Delta Air Lines CEO Ed Bastian has raised alarms over a proposal from former President Donald Trump to impose a temporary cap on US credit card interest rates, warning it could disrupt multiple industries. The plan would limit annual percentage rates to 10% for one year, though its start date, feasibility, and need for congressional approval remain unclear. Airline executives argue the proposal could have unintended consequences for consumer credit access and the financial structures that support travel rewards. The comments were made as lawmakers and markets weigh the feasibility and fallout of the idea.
Airline loyalty programs depend heavily on partnerships with major credit card issuers, which use interest income and fees to fund rewards like miles and elite perks. Any significant change to credit card economics could force banks to rethink how much credit they extend and what benefits they offer. For airlines, this revenue stream has become central to profitability, sometimes rivaling ticket sales. As a result, even a temporary policy shift has sparked concern across the aviation and financial sectors.
Why Credit Cards Have Become Critical To Airline Profits
The proposed interest rate cap would dramatically reduce what banks can charge cardholders, particularly those who carry balances month to month. Critics say such limits could lead lenders to reduce credit availability, especially for borrowers with weaker credit profiles. Airline executives argue this would ripple through the economy, affecting everything from consumer spending to travel demand. Delta’s leadership has described the proposal as a fundamental disruption rather than a minor regulatory adjustment.
Co-branded airline credit cards generate billions of dollars annually by encouraging spending in exchange for miles and travel perks. If banks see their margins compressed, they may respond by cutting rewards, raising annual fees, or restricting approvals. That could make it harder for travelers to earn miles at the same pace they do today. Airlines fear this would weaken customer loyalty and reduce a major source of predictable income. CEO Ed Bastian said in a Bloomberg interview:
“I think one of the big issues and challenges with the potential order is the fact that it would actually restrict the lower-end consumer from having access to any credit, not just what the interest rate they’re paying, which would upend the whole credit card industry.”
How An Interest Rate Cap Could Reshape Travel Rewards
Over the past decade, airline loyalty programs have evolved into sophisticated financial products rather than simple marketing tools. Banks purchase miles in bulk from airlines, using them to attract and retain cardholders. This arrangement has helped airlines stabilize revenue during downturns and offset volatility in ticket sales. Any regulatory change affecting banks’ ability to profit from cards could force a reassessment of that model.
Travelers have already seen frequent flyer programs adjust award pricing and availability, often requiring more miles for the same trips. A reduction in funding from credit card partners could accelerate those trends. Analysts suggest consumers may notice fewer sign-up bonuses, slower earning rates, or tighter redemption rules. These shifts could alter how travelers plan and pay for trips.
Supporters of the rate cap argue it would offer short-term relief to consumers facing high borrowing costs. However, opponents contend that artificially low caps may discourage lending altogether. Without congressional approval and detailed implementation rules, the proposal remains speculative. Even so, the discussion has highlighted how interconnected consumer finance and airline economics have become.
How Did Ed Bastian Make Delta Air Lines Become The US’ Most Profitable Carrier?
Bastian has led Delta from its emergence from bankruptcy to become the world’s highest-earning airline.
What Travelers And Airlines Stand To Lose If The Plan Advances
Financial markets have reacted cautiously to the proposal, with airline and banking stocks showing sensitivity to headlines around credit regulation. Investors are closely monitoring political signals to gauge whether the plan has a realistic path forward. Some analysts believe the uncertainty alone could influence corporate planning for future credit card partnerships.
Historically, major changes to credit regulation have reshaped consumer behavior, often in ways policymakers did not anticipate. If enacted, even temporarily, the cap could have lasting effects on how rewards programs are structured. Airlines may look for alternative revenue sources or renegotiate agreements with card issuers. The outcome could reshape loyalty programs long after the cap expires.
While the proposal’s future remains unclear, industry leaders are taking it seriously due to the scale of revenue involved. Airlines, banks, and travelers alike have a stake in how the debate unfolds. Regardless of the outcome, the discussion has renewed scrutiny on the role credit cards play in modern air travel economics.
link