Over the past year, the Biden administration has taken a number of steps to try to rein in airlines by cracking down on policies it sees as harmful to consumers.
In late spring, Delta (DAL) United (UAL) and American Airlines (AAL) have banded together to sue the Department of Transportation over new rules requiring them to disclose “junk fees” such as baggage and cancellation fees in advance.
The credit card competition bill introduced by Senators Dick Durbin (D-Ill.) and Roger Marshall (R-Kan.) in 2023 is also currently on the agenda. While the bill is not exclusive to airlines, many have expressed concern that merchants could be required to offer consumers the option to choose between different credit card networks for each purchase (for example, a customer using a Visa or MasterCard) (V) The card could choose to use the Mastercard (MOTHER) The network would completely dismantle its loyalty rewards programs.
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At the recent World Aerospace Summit 2024 in Washington, United CEO Scott Kirby called the proposed bill “bad policy” in a tirade against the proposed changes.
United CEO: 'It's well-intentioned, but it would be bad policy'
“The only risk to (loyalty) programs is legislative initiatives that I'm sure are well-intentioned but would simply be bad policy, particularly the Credit Card Competition Act,” Kirby said during a legislative meeting. reported by Travel and airline website The Points Guy added that more than three million passengers use United's MileagePlus program and that “customers love these programs.”
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The most recent earnings figures reported by Points Guy show that the MileagePlus program also brought United more than $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 retain customers through “potentially unfair, deceptive or anticompetitive practices.”
As head of United, Kirby, unsurprisingly, spent the meeting specifically praising MileagePlus and rewards programs in general.
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That's why airline loyalty programs remain under high scrutiny
“The affinity and loyalty that people have for these programs is incredible,” Kirby added.
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 only Air France-KLM. (AFRAF) Flying Blue and Air Canada (ACDVF) The Aeroplan of
Factors that rate programs include how easy (or difficult) it is to earn miles through means other than purchasing flights, how quickly you can achieve benefits like free flights, and the cost of those benefits in points you accumulate — all things the DoT is currently examining to determine whether they can be devalued and dynamically priced, which would give consumers less than advertised to encourage them to spend with the airline.
Current Transportation Secretary Pete Buttigieg issued a statement saying airline miles “have become such a significant part of our economy that many Americans view their rewards points balances as part of their savings.”
The major U.S.-based airlines targeted by the investigation have yet to respond (they have 90 days since being informed on Sept. 5 to do so).
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