could have been in determining whether US Airlines structure the programs in a manner that discourages redemption or is in bad faith.
We encourage our readers who had a bad frequent flyer experience and who feel so inclined, to file a complaint with the DOT here.
What has become abundantly clear is that consumers earning frequent flyer miles must be aware that for the time being their miles will remain at risk of being devalued, downgraded or more difficult to use, and that the Federal government has chosen not to enforce how frequent flyer programs are structured or maintained by the airlines!
For help redeeming your miles and points, visit our website or CALL PEYD TODAY