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4 Big Airlines Face U.S. Inquiry Over Frequent Flier Programs

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The Transportation Department ordered American, Delta, Southwest and United to share more information about their rewards practices to ensure they are fair to consumers and rivals.The Transportation Department announced on Thursday that it was investigating the rewards programs of the country’s four biggest airlines, part of the agency’s continuing efforts to bolster protections for air travelers.As part of the inquiry, Transportation Secretary Pete Buttigieg ordered the carriers — United Airlines, Delta Air Lines, American Airlines and Southwest Airlines — to furnish the agency with records and detailed information about their loyalty programs.The agency said its investigation was “focused on the ways consumers participating in airline rewards programs are impacted by the devaluation of earned rewards, hidden or dynamic pricing, extra fees, and reduced competition and choice.”Mr. Buttigieg said in a statement that such programs “are controlled by a company that can unilaterally change their value.”“Our goal is to ensure consumers are getting the value that was promised to them,” he added, “which means validating that these programs are transparent and fair.”Airlines’ policies have been in the Biden administration’s cross hairs for months as it has tried to clamp down on practices that it sees as unfavorable to consumers. In April, the Transportation Department issued new rules requiring airlines to offer refunds when flights are canceled or delayed and to reveal all fees before a ticket is purchased.Mr. Buttigieg expressed concerns about loyalty programs in May during a joint hearing of the Transportation Department and the Consumer Financial Protection Bureau on airline loyalty and credit card programs. He said the agency was examining whether the companies were being straightforward with customers about what they would receive and whether they were “getting the deal that they were promised.”The agency, he added at the time, was also looking into the impact of the programs on competition in the industry, and whether some were “being operated in a way that has the potential to block the entry or growth of smaller airline competitors, which could ultimately limit options for consumers.”In statements, Delta and Southwest defended their loyalty programs. American and United referred requests for comment to Airlines for America, a trade association that represents the country’s biggest airlines, which said in a statement that “U.S. carriers are transparent about these programs, and policymakers should ensure that consumers can continue to be offered these important benefits.”Last year, Delta prompted an outcry among travelers when it announced changes to its SkyMiles frequent flier program. The airline later adjusted its modifications. More

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    JetBlue Expects U.S. Move to Block Merger With Spirit

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    JetBlue said it saw a “high likelihood” of an antitrust suit by the Justice Department this week, but declared that the deal would foster competition.JetBlue Airways said Monday that it saw a “high likelihood” that the Justice Department would sue the company this week over its planned acquisition of Spirit Airlines. The $3.8 billion deal could create a new challenger to the nation’s four dominant carriers, but would add to industry consolidation.JetBlue said that it had long prepared for such a lawsuit and that its timeline for closing the deal was unchanged, provided it overcomes the expected challenge in court.“We believe there is a high likelihood of a complaint from D.O.J. this week, and we have always accounted for that in our timeline to close the transaction in the first half of 2024,” the company said.Critics of the deal say removing Spirit from the market would limit competition and further consolidate an already concentrated industry. While JetBlue is known for affordable fares, Spirit offers even lower prices, charging extra for everything from printing boarding passes at airport kiosks to selecting seats in advance. After the deal, JetBlue would reconfigure Spirit’s densely packed planes, removing seats, increasing legroom and adjusting the economics of each flight.According to two people familiar with the Justice Department’s plans, a government lawsuit will contend that after removing seats from Spirit planes, the combined airline would not be able to increase revenue per passenger without raising prices.Buying Spirit would allow JetBlue to accelerate its plans for growth. Today, JetBlue controls more than 5 percent of the U.S. airline market. After the acquisition, it would have a 10 percent share, making it the fifth-largest airline in the country. United Airlines, the fourth-largest carrier, has a 15 percent market share. Southwest Airlines, Delta Air Lines and American Airlines each have a more than 17 percent share.“JetBlue’s combination with Spirit allows it to create a compelling national challenger to these dominant airlines,” JetBlue said in a news release on Monday describing some of its arguments in favor of the deal.The acquisition would benefit consumers and disrupt the industry, it said, allowing JetBlue to bring low fares to new markets and forcing those large airlines to match its lower prices. JetBlue also said it had committed to giving up some of Spirit’s holdings in markets such as Boston, New York and Fort Lauderdale, Fla., where the combined airline would have an outsize presence.But the two people familiar with the Justice Department’s plans said its suit would assert that there was no guarantee that other airlines, with different cost structures from Spirit’s, would pick up Spirit slots that JetBlue might offer to shed.In addition to the Justice Department, the Transportation Department could also stand in the way of the deal by blocking the transfer of operating certificates, opponents of the sale have argued.After the expectation of a federal move to block the acquisition was reported on Monday, Spirit shares fell more than 8 percent. JetBlue shares were up about 1 percent.Unions representing workers at both airlines are divided on whether the merger should proceed. Last month, the Association of Flight Attendants-C.W.A., which represents 5,600 flight attendants at Spirit, wrote to Attorney General Merrick B. Garland and Transportation Secretary Pete Buttigieg to express support for the deal.“The JetBlue-Spirit merger will help to correct conditions in the industry with demonstrable improvements and protections for workers along with greater competition that benefits workers and consumers alike,” the union’s president, Sara Nelson, said in the letter. “This is the anti-merger, merger.”In a separate letter, the head of the Transport Workers Union, which represents 6,800 JetBlue flight attendants, asked Mr. Garland and Mr. Buttigieg to prevent the acquisition, arguing that it would violate antitrust laws and undermine competition and workers.In a letter in September, Senator Elizabeth Warren, a Massachusetts Democrat, asked Mr. Buttigieg to use his department’s “historically underutilized” authorities to intervene.JetBlue is also awaiting the outcome of a Justice Department antitrust lawsuit over the airline’s partnership with American in Boston and New York. A federal judge in Boston is expected to issue a decision in that case imminently.Lauren Hirsch More

