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It seems like we report a new loyalty program devaluation each week. Awards cost more, fees go up, etc.. But the U.S. Transportation Secretary Pete Buttigieg wants that to stop, sending letters to America’s 4 largest airlines demanding information about loyalty program devaluations. In this Coffee Break episode, we’ll discuss what this might all mean!
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Coffee break: Pete Buttigieg’s war on airline loyalty devaluations
(00:00) – U.S. Transportation Secretary Pete Buttigieg wants that to stop.
Read more about this airline rewards probe here.
(00:43) – Let’s hear the press release…
(02:48) – AA, Delta, Southwest, and United were ordered to submit information by Dec 4. Here are the categories of information requested…
(08:51) – Details indicate a fairly deep understanding of loyalty program issues.
(10:02) – What good might come out of this?
(13:41) – What bad might come of this?
(16:46) – Will anything happen at all?
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Music Credit – Beach Walk by Unicorn Heads
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FIRST STEP FOR TAXATION (TO KNOW AND SET VALUES)
The way I view it is this miles/points game is better to play where there is less government regulations because you can find a real gemstone in the murky waters.
If everything is transparent then why bother to play at all if the result is known in advance.
It is always a bad omen when the Government gets involved…They will probably raise the taxes on the awards and tax us as if it was unearned income….
I fall between Greg & Nick’s conclusions. I don’t think it will result in a major change like a set value per point, as that won’t benefit consumers or the airlines.
I see two outcomes that could actually be valuable:
I would love to see the airlines have some of the same rules like the banks do. I believe the banks have to provide 30-60 days notice before they make any changes to their terms, so why can’t the airlines give a 30-60 day notice about upcoming devaluations?
It’s very questionable that the FAA should have authority to police a loyalty program in the first place. I feel either nothing or something bad happens to programs. There is no reason for optimism when bureaucrats decide to fix something like this. Where does it end? Practically every large company in the country has some kind of loyalty program. Will they issue rules about fuel points?
If the goal is transparency, Delta is good at showing you a fixed value for everything. Do you want everyone to follow SkyMiles?
It’s not the FAA. They deal with airworthiness, air traffic control, etc.
Questionable (depending on your point of view) as a policy matter but not so much as a legal issue.
The language of the statute cited in the Buttigieg letter dates back to the mid-1990’s (modified by Congress from time to time since). It has been used for actions like requiring disclosure of the airline flying the plane when a code share ticket is sold.
Starts with this:
Good news is Secretary Buttigieg is smarter than all airline executives collectively as well as their lawyers. Devaluations of loyalty miles/points is getting out of control.
no he is not
Wait. The government trying to keep big companies from screwing the little guy? Love it!
I’m mostly with Nick’s conclusions. That said, I think the airline programs will still want to find some ways to provide better value, as the airlines won’t want people to think that they’re only getting a penny per point when using their cards. Most customers don’t focus too much on the points game, but if it’s clear that they’re only getting 1% back on most purchases, they’re going to question keeping it versus the prevalent 1.5-2% cash back cards on the market.
It might lead to a situation where there’s less super-outsized value (like what we aspire towards) but better everyday value (where you can redeem for economy flights at 1.5 cents per point, for example.)
“The nine most terrifying words in the English language are ‘I’m from the government and I’m here to help.’”
I like having the NTSB investigate plane crashes, having the FAA provide air traffic control, and being able to reach out to the DOT when an airline doesn’t uphold their contract of carriage or tries to add undisclosed fees.
Please.
You like clean food and water? Clean air? Thank the EPA.
Safe working conditions? Workman’s Comp if you get injured? Thank the OSHA
Reliable weather data? Thank NOAA
Social Security and Medicare when you get old?
I could go on. Thank the government for all that. It didn’t happen by accident, and it definitely didn’t happen because corporations are our friends.
Sure do miss those Cuyahoga river fires… how else will the citizens of Cleveland keep warm?
The government is not your friend either. There are a few acceptions & you correctly noted some but for the most part, it’s corrupt & controlled by special interest groups and lobbyists.
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True for big airlines. False for the average american.