By Padraic Halpin and Tim Hepher
DUBLIN, Jan 28 (Reuters) – A proposal by U.S. President Donald Trump to cap credit-card interest rates, if implemented, could have a big impact on the profitable loyalty programmes of the country’s airlines, industry advisers said on Wednesday.
Loyalty programmes have become a cash generator for carriers through the sale of miles to third-party partners, mostly credit-card-issuing banks that award the miles to their own customers.
The more customers spend, the more miles they earn for use against airfares and the more credit-card-issuing banks pay to airlines.
“If you say that we’re going to cap it at 10%, that’s a huge chunk of profit that has just disappeared and the value they’re getting per mile will change dramatically,” said BK Associates managing director Pooja Gardemal, speaking at the Airline Economics conference in Dublin. Her Maryland-based consultancy advises airlines on frequent-flyer programmes.
UNCLEAR HOW CAP WOULD BE IMPLEMENTED
Gardemal said such a cap would damage airline loyalty economics and echoed banks’ concerns that it could restrict consumers’ access to credit.
Trump has called for a one-year cap at 10%, but he has not said how it would be implemented. The idea faces an uncertain path in Washington: it would likely need congressional action, and nothing changed on January 20 despite Trump’s earlier suggested start date.
Banks have strongly criticized the idea, with JPMorgan Chase CEO Jamie Dimon warning it would amount to an economic disaster. Airlines and their partners are weighing how a hit to credit-card profits could ripple through to loyalty revenue.
Delta Air Lines, for example, received $8.2 billion from American Express in 2025 and is aiming for $10 billion from its co-branded card program. CEO Ed Bastian this month said it is too early to assess a proposal that may never happen.
United Airlines Chief Commercial Officer Andrew Nocella said the carrier is in regular contact with JPMorgan, its biggest card partner.
He said United would be affected by an interest-rate cap, but expects it would be less exposed than many rivals because its cardholders generally have higher credit scores and lower default rates.
In an outlook report published ahead of the aircraft-finance gathering, leasing firm Avolon said U.S. airlines have increasingly become “lifestyle brands,” with loyalty and credit-card revenue helping offset money-losing parts of the core airline business.
Anne Correa, senior vice president of modelling at airline and lessor adviser MBA Aviation, told the Dublin conference that her firm had discussed the potential impact of the proposal with banks and that if it took effect it would change the behaviour of consumers and the value of loyalty programmes.
Others cautioned on Wednesday that a cap would not affect wealthier customers who make up much of the loyalty revenue.
“Only people with means will be eligible for cards at a 10% rate,” Michael Miller, a managing director at Barclays, told the conference.
“It’s an unlikely outcome that it (the proposal) sticks.”
(Additional reporting by Rajesh Kumar Singh in ChicagoEditing by Rod Nickel)
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