A Supreme Court decision allowing frequent flyer program members to take legal action against respective airlines, has had serious ramifications within the industry.
The case in question, American Airlines vs. Wolens, relates to changes and restrictions made by the airline to their frequent flyer program-retroactively.
The basis for the lawsuit is that in 1988, American Airlines instituted various restrictions to its frequent flyer program that were detrimental to the program participants. In an effort to negate excessive costs, American limited the number of seats available on each flight for discounted or award travel and made this type of travel unavailable during the busiest flight periods of the year, which includes Thanksgiving and Christmas. American justified its actions by saying that it had previously reserved the right to change its benefits at any time and argued that the lawsuit was not permitted under the Airline Deregulation Act of 1978, which pre-empts state court lawsuits over issues related to airline rates, routes or services. Any disputes over frequent flyer benefits would definitely fall into this category and thus all claims would be handled by the federal Department of Transportation, they stated.
The plaintiffs, in response, accused the airline of breach of contract, stating that their cost-cutting actions had devalued their accrued mileage under improper circumstances. They went on to add that the Department of Transportation did not have the authority to award monetary damages, and that the basis of the claim did not fall under the auspice of the 1978 Act.
The Supreme Court agreed with the plaintiffs assertations; a federal deregulation act does not bar lawsuits over frequent flyer plans from state courts: The programs in question do not fall under the "umbrella" of rates, routes and services under the 1978 Act. The Supreme Courts decision (6-2) to uphold the Illinois ruling allowed the plaintiffs to go ahead with their action against American Airlines, innovators of the frequent flyer program.