Title: Airline Points - Unveiling the Dark Side
Recently, airlines like Ganesh Sitaraman Delta and Alaska made it more difficult to earn status with their programs, even taking away some perks for those who already had status, such as easier access to lounges. William J. McGee, on the other hand, took things a step further by amending American's policy so that customers could only earn points when booking through American, its partners, or select travel agencies - nudging passengers away from competitor platforms.
Despite airline point systems appearing to be a great deal, they're actually riddled with exploitative policies that can trick passengers into handing over their money without receiving substantial "rewards."
One question people commonly ask is how much their points are worth. Despite the existence of resources like The Points Guy, determining a definitive value for points has become challenging. While the largest airlines used to publicly share redemption charts, some have stopped doing so, allowing them to alter the value of points at will. This switch leads to passengers essentially paying more in points for flights. In fact, a study showed that, since 2019, the cost of airline rewards has increased faster than the rate of inflation, while the value of those rewards has decreased.
Let's take a deeper look into those "mileage multiplier" offers that are sometimes presented after booking a flight. An airline might try to sell you extra points for a fee. However, it's not uncommon for airlines to charge more for these "multipliers" than what the points are said to be worth. This is similar to offering someone a deal where they need to pay $20 in order to receive $10 back. Since the conversion rates aren't transparent, they may not realize it's a negative deal.
Another scenario involves transferring points. Let's say you want to transfer 10,000 Delta points to your spouse. According to some estimations, these points could be worth $120.00. However, Delta would charge you a $30 fee to transfer them and one cent for each point transferred. That's a total of $130 paid to transfer $120 worth of points. Other airlines charge similar fees. Given that these processes merely involve shifting numbers in respective accounts, there's no need for additional costs.
The fact that these practices are unfavorable to consumers should come as no surprise. Some experts even believe the value of airline points programs greatly exceeds that of the airlines' transportation business.
These unfair and abusive practices serve as a significant source of income for airlines. In 2023, the six largest US carriers reaped $27 billion in revenue from loyalty programs and commissions, equating to 68% of the global industry's total revenue.
Given these circumstances, there's potential for lawmakers to step in and change the game. Senators Richard Durbin (D-Ill.) and Roger Marshall (R-Kan.) have expressed concerns about the perceived wrongdoings in these programs. In a letter to the Department of Transportation and Consumer Financial Protection Bureau, they mentioned their concern for "troubling reports that airlines are engaging in unfair, abusive, and deceptive practices" and sought answers regarding the agencies' plans to address the situation.
The Department of Transportation holds the authority to define and eliminate "unfair and deceptive practices" in the transportation sector, and they've already signaled their intention to scrutinize the points system. They'll be holding a hearing in conjunction with the Consumer Financial Protection Bureau this week, vowing to "carefully review complaints" and identify any necessary actions.
By taking legislative or regulatory action, it's possible to remove the unfairness from airline point systems. This would not signify the elimination of reward programs. Instead, it would simply ensure a level playing field for consumers.
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In light of these questionable practices, many travelers express their strong disagreement with the airline point systems, sharing their critical opinions on social media and online forums.
Despite these concerns, some consumers continue to enthusiastically participate in these loyalty programs, holding onto the hope that their opinions can lead to positive change within the industry.
Source: edition.cnn.com
