Delta CEO Says Credit Cap Threatens Airline Loyalty Programs

Delta Air Lines chief executive Ed Bastian has warned that a proposed U.S. credit card interchange fee cap could undermine airline loyalty programmes by eroding a key source of ancillary revenue that supports frequent-flyer benefits and customer engagement.

Bastian’s comments were made during a public forum on aviation economics, where he expressed concern that limiting the fees credit card issuers charge merchants could reduce payments made to airlines under co-branded card arrangements. Those payments, known within the industry as loyalty programme funding, help underwrite miles programmes, status benefits, partner rewards and other customer incentives that have become central to airline revenue strategies.

Airline loyalty programmes represent one of the largest ancillary revenue streams for carriers, generating billions of dollars annually through partnerships with financial institutions. Delta, alongside other major U.S. carriers, has traditionally relied on these arrangements to balance yield pressures in competitive markets and to invest in customer retention mechanisms.

Bastian underscored that any regulatory action that materially weakens credit card economics would force carriers to reassess the structure of their loyalty offerings. “Loyalty programmes are not standalone products — they’re integrated into network strategy, pricing, and long-term customer value,” he said, noting that reductions in ancillary inflows could translate into reduced benefits or higher base fares over time.

The concerns resonate amid broader policy discussions in the United States over interchange fee regulation, where consumer advocates and legislators have debated limits on the fees charged to merchants. Proponents of caps argue that reducing these fees could lower costs for businesses and ultimately consumers. Airlines and financial partners argue such measures have knock-on effects for co-branded card rewards, which are priced partly on fee-sharing arrangements.

Delta’s warning highlights the interconnected nature of airline revenue models. Beyond ticket sales, carriers increasingly depend on ancillary channels — including baggage fees, seat selection fees, and loyalty partnerships — to bolster margins in an environment defined by fuel volatility, wage inflation, and competitive pricing. Delta’s financials have traditionally benefited from robust loyalty segment performance, which has helped buffer against cyclical downturns.

Analysts observing ongoing policy debates note that the elasticity of loyalty programme economics is sensitive to external shocks. Disruptions in co-brand partnerships, for example through reduced issuer payments, can impact a carrier’s ability to fund elite status benefits or award inventory without reallocating costs elsewhere in the business.

Other airline executives have reportedly expressed similar concerns in private discussions with regulators, emphasising the symbiotic relationship between banks and carriers in the frequent-flyer ecosystem. A shift in credit card fee structures would also influence how carriers negotiate with issuing partners and allocate marketing support for co-branded products.

For customers, loyalty programme change can carry tangible effects, from reduced redemption options to altered status qualification thresholds. Frequent flyers often value benefits such as free upgrades, lounge access, and priority services that are funded in part through loyalty revenue partnerships rather than ticket yield alone.

Regulators balancing policy objectives will need to weigh potential merchant cost savings against disruption to ancillary industries such as airline loyalty. The aviation sector’s input into the interchange fee debate underscores how interconnected financial systems and transportation economics have become.

Delta’s public positioning on the issue signals the extent to which airline executives are prepared to engage in broader financial policy conversations that have direct implications for airline operations and customer propositions.