Over the last year, the Biden administration has taken a number of steps to try to reign in airlines by cracking down on policies that it feels are harmful to consumers.
At the end of spring, Delta (DAL) , United (UAL) and American Airlines (AAL) came together to sue the Department of Transportation over new rules requiring them to disclose “junk fees” such as baggage and cancelation costs upfront.
The Credit Card Competition Bill that was put forward by senators Dick Durbin (D-Ill.) and Roger Marshall (R-Kansas) back in 2023 is also currently on the docket. While the bill is not exclusive to airlines, many have expressed concern that requiring merchants to give consumers a choice of credit card networks to use for every purchase (for example, a customer using a Visa (V) card could opt in to use the Mastercard (MA) network) would completely uproot their loyalty rewards programs.
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At the recent 2024 Global Aerospace Summit in Washington, United CEO Scott Kirby called the proposed bill “bad policy” in a tirade against the proposed changes.
United CEO: ‘Well intentioned but would just be bad policy’
“The one risk to [loyalty] programs are legislative initiatives that I’m sure are well intentioned but would just be bad policy, particularly the Credit Card Competition Act,” Kirby said during a legislative meeting reported by airline and travel website The Points Guy. He further added that over three million passengers use United’s MileagePlus Program and that “customers love these programs.”
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Numbers from the most recent earnings reported by the Points Guy show that the MileagePlus program also brought United over $892 million or 6% of total revenue in the second quarter.
The U.S. Department of Transportation is currently conducting a separate investigation into whether airlines use rewards programs to keep customers with them using “potential[ly] unfair, deceptive, or anticompetitive practices.”
As the head of United, Kirby predictably spent the meeting singing the praises of MileagePlus specifically and rewards programs as a whole.
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This is why scrutiny of airline loyalty programs remains high
“The affinity, the loyalty people have for these programs is incredible,” Kirby said further.
A recent survey by points and travel platform Point.me found that United’s MileagePlus is the third-best airline loyalty program in the world, behind just Air France-KLM (AFRAF) ‘s Flying Blue and Air Canada (ACDVF) ‘s Aeroplan.
The factors ranking programs included how easy (or difficult) it is to earn miles by ways other than buying flights, how fast one will be able to reach benefits like free flights and the cost of said benefits in the points one accumulates — all things that the DoT is currently examining for devaluation and dynamic pricing that would get consumers less than what is advertised to encourage them to spend with the airline.
Current Transportation Secretary Pete Buttigieg issued a statement saying that airline miles “have become such a meaningful part of our economy that many Americans view their rewards points balances as part of their savings.”
The major U.S.-based airlines to whom the probe was addressed have not yet responded (they have 90 days from when they were informed of it on Sept. 5 to do so.)
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