2023-10-25 14:46:10
Scott Kirby, CEO de UA
Archyde.com
Are frequent flyer miles programs in danger? United Airlines CEO Scott Kirby warned that airline customers might start to see their mileage programs disappear because of a new bipartisan bill in the US Congress on credit card fees.
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“This would kill rewards programs,” Kirby said on a company earnings conference call.
“They would no longer exist. It will kill credit card rewards programs when it happens, and I think it’s bad policy,” he warned.
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The businessman referred to the Credit Card Competition Act, proposed by Senator Dick Durbin of Illinois, which aims to end what Durbin calls an alleged “Visa-Mastercard duopoly” on credit card transactions, several media reported. international.
It was stated that “Visa and Mastercard control 80% of credit card payments in the United States and charge merchants transaction fees of between 2 and 3%, according to a summary of the bill.”
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Durbin, a Democratic lawmaker who introduced the bill in June, “aims to require large U.S. banks to allow at least one other payment network in addition to Visa or Mastercard to be used for credit card transactions.”
Photo illustration with MasterCard and Visa credit cards. REUTERS/Maxim Zmeyev
“This is intended to introduce competition that forces the payment giants to lower their commissions,” it was stated.
The bill was originally introduced by Durbin in 2022, although it never came to a vote. Now, he noted, “it has been reintroduced with growing bipartisan support, including Republican and Democratic cosponsors in the Senate and House of Representatives.”
However, “several airlines, which partner with banks to issue miles or loyalty points, say the bill will cut into Visa and Mastercard’s revenue and make them less willing to participate in rewards programs.”
In this regard, Delta Air Lines CEO Ed Bastian told Bloomberg that he anticipated that banks would stop partnering if the bill was approved, which would cause an “incredible” reaction from consumers.
“These cards would no longer be able to receive the funding to be able to invest in rewards cashback opportunities. It is something we are looking at, obviously,” she stated.
Delta’s Ed Bastian also warned regarding this law
On United’s earnings call, Kirby criticized Durbin’s bill, saying the vast majority of American consumers participate in at least one rewards program.
“Almost everyone has one,” he said. “And they like them a lot. Our customers like them a lot. And that is why I think it would be difficult for Congress to vote that 84% of its voters are going to be displeased with the result of that vote,” he explained.
The collapse of loyalty programs would also deeply affect airline profits.
Dick Durbin, author of the controversial project
U.S. airlines that partner with credit cards to offer points or miles programs typically charge each time a customer uses these cards, generating billions in revenue, it was explained.
“Still, supporters of the Credit Card Competition Act say it will save $15 billion annually for retailers, restaurants, small businesses and their customers. They also argue that large banks will continue to offer rewards programs following the law is passed,” he said.
In particular, “the European Union already imposes a strict 0.3% limit on credit card transaction fees. “European banks and airlines continue to offer points and miles programs to their customers.”
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