The Department of Transportation is conducting an audit of frequent flyer programs, focused on disclosure of program rules and costs associated with redemptions.
The audits are being conducted at the behest of Representative Alan Grayson (D-FL), who wants to protect his 10 million miles.
Frequent-flyer programs need more federal oversight, contends a Florida congressman. Representative Alan Grayson, an Orlando-area Democrat who himself has amassed about 10 million miles, says the airlines have turned their loyalty programs into dishonest profit centers that cheat air travelers by devaluing their miles and changing program rules without proper notice.
…“We’ve crossed the line from a series of programs throughout the industry that are honest and constrained by competition to programs that are no longer constrained by competition,” Grayson says. He accuses airlines of being “greedy and deceptive” in how they administer the programs.
The piece suggests that Grayson believes airline competition kept the programs generous, and presumably now the Department of Transportation needs to do that. Although the timing of many of the changes to programs that members haven’t liked occurred prior to the recent round of industry consolidation. (The piece cites for instance members referring to Delta miles as SkyPesos, something that predated recent mergers.)
Here’s what Grayson specifically would like to see:
Ideally, Grayson says, the airlines should be forced to give at least one year’s notice of major program changes and to offer at least one seat on every flight available at the lowest mileage level. “If you’re going to have a program like this at all, it’s got to be an honest program,” he says. “Every human being comes with a built-in cheat detector. They know when they’re being cheated; they know when they’re being deceived.”
Giving a year’s notice for major changes is something I’ve argued for a long time that we, as consumers, should expect and demand.
The specific standard notwithstanding, the idea of some standard for change notification is something that could well develop under the threat of regulation. Eric M. Fraser, a blog reader who has provided commentary here on legal issues (such as here), suggests:
Eric Fraser, a miles collector and Phoenix attorney who specializes in federal regulatory issues, says the department is likely to be most interested in whether airlines properly notify program members of pending changes. “This is an area where the DOT sniffing around could just have an immediate benefit, even if they don’t start to write rules,” Fraser says.
Grayson’s suggestion for airlines offering one award seat per flight is something that United actually promised back in April 2006, as a sweetener to make their October 2006 award chart devaluation go down smoother.
We don’t know if United still does this, or if they really ever did. And I’m not sure how much it would matter anyway.
People tend to think that award seats are opened when schedules are loaded (be that 331 days, 338 days, 355 days out from travel or otherwise). When they call an airline at midnight on that magic day, if award seats aren’t available “someone must’ve beaten them to it.”
That’s not how it works, airlines may load some award inventory when schedules first become available. They also might not, at all for peak travel times or an airline’s practice may be to load that later, say after a month or two. The point though is that airlines want to make those seats available as ‘saver’ awards that would otherwise go unsold. Eleven months out their guesses about what seats those are is informed by the past, but still a guess. As travel gets closer they should have a better idea of it.
As a result, close to departure is – with many but not all airlines – about the best time to be booking awards, as unsold seats become available as awards.
A requirement that airlines make at least one seat available per flight says nothing about when they do this (331 days out, or 7?) or in what class of service. One isn’t really that helpful, either. And the problem, if there is one, is that airlines haven’t grown capacity as demand for air travel has grown so there are fewer seats going unsold. I’m not sure, current law which probably wouldn’t allow this notwithstanding, if DOT ought to be dictacting changes to the economics of the programs — or requiring more flights so that there are seats (although programs have in the past run special award flights, such as to Hawaii).