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A top US airline lobbyist warns that capping credit card rates at 10% will harm the industry

The head of a trade group that represents major?U.S. The head of the trade group representing major?U.S. Airlines for America CEO Chris Sununu said at an aviation conference that capping credit card interest rates at 10%, or reducing the small 2% charge they receive on credit cards would have a huge economic impact across the industry. Trump called on January 10, for a cap of 10% on credit card rates to be in place starting January 20. Elizabeth Warren, a Democratic senator from Massachusetts, praised Trump's request and promised to work with him.

This month, unions, civil right groups, labor unions and others[ backed legislation that would cap credit card rates at 10% over five years. Sununu said that the airline industry had a profit margin of a single digit and cited comments made by Jamie Dimon, CEO of JPMorgan Chase, who stated that the cap would'remove access to cards for much of America.

Dick Durbin, a Democrat Senator from Illinois, has described airlines as "credit card companies who fly planes" because they generate billions in annual fees. The White House didn't immediately respond.

The commercial airlines rely so heavily on their loyalty program and points. They drive revenue and they drive customers. "You mess with that, and everything changes," Sununu said. He said that hundreds of millions in airline investments in innovation were at risk, and could have massive ripple effects "very quickly."

Due to the fact that there are fewer credit cards, "this means a great deal more people don't fly, or they can't use their points for free flights." Sununu explained that this would mean we were buying fewer planes. "You've got this half-trillion dollar industry that is now undergoing a massive change, all because it was enticing to talk about credit cards."

Major Airlines have

Years of fighting against legislation

Visa and Mastercard would be forced to reduce the fees they charge on transactions. They could also stop issuing rewards credit cards which reward frequent flyer miles when consumers make a transaction.

According to airlines, in 2018, over 31 million Americans held airline travel rewards cards. In 2023, 57% of frequent flyer points and miles issued will be generated through airline credit card usage. In 2023, points earned by using an airline credit card were used to award nearly 16 million domestic air visitor flights. (Reporting and editing by Franklin Paul, David Gregorio and David Shepardson)

(source: Reuters)