Airline Fees & Free Travel: What Changes Mean for You
The future of your free travel is at stake. Learn how potential changes to credit card swipe fees, driven by the Credit Card Competition Act (CCCA), could drastically alter airline credit card rewards. Airlines generated roughly $25 billion last year through credit card partnerships,a revenue stream now threatened by potential fee caps. This legislation aims to lower interchange fees, perhaps saving merchants billions. However, airlines warn of cuts to free flights and travel perks. Discover how the CCCA, with its aim to reduce these fees, could impact your ability to earn and redeem miles and points. News Directory 3 is keeping a close eye on developments as the debate unfolds. Discover what’s next for your travel plans.
Airline Credit Card Rewards at Risk as congress Considers Fee Caps
Updated June 05, 2025
Airlines are sounding the alarm over a potential threat to their lucrative loyalty programs.At issue is a congressional push to curb credit card swipe fees, also known as interchange fees. These fees, typically 1.5% to 3% of each transaction, are paid by merchants every time a customer uses a rewards credit card.
These swipe fees fuel a meaningful revenue stream for airlines through co-branded credit card partnerships.In 2023,U.S. banks channeled approximately $25 billion to airlines in exchange for loyalty miles,accounting for 57% of all frequent flyer miles issued,according to industry data.
Airlines are warning that the proposed Credit Card Competition Act (CCCA) could create a substantial deficit in their budgets, potentially impacting the availability of free flights and other travel perks. The proposed legislation seeks to lower swipe fees, which could save merchants an estimated $15 billion each year.
Southwest airlines, for example, reported $896 million in loyalty revenue during the third quarter of 2024, representing about 13% of its total revenue. This revenue is largely derived from its co-branded credit cards.
Senators Dick Durbin and Roger Marshall contend that the CCCA amendment would foster competition and reduce swipe fees. They point to the 2010 debit card cap as a successful precedent, which they say saved small businesses billions.
However, airlines and related industries, including Airbus SE and Boeing Company, argue that cutting these fees would jeopardize loyalty programs. They claim these programs facilitated 16 million free domestic flights in 2024 and supported numerous aircraft orders.
Industry advocates highlight the precedent set by debit card interchange caps in 2011. Following those caps, debit card rewards largely disappeared, and free checking became less common, shifting costs back to consumers.
Analysts suggest that even a modest reduction in swipe fee margins could considerably impact the economics of co-branded cards, potentially leading to reduced earning rates or the elimination of annual fee waivers.
Trimming these fees would “imperil” loyalty programs that fueled 16 million free domestic flights in 2024 alone and underwrote many orders for new aircraft.
What’s next
If the proposed legislation passes, consumers may see a decrease in credit card sign-up bonuses and everyday spending multipliers. Airlines might also increase the mileage required for award flights or shift towards revenue-based redemption systems. cash-back cards, which operate on thinner margins, could become more appealing to consumers.