FREQUENT fliers may have a turbulent time ahead of them as new legislation threatens airline loyalty programs.
Major US airlines, as well as labor unions and manufacturers, wrote to senators on Monday, warning that the bill could damage the aviation industry.
Reported by Business Insider, United, American, and Southwest Airlines are actively opposing a bill introduced by Republican Senator Roger Marshall of Kansas and Democratic Senator Dick Durbin of Illinois.
The proposed bill would amend the GENIUS Act, which focuses on regulating cryptocurrency.
The amendment aims to expand competition among credit card providers and reduce card fees.
Airlines previously overturned the government’s attempts to control credit card fees in the past, but this may be a more challenging feat.
The proposed legislation has garnered support from significant entities like the National Retail Federation, however, it is encountering strong resistance from airlines and financial institutions.
“A lot of people call airlines credit card companies with wings,” points guru and Prince of Travel editor, TJ Dunn, previously told BI.
The airlines referenced a report by Airlines for America, indicating that airline travel rewards cards contributed to $25 billion in economic activity in the year 2023.
Over 31 million Americans owned airline rewards cards.
In 2023, travel rewards cards accounted for 57% of the frequent flyer miles or points earned that year.
Loyalty programs for Delta, United and American were each valued at over $20 billion in 2023, USA Today reported.
“Americans value and enjoy credit card rewards programs because they reward consumers for dollars that they would be spending no matter what,” the letter said.
“Many may be unpleasantly surprised if Congress disrupts those programs.”
Airlines argue that this bill could prevent travel from being accessible.
The letter states that the amendment could cause travel rewards programs to stop completely.
Unions representing pilots, flight attendants, and Boeing workers have all signed the letter.
The unions argue that a reduction in loyalty programs could also cause “a contraction in airline activity and jobs.”
How can the legislation effect loyalty programs?
The new legislation may lead to the end of airline loyalty programs, according to a letter sent to the US Senate. The amendment will restrict the fees that credit card companies can charge.
“Americans value and enjoy credit card rewards programs because they reward consumers for dollars that they would be spending no matter what,” the letter said.
“Many may be unpleasantly surprised if Congress disrupts those programs.”
Unions wrote that lost revenue would “certainly complicate existing or future collective bargaining negotiations.”
As a result of the loss of revenue, the letter argues that airlines wouldn’t have as much money to invest in new planes.
Dublin and Marshall believe that the new amendment could help small businesses.
In total, sellers and consumers may save $15 billion in annual transaction fees.
