Should DOT require the airlines to release award space?

New American

With all the discussion involving the US Department of Transportation (DOT) relating to the mistake fares, it is probably no surprise that they are being bandied about in the blogosphere for other ‘consumer protections’.

So I ask: Should DOT require the airlines to release saver award space? Jason Steele, writing for the Points Guy does.

It’s my hope that DOT regulations can compel airlines to offer reasonable amounts of award seats, but that any government action won’t be so severe as to spur the airlines to eliminate the current award travel system altogether.

This statement both scares me and seems as wishful thinking. To me, it’s akin to trying to open Pandora’s Box, but only a little bit, and we know how that went.

What if DOT did take action?

But lets consider for a moment if DOT did get involved, here are some questions to consider:

  • Would this rule apply to every US flight? To every flight (regardless of carrier) that originates or terminates in the US? To every US flagged airline?
  • When would airlines have to release that saver space? Beginning of schedule? 6 months out? 3 months out?
  • How would DOT determine how many seats are enough? Airlines aim for particular load factors (industry lingo for how full the flight is), if DOT required too many saver seats it would make some flights unprofitable to fly.
  • Wouldn’t the airlines just bake the requirement into the price to increase fares even more? Or worse, this is the final push to a revenue based system like Southwest, in which case there is no “saver” award to begin with?

So why is it a bad idea?

  • Lets start off with the fact that what travel hackers do is inherently on the fringes. More regulation generally makes it more difficult to get outsized rewards.
  • Airlines are already heavily regulated and heavily taxed. This just makes it harder for them to make a profit, thus generate capital for new aircraft among other things. And remember air travel facilities business and tourism (a kind’ve big industry in the US)
  • Airlines are experiencing high load factors (~83%+ according to @WandrMe). This is clearly leading to fewer award seats. But the industry is cyclical,  things may change. Let the airlines “get healthy.”
  • Airlines are still releasing a ton of space. Some, like Southwest, have no restrictions on awards at all, in fact Southwest Rapid Rewards points have a fixed value. Others release space at the beginning of schedule, or at other various times. Heck, Aer Lingus has great availability! Or at least did when One Mile at a Time posted.
  • How long after the DOT starts enforcing saver award seat availability does it take for more government involvement, perhaps by the IRS? I think it benefits even fewer for taxes on miles and points, than even the benefits of more saver awards.
  • The DOT in their latest moves have been backing away from forcing airlines to honor mistake fares, why would they take an opposite track on frequent flier programs, an area the DOT has no jurisdiction in anyway?

I’m not the only one who believes this

In fact, from a brief, search, I found Brian Cohen of The Gate who disagrees with regulating frequent flier programs, and he references (and in fact, I recall reading the post myself), Gary Leff, of View from the Wing who offers comments on both sides, ultimately, Gary’s opinion in fact he states:

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.

Wrapping Up

Ultimately, I think it is short sighted to think that the DOT could force airlines to release more saver award space, and yet not get the more (and I dare say – dire) intrusive involvement. Really, DOT involvement in frequent flier programs could have far reaching and predominately negative consequences. In the short term there might be more saver award seats available, but longer term, the incremental value we get from miles and points will become less and less sooner.

3 thoughts on “Should DOT require the airlines to release award space?

    • @projectx – yeah, Rapid Rewards’ll have a wild card. Of course they haven’t told us what that will be as of yet.

  1. No, the DOT should stay out of any attempt to regulate award space. Airlines have no obligation to have a rewards program or a loyalty program in the first place. I could live with a ban on award surcharges (Brazil does it, why can’t we?!) but nothing else.

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