I’m not sure I’ve ever seen anything as egregious as Delta over the past few weeks.
- Delta eliminated their award charts — just pulled them off the website — without telling anyone. When asked they said that members now get all they need to know from the award calendar. That suggests pricing could change and change rapidly, or at least they’re preparing for it to.
- Delta now has 21 day advance purchase requirements for the lowest award prices in many (most) markets. They’ve made your miles less valuable, without notice or even acknowledgment, for one of the only strong uses for domestic coach awards.
One candidate for ‘worst action by an airline frequent flyer program against its members’ as noted by a commenter on the blog is fuel surcharges, especially the continued charging of these fees as the price of fuel has come down.
Delta believes it can do whatever it wishes, whenever it wishes — no need for respect or transparency for members, they simply aren’t required to. That’s the position they explicitly took in front of the Supreme Court.
Airlines Are Strongly Pro-Government
Though airlines often complain about security and other aviation taxes, airlines aren’t pro-free market and anti-government, they just don’t like competition and do like subsidies.
United ran air service at the behest of the Governor of New Jersey and the Chairman of the Port Authority of NY/NJ in exchange for support of using state tax dollars to bring better public transit to Newark.
They love state aid when it benefits them, they work with state carriers as partners, but they’re shocked – shocked! – when the state subsidies can be a hammer to use against Middle East carriers.
And Delta scapegoats government regulators as the reason they have to obfuscate changes and ensure that their customers are surprised to learn that the awards they’ve been saving up to redeem for have gotten more expensive.
Airline Behavior, and Changes in Legal Options for Travelers, Make the Case for Regulatoin
As free market as I am (and I’m a strong libertarian), I’m open to regulation of frequent flyer programs, which is to say I’m not in a position to oppose it on any fundamental grounds given:
- Legal options taken away from members
- Facts on the ground, how programs are behaving in light of the lack of common law restraint on their actions.
Last year the Supreme Court, in Northwest v. Ginsberg essentially took away any common law avenue of suit against a frequent flyer program.
The court concluded that:
- Frequent flyer programs are part and parcel to running an airline.
- State contract claims like those based on an implied covenant of good faith and fair dealing are tantamount to states regulating the airlines
- These claims are pre-empted by the Airline Deregulation Act.
The Supreme Court has basically said the courts are closed to consumers with respect to claims about frequent flyer programs. I think the analysis is flawed — these programs aren’t merely rebates for travel, they are all-purpose marketing programs. These programs aren’t just a mechanism to use points for travel, non-travel redemption options are available. And just because the programs (may be, but aren’t always) owned by an airline, that isn’t sufficient to exempt them from regulation. Delta after all owns an oil refinery.
As it stands, you basically can’t sue a frequent flyer program unless they directly violate language in their own t&c which say they can do as they wish.
To the extent that common law claims are pre-empted, and the Court’s and airlines’ position is basically that it’s up to the DOT to regulate them then it’s hard to suggest that the DOT position that it doesn’t regulate frequent flyer programs ought to be immutable.
Regulation May Still Be a Bad Idea
That doesn’t make all, most, or even any given regulation a good idea. I remain skeptical it could be done well. I remain skeptical that any regulation wouldn’t be subject to regulatory capture. But until Northwest v. Ginsberg is overturned (and I think that would be a better path), it’s hard to have any sort of fundamental objection to regulation as a second-best.
But ‘Just Fly Someone Else’ Isn’t Sufficient
Accumulating miles in a given program is 100% voluntary.
An airline might posit that two parties come to a meeting of the minds, consumers get points that an airline (Delta, say) makes clear upfront via their program terms are of indeterminate value and 100% at risk at the sole discretion of one of the parties to the agreement.
Under that scenario it sure sounds like a rigged game, but that no consumer is required to participate in.
Here’s the rub: That’s not the game that airlines were describing in the past. There were clear inducements, and often even promises (like Delta taking out a Superbowl ad years ago saying miles would never expire before introducing expiring miles, or United explicitly promising that million miler benefits like upgrades wouldn’t change two months before taking away those upgrades) that are broken.
Furthermore, I’ve yet to hear an airline spokesperson declare the game is rigged. They want members to believe it’s not. So I wouldn’t accept the argument that we all know it is as an ‘out’.
And we aren’t just talking about the prospective earning of miles, we’re talking about changes to the value proposition of already hard-earned points. The changes are effectively retroactive to past activities.
What do you think? Have airlines gone a step too far with their programs? Are we left with no other options but regulation to enforce our contracts with frequent flyer programs?
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