The top executives from American Airlines, United Airlines, Visa, and Mastercard will not be present at a Senate Judiciary Committee hearing scheduled for April 9, as announced by the committee’s chair, Senator Dick Durbin.
The hearing aims to examine the competition in credit card services, a matter of significant importance due to proposed legislation that targets the reduction of fees charged by Visa and Mastercard on transactions. This legislation, opposed by the aforementioned companies, seeks to introduce competition to potentially lower these transaction fees.
In February, Senator Durbin extended invitations to these executives to discuss their opposition to the bill, which argues that the implementation could negatively impact the availability of rewards credit cards offering frequent flyer miles for transactions.
However, Durbin expressed his disappointment, stating, “They’re just too darned busy to come and explain the major source of profits for their businesses,” emphasizing that thwarting the bill is a priority for its opponents, who have invested $51 million in lobbying against it.
Airlines Described as 'Credit Card Companies with Planes'
Despite the absence of these CEOs at the upcoming hearing, Durbin affirmed that the event would proceed as planned, with all options on the table to secure their testimonies. He highlighted the potential benefits of the bill he co-sponsored with Republican Senator Roger Marshall, suggesting it could save merchants and consumers approximately $15 billion annually in credit card transaction fees. Currently, businesses pay over $100 billion in these fees every year.
Senator Durbin criticized the airline industry’s reliance on revenue from branded credit cards, likening airlines to “basically credit card companies that own some planes.” This statement comes in the context of ongoing scrutiny by the U.S. Transportation Department into the frequent flyer programs of major U.S. airlines, investigating potential deceptive or unfair practices.
In October, Durbin and Marshall reached out to the Transportation Department and the Consumer Financial Protection Bureau concerning “troubling reports” of such practices in the airlines’ loyalty programs.
Airlines Defend Business Model
The opposition from airlines is rooted in the benefits they claim are provided by the industry’s credit cards. According to them, these cards, held by at least 30 million U.S. customers, make travel more affordable and accessible, with Federal Reserve data indicating that 97% of total credit card spending is attributed to various rewards accounts. The credit card companies and airlines involved have yet to comment on their decision to not testify at the hearing.