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    The Biggest Kink in America’s Supply Chain: Not Enough Truckers

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    WASHINGTON — Facing more than $50,000 in student debt, Michael Gary dropped out of college and took a truck driving job in 2012. It paid the bills, he said, and he could reduce his expenses if he lived mostly out of a truck.But over the years, the job strained his relationships. He was away from home for weeks at a time and could not prioritize his health: It took more than three years to schedule an optometry appointment, which he kept canceling because of his irregular work hours. He quit on Oct. 6.“I had no personal life outside of driving a truck,” said Mr. Gary, 58, a resident of Vancouver, Wash. “I finally had enough.”Truck drivers have been in short supply for years, but a wave of retirements combined with those simply quitting for less stressful jobs is exacerbating the supply chain crisis in the United States, leading to empty store shelves, panicked holiday shoppers and congestion at ports. Warehouses around the country are overflowing with products, and delivery times have stretched to months from days or weeks for many goods.A report released last month by the American Trucking Associations estimated that the industry is short 80,000 drivers, a record number, and one the association said could double by 2030 as more retire.Supply-chain problems stem from a number of factors, including an extraordinary surge in demand for goods and factory shutdowns abroad. But the situation has been compounded by a shortage of truckers and deteriorating conditions across the transportation sector, which have made it even harder for consumers to get the things they want when they want them.The phenomenon is rippling across the economy, weighing on growth, pushing up prices for consumers and depressing President Biden’s approval rating. But the White House has struggled with how to respond.On Tuesday, it announced a series of steps aimed at alleviating supply-chain problems, such as allowing ports to redirect other federal funds to efforts to ease backlogs. As part of the plan, the Port of Savannah could reallocate more than $8 million to convert existing inland facilities into five pop-up container yards in Georgia and North Carolina to help ships offload cargo more quickly.That followed an announcement by Mr. Biden last month that major ports and private companies would begin moving toward 24-hour operation in an effort to ease the gridlock. But early results suggest that trucking remains a major bottleneck in that effort, compounding congestion at the ports.The directors of the ports of Los Angeles and Long Beach said that, at least initially, few additional truckers were showing up to take advantage of the extended hours.Gene Seroka, the executive director of the Port of Los Angeles, said his port had told the White House in July that about 30 percent of the port’s appointments for truckers went unused every day, largely because of shortages of drivers, the chassis they use to pull the loads and warehouse workers to unload items from trucks.“Here in the port complex, with all this cargo, we need more drivers,” Mr. Seroka said.The $1 trillion infrastructure bill that the House passed last week could help mitigate the shortage. The legislation includes a three-year pilot apprenticeship program that would allow commercial truck drivers as young as 18 to drive across state lines. In most states, people under 21 can receive a commercial driver’s license, but federal regulations restrict them from driving interstate routes.But industry experts said the program was unlikely to fix the immediate problem, given that it could take months to get underway and the fact that many people simply do not want to drive trucks.Mr. Biden said last month that he would consider deploying the National Guard to alleviate the trucker shortage, although a White House official said the administration was not actively pursuing the move.Meera Joshi, the deputy administrator of the Federal Motor Carrier Safety Administration, said the agency had focused on easing the process of obtaining a commercial driver’s license after states cut back licensing operations during the coronavirus pandemic. The agency has also extended the hours that certain drivers can work. “They are the absolute backbone of a big part of our supply chain,” Pete Buttigieg, the transportation secretary, said about truckers at a White House briefing on Monday. “We need to respect and, in my view, compensate them better than we have.”The shortage has alarmed trucking companies, which say there are not enough young people to replace those aging out of the work force. The stereotypes attached with the job, the isolating lifestyle and younger generations’ focus on pursuing four-year college degrees have made it difficult to entice drivers. Trucking companies have also struggled to retain workers: Turnover rates have reached as high as 90 percent for large carriers.In response, the companies have raised their wages. The average weekly earnings for long-distance drivers have increased about 21 percent since the start of 2019, according to the Bureau of Labor Statistics. Last year, commercial truck drivers had a median wage of $47,130.On any given day this summer, dozens of container ships waited outside the ports of Los Angeles and Long Beach to unload their cargo.Stella Kalinina for The New York TimesThe Port of Los Angeles. Trucking remains a major bottleneck in the effort to reduce congestion at U.S. ports.Stella Kalinina for The New York TimesTo pay for those increases, trucking companies are raising their rates. Jon Gold, the vice president of supply chain and customs policy at the National Retail Federation, said the driver shortage has contributed to steeper costs for retailers, which are trickling down to consumers and pushing up some of the prices at stores.