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Airlines fear fee bill could end rewards credit cards

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Durbin claims bill saves $15 billion in fees annually

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Airlines rely on loyalty programs for significant revenue

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Airlines warn fee bill may harm tourism and air travel

(Adds paragraph 4 on debit card bill)

By David Shepardson

WASHINGTON, June 2 (Reuters) - Major airlines said on

Monday they oppose a new effort to advance legislation that

would reduce fees charged by Visa and Mastercard ( MA ) on

transactions, saying it could force them to stop offering

rewards credit cards that give consumers frequent flyer miles

for making transactions.

American Airlines ( AAL ), United Airlines,

Southwest Airlines ( LUV ) and others including planemakers

Boeing ( BA ), Airbus, RTX and GE Aerospace

, said in a letter to senators the legislation sponsored

by Senators Dick Durbin and Roger Marshall could sharply reduce

air travel and harm overall tourism. Also signing the letter

were aviation unions.

Airlines generate billions of dollars annually in fees for

branded credit cards. Durbin has called the airlines "basically

credit card companies that own some planes."

The airlines argue the reduction in swipe fees would make it

impossible to offer rewards and point to a 2010 law aimed at

debit card fees that they say nearly eliminated rewards debit

cards.

Airlines successfully defeated efforts in 2023 to pass the

measure but it could be attached to a cryptocurrency bill under

consideration this week.

Durbin, a Democrat, previously said the measure co-sponsored

with Republican Marshall could save merchants and consumers $15

billion annually in fees for credit card transactions, while

businesses pay more than $100 billion in so-called swipe fees

annually.

Durbin and Marshall did not immediately respond to requests

for comment.

The letter said over 31 million Americans hold airline

travel reward cards and 57% of all frequent flier miles and

points issued in 2023 were generated by airline credit card use.

Nearly 16 million domestic air visitor trips were awarded from

points earned through use of an airline-branded credit card in

2023.

Last year, the Biden administration Transportation

Department opened an inquiry ordering American, Delta Air Lines ( DAL ),

Southwest ( LUV ) and United to provide records and submit reports to

ensure consumers do not face unfair, deceptive, or

anticompetitive practices.

U.S. carriers relied on these programs, which have tens of

millions of members, for revenue and to raise funds during the

COVID-19 pandemic when travel demand plunged.

Loyalty programs of Delta, United and American were each

valued at more than $20 billion in 2023, according to consulting

firm On Point Loyalty.

(Reporting by David Shepardson;

Editing by Nick Zieminski and Lincoln Feast.)