Airlines warn new credit card fee bill could end frequent flyer rewards
Major airlines have warned that a new bill to reduce credit card fees might end frequent flyer rewards programs.
Major airlines have opposed a new effort to advance a bill that would reduce credit card fees. Their argument was that if the bill proceeded, it could force them to stop offering rewards such as frequent flyer miles.
Dick Durbin and Roger Marshal, the senators who are sponsoring the bill, received an open letter from several airlines (and aviation unions) such as:
- American Airlines AAL.O
- United Airlines UAL.O
- Southwest Airlines LUV.N
- Boeing BA.N
- Airbus AIR.PA RTX RTX.N
- GE Aerospace GE.N
The airlines stated in the letter that not only, the bill would reduce air travel and harm tourism as a consequence.
Impact of the bill on frequent flyer miles and tourism
According to Dick Durbin, the airline companies generate an unsurmountable amount of money out of credit cards' annual fees. He assures that this measure would be able to save merchants and consumers almost $15 billion annually in fees. Durbin is not wrong. Delta, United and American's loyalty programs were valued in 2023 at over $20 billion each.
Nonetheless, the letter states that more than 31 million Americans own airline travel reward cards and 57% of their frequent flier miles issued in 2023, were generated by airline credit card use. Additionally, the same year, 16 million domestic air visitor trips were due to points earned through a credit card.
Airlines and industry push back against credit card fee bill
However, this is not the first time airlines have tried to prevent this bill from passing. In 2023, they were able to successfully win the battle, but it was attached to a cryptocurrency bill under consideration.
The Biden administration opened an inquiry in 2024 involving American, Delta Air Lines, Southwest and United, urging them to provide records to make sure consumers are not being victims to unfair or deceptive practices.