“We are seeing cost increases at every step of the way in the transportation supply chain,” Mr. Gold said. “From ocean to truck to rail, costs are increasing.”Derek J. Leathers, the president and chief executive of Werner Enterprises in Omaha, which employs about 9,500 drivers, said its services cost about 15 percent more than prepandemic levels as driver salaries and equipment costs have climbed.The company is trying to hire about 700 truck drivers — up from about 300 before the pandemic — after demand swelled and retirements left the company short on workers. It has increased driver compensation by about 20 percent since the start of 2020 and expanded the number of driving academies it operates.“I’ve been in the business for over 30 years,” Mr. Leathers said. “I definitely think this is the tightest driver market I’ve seen in my career.”Understand the Supply Chain CrisisCard 1 of 5Covid’s impact on the supply chain continues. More

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    Program to Lend Billions to Aid California’s Supply-Chain Infrastructure

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    The Transportation Department and the state are teaming up on the program, which aims to prevent a repeat of the supply-chain crisis by bolstering ports and other sources of bottlenecks.WASHINGTON — The Transportation Department will team up with California to provide billions in loans to strengthen the state’s overwhelmed ports and supply-chain infrastructure, in an effort to prevent a repeat of the bottlenecks that have crippled the flow of goods into and out of the United States, officials announced on Thursday.Most of the projects will probably take years to fund and complete, a department spokesman said, so the initiative will offer little relief for the supply-chain crisis now gripping the globe. But with potentially more than $5 billion in loan money on offer, officials say the investment is a necessary step to bolster the state’s aging infrastructure.The loans could be used to upgrade ports, expand capacity for freight rail, increase warehouse storage and improve highways to reduce truck travel times. The Transportation Department will provide some of the loan money through its own programs, while also working with the California State Transportation Agency to identify other financing opportunities.Backlogs of ships at ports and shortages of shipping containers, truck drivers and warehouse workers have aggravated the delivery delays and rising prices that began when coronavirus outbreaks shut down factories around the world even as demand for goods spiked. The Biden administration moved this month to nearly double the hours that the Port of Los Angeles is open, shifting to a 24/7 operation.“Our supply chains are being put to the test, with unprecedented consumer demand and pandemic-driven disruptions combining with the results of decades-long underinvestment in our infrastructure,” Pete Buttigieg, the transportation secretary, said in a statement. “Today’s announcement marks an innovative partnership with California that will help modernize our infrastructure, confront climate change, speed the movement of goods and grow our economy.”The announcement comes as President Biden and lawmakers try to push through Congress their own major infrastructure plan, which includes money for ports and other transportation initiatives. Progressive lawmakers in the House have resisted throwing their support behind the bipartisan infrastructure bill as leverage while negotiations continue over a separate $1.85 trillion economic and environmental bill.David S. Kim, the secretary of the California State Transportation Agency, said it was the first time California had worked with the federal government to issue loans for infrastructure projects on such a broad scale.“Our supply-chain infrastructure is outdated,” Mr. Kim said. “Now’s the time to modernize it and prepare our system for what will be huge growth and huge demand for years to come.”The partnership comes after Gov. Gavin Newsom of California signed an executive order last week directing state agencies to identify longer-term solutions to alleviate congestion at California ports, which he said were “key” to the country’s supply chain. Mr. Newsom said the new agreement would help accelerate upgrades to the state’s infrastructure system.“This innovative federal-state partnership will help us fast-track those projects that will make our ports and infrastructure even more efficient,” Mr. Newsom said in a statement.California’s budget this year includes $250 million for ports, $280 million for infrastructure projects at and around the Port of Oakland, and $1.3 billion over three years for zero-emission trucks, transit buses and school buses, including the deployment of more than 1,000 zero-emission port drayage trucks. More

