Airlines Get Increasingly Desperate To Save Their Credit Card Revenue

If you’ve sat through those annoying sales pitches on flights from attendants desperately trying to convince you to sign up for their airline’s credit card, you might correctly assume it is because there’s a lot of money at stake. These cards generate billions of dollars each year for airlines (some estimate 12% of annual revenue) and it’s the best kind of revenue: free money they have to do little to nothing in order to receive.

Now there is new proposed credit card legislation in the US to increase competition that airline CEOs are predicting will “kill loyalty programs.” Clearly they want to protect their cash cow (and have even joined forces to build an advocacy website), but are their claims true?

An analysis by a leading rewards website (which relies on commissions from these credit cards) predictably suggests this legislation could have a major impact on how travelers are able to “earn” points for everything that isn’t getting on a plane and flying. On the flip side, the winners of this legislation would be small businesses, restaurants and all other retailers who would pay less in swipe fees if there was more credit card competition.

The most fascinating part of this story is the unique showdown it has created between many of the biggest sectors in our economy: government, retail, travel, financial and restaurants are all deeply involved. All have billions of dollars at stake and are ready to fight for the outcome that benefits them. The rest of us, as consumers, diners, travelers and account holders will just have to wait and see what happens.