A group of Delta SkyMiles members has filed a complaint in federal court in New York, claiming that the carrier has unfairly restricted award availability by allowing SkyMiles members to earn miles through means other than flying.
The three plaintiffs named in the complaint claim to represent “all members who are or were participants in the Delta Air Lines SkyMiles program and have had Delta SkyMiles wrongfully confiscated” and are bringing the suit as a class action, though the class has yet to be certified.
The suit contends that the SkyMiles program began as a “miles-flown” customer loyalty program, but has evolved into a larger marketing program where Delta awards the majority of its miles to credit card users and shoppers who buy special promotional items. According to the plaintiffs, this practice has caused Delta to adopt restrictions such as blackout dates, capacity controls and expiration dates “that make it ever more difficult for plaintiffs … to obtain fair value for the miles credited to their accounts.”
In addition to making awards more difficult to get, the frequent flyer plaintiffs accuse Delta of using “threats and intimidation” to prevent members from selling, exchanging or bartering their miles and claim that Delta’s and other airlines’ formation of companies such as Milepoint.com are in violation of antitrust laws. The plaintiffs are seeking unspecified damages and a court order banning Delta and other airlines from forming ventures like MilePoint.
The complaint specifically alleges violation of the Sherman and Clayton Antitrust Acts, violation of the Racketeer Influenced and Corrupt Organizations Statute, breach of contract, breach of duty of good faith and fair dealing in both restriction of availability of goods and services and suppression of value of frequent flyer miles, conversion, fraud and misrepresentation and breach of the New York State Consumer Protection Statute.
Delta has, according to the complaint, acted in concert with other airlines to “unreasonably restrict, restrain, limit and control the market” for miles by prohibiting their sale, while simultaneously “selling” miles themselves with ventures such as Milepoint.com. The plaintiffs allege that such behavior not only violates federal antitrust law, but also constitutes a “pattern of racketeering activity” sufficient to violate the RICO statute.
The plaintiffs further allege that SkyMiles rules do not prohibit the sale, exchange or barter of miles, and thus that a prohibition against such sale is a breach of contract. Alternatively, they claim that even if the program rules do prohibit the sale of miles, Delta’s own selling of miles constitutes a breach.
The complaint goes on to allege that blackout dates and capacity controls violate Delta’s duty of good faith and fair dealing by restricting the availability of promised awards. Such restrictions, the plaintiffs claim, combined with the prohibition on the sale of miles, unreasonably suppress the value of the miles.
The plaintiffs, each of whom have had miles confiscated by Delta, also allege conversion, and further claim that by advertising SkyMiles as a means to easy air travel and then restricting availability, Delta has committed fraud and misrepresentation.
Finally, the plaintiffs allege that by claiming the sale of miles was unlawful (as opposed to just “against the rules”), Delta has violated that portion of the New York State Consumer Protection Statute which prohibits “deceptive acts or practices in the conduct of any business, trade or commerce.”
If anything, the case offers an insight into the culture of entitlement that has haunted the frequent flyer industry. Originally, if a flyer had the miles, and there was a seat available, any award was a shoo-in. Those awards, however, were generally between 40,000 and 50,000 miles.
It was only much later that the airlines introduced the 25,000-mile awards — a discount that understandably came with restrictions. Many flyers, however, now want the availability of the 50,000-mile awards (which are still an option, by the way) at half-price.
If you are a SkyMiles members who supports the claims in this complaint and you want your name added to the class-action suit, you should contact:
Sr. Partner: Barry Roberts
Roberts & Hundertmark LLP
5028 Wisconsin Ave., NW, Ste. 250
Washington, DC, 20016
phone: (202) 362-9700
Editor’s Note: We obtained a copy of this complaint and see little or no merit to the case. Granted, we’re not the legal system, but we see enough error in its presentation of facts to question the motive other than a few members wanting the right to sell their miles. While we have long been on record that there needs to be reform in the supply and demand of select award seats — we don’t see this type of action as the remedy and wish the best for Delta SkyMiles. You can see the entire transcript of the complaint at http://www.insideflyer.com/articles/o2.php?key=59. We think you’ll find this interesting reading.