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    Flight paths over Belarus should be assessed, the transportation secretary says.

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    The transportation secretary said Monday that the safety of flights operated by U.S. airlines over Belarus should be reviewed after the Eastern European country forced a commercial flight to land in order to seize a dissident on board.“That’s exactly what needs to be assessed right now,” the secretary, Pete Buttigieg, told CNN. “We, in terms of the international bodies we’re part of and as an administration with the F.A.A., are looking at that because the main reason my department exists is safety.”The comments came after the authoritarian leader of Belarus dispatched a fighter jet on Sunday to intercept a Ryanair plane carrying the journalist Roman Protasevich. The plane was forced to land in Minsk, the Belarusian capital, where Mr. Protasevich was arrested.The secretary of state, Antony J. Blinken, condemned the forced diversion, saying it was a “shocking act” that “endangered the lives of more than 120 passengers, including U.S. citizens.” And Michael O’Leary, the chief executive of Ryanair, an Irish-based low-cost carrier, called the operation a “state -sponsored hijacking.”The International Air Transport Association, a global industry group, said Saturday on Twitter, “We strongly condemn any interference or requirement for landing of civil aviation operations that is inconsistent with the rules of international law.” The group called for “a full investigation by competent international authorities.”Officials in the region also criticized the action. Ursula von der Leyen, president of the European Commission, called the re-routing to Minsk “utterly unacceptable,” adding that “any violation of international air transport rules must bear consequences.”Though not a major European hub, Minsk is served by multiple international airlines, including Lufthansa, KLM, Turkish Airlines and Air France. Delta Air Lines and United Airlines offer flights to Minsk through their partnerships with those European airlines as well as through Belavia, the Belarusian national carrier.Belarus sits between Poland and Russia and also has borders with Ukraine, Lithuania and Latvia, putting it in the path of some flights to and from major European airports. More

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    The Business Rules the Trump Administration Is Racing to Finish

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    #masthead-section-label, #masthead-bar-one { display: none }The Presidential TransitionLatest UpdatesHouse Moves to Remove TrumpHow Impeachment Might WorkBiden Focuses on CrisesCabinet PicksAdvertisementContinue reading the main storySupported byContinue reading the main storyThe Business Rules the Trump Administration Is Racing to FinishFrom tariffs and trade to the status of Uber drivers, regulators are trying to install new rules or reduce regulations before President-elect Joe Biden takes over.President Trump is rushing to put into effect new economic regulations and executive orders before his term comes to a close.Credit…Erin Schaff/The New York TimesJan. 11, 2021, 3:00 a.m. ETIn the remaining days of his administration, President Trump is rushing to put into effect a raft of new regulations and executive orders that are intended to put his stamp on business, trade and the economy.Previous presidents in their final term have used the period between the election and the inauguration to take last-minute actions to extend and seal their agendas. Some of the changes are clearly aimed at making it harder, at least for a time, for the next administration to pursue its goals.Of course, President-elect Joseph R. Biden Jr. could issue new executive orders to overturn Mr. Trump’s. And Democrats in Congress, who will control the House and the Senate, could use the Congressional Review Act to quickly reverse regulatory actions from as far back as late August.Here are some of the things that Mr. Trump and his appointees have done or are trying to do before Mr. Biden’s inauguration on Jan. 20. — Peter EavisProhibiting Chinese apps and other products. Mr. Trump signed an executive order on Tuesday banning transactions with eight Chinese software applications, including Alipay. It was the latest escalation of the president’s economic war with China. Details and the start of the ban will fall to Mr. Biden, who could decide not to follow through on the idea. Separately, the Trump administration has also banned the import of some cotton from the Xinjiang region, where China has detained vast numbers of people who are members of ethnic minorities and forced them to work in fields and factories. In another move, the administration prohibited several Chinese companies, including the chip maker SMIC and the drone maker DJI, from buying American products. The administration is weighing further restrictions on China in its final days, including adding Alibaba and Tencent to a list of companies with ties to the Chinese military, a designation that would prevent Americans from investing in those businesses. — Ana SwansonDefining gig workers as contractors. The Labor Department on Wednesday released the final version of a rule that could classify millions of workers in industries like construction, cleaning and the gig economy as contractors rather than employees, another step toward endorsing the business practices of companies like Uber and Lyft. — Noam ScheiberTrimming social media’s legal shield. The Trump administration recently filed a petition asking the Federal Communications Commission to narrow its interpretation of a powerful legal shield for social media platforms like Facebook and YouTube. If the commission doesn’t act before Inauguration Day, the matter will land in the desk of whomever Mr. Biden picks to lead the agency. — David McCabeTaking the tech giants to court. The Federal Trade Commission filed an antitrust suit against Facebook in December, two months after the Justice Department sued Google. Mr. Biden’s appointees will have to decide how best to move forward with the cases. — David McCabeAdding new cryptocurrency disclosure requirements. The Treasury Department late last month proposed new reporting requirements that it said were intended to prevent money laundering for certain cryptocurrency transactions. It gave only 15 days — over the holidays — for public comment. Lawmakers and digital currency enthusiasts wrote to the Treasury secretary, Steven Mnuchin, to protest and won a short extension. But opponents of the proposed rule say the process and substance are flawed, arguing that the requirement would hinder innovation, and are likely to challenge it in court. — Ephrat LivniLimiting banks on social and environmental issues. The Office of the Comptroller of the Currency is rushing a proposed rule that would ban banks from not lending to certain kinds of businesses, like those in the fossil fuel industry, on environmental or social grounds. The regulator unveiled the proposal on Nov. 20 and limited the time it would accept comments to six weeks despite the interruptions of the holidays. — Emily FlitterOverhauling rules on banks and underserved communities. The Office of the Comptroller of the Currency is also proposing new guidelines on how banks can measure their activities to get credit for fulfilling their obligations under the Community Reinvestment Act, an anti-redlining law that forces them to do business in poor and minority communities. The agency rewrote some of the rules in May, but other regulators — the Federal Reserve and the Federal Deposit Insurance Corporation — did not sign on. — Emily FlitterInsuring “hot money” deposits. On Dec. 15, the F.D.I.C. expanded the eligibility of brokered deposits for insurance coverage. These deposits are infusions of cash into a bank in exchange for a high interest rate, but are known as “hot money” because the clients can move the deposits from bank to bank for higher returns. Critics say the change could put the insurance fund at risk. F.D.I.C. officials said the new rule was needed to “modernize” the brokered deposits system. — Emily FlitterNarrowing regulatory authority over airlines. The Department of Transportation in December authorized a rule, sought by airlines and travel agents, that limits the department’s authority over the industry by defining what constitutes an unfair and deceptive practice. Consumer groups widely opposed the rule. Airlines argued that the rule would limit regulatory overreach. And the department said the definitions it used were in line with its past practice. — Niraj ChokshiRolling back a light bulb rule. The Department of Energy has moved to block a rule that would phase out incandescent light bulbs, which people and businesses have increasingly been replacing with much more efficient LED and compact fluorescent bulbs. The energy secretary, Dan Brouillette, a former auto industry lobbyist, said in December that the Trump administration did not want to limit consumer choice. The rule had been slated to go into effect on Jan. 1 and was required by a law passed in 2007. — Ivan PennAdvertisementContinue reading the main story More