United CEO Scott Kirby expresses concerns over new credit card and frequent flyer regulations

Scott Kirby, the CEO of United Airlines, cautioned on Tuesday that government intervention threatens popular airline loyalty programs.

"The primary threat to [loyalty] programs comes from legislative actions that, although well-meaning, could lead to poor policy choices, especially the Credit Card Competition Act," he stated at the U.S. Chamber of Commerce's 2024 Global Aerospace Summit in Washington, D.C.

The Credit Card Competition Act is a bipartisan proposal that would provide merchants with more options regarding which credit card network handles their transactions. Supporters claim it would reduce transaction fees for merchants, while critics argue that these savings might not be passed on to consumers.

Additionally, there are concerns that if transaction revenues decline, credit card companies might scale back on rewards programs — including those that offer airline loyalty miles.

The proposed legislation was put forward in the Senate in June 2023 but is still awaiting action in committee.

Kirby and others have voiced their opposition to the bill, highlighting the strong appeal of airline loyalty programs.

"Travelers appreciate these programs," Kirby stated on Tuesday. He mentioned that this summer, 3 million passengers booked flights using miles from United's MileagePlus loyalty scheme.

What Kirby did not address is that United's credit card partnerships and the MileagePlus program are highly profitable for the airline. In the second quarter, other operating revenue, which includes MileagePlus and credit card arrangements, reached $892 million, accounting for 6% of total revenue.

Mile watch: DOT initiates formal investigation into major airline frequent flyer programs

On September 5, the U.S. Department of Transportation opened an inquiry into American Airlines' AAdvantage, Delta Air Lines' SkyMiles, Southwest Airlines' Rapid Rewards, and United's MileagePlus loyalty schemes, aiming to protect "rewards customers from potential unfair, deceptive, or anticompetitive practices."

During Tuesday's session, Kirby faced multiple questions regarding the investigation but used the opportunity to highlight the appeal of airline loyalty programs and the dangers of legislative interference.

"The loyalty that people have for these programs is remarkable," he remarked.

United and other airlines have referred all inquiries regarding the investigation to their trade association, Airlines for America.

Value check: Are airline credit cards still a good investment?

New York's air traffic challenges are set to persist

In August, the Federal Aviation Administration transferred air traffic control responsibilities for Newark Liberty International Airport (EWR)—a key hub for United—from its traditional Long Island center (known as "N90") to its facility in Philadelphia. This shift aims to tackle ongoing staffing shortages.

Kirby called the transition "really beneficial" for resolving operational challenges at Newark tied to air traffic control staffing.

"There were certainly some challenges during the transition," he noted regarding the changes in August. "We anticipated some bumps, but overall, I think it was managed quite well."

Numerous radar failures have been reported at Newark since the new system was implemented, including three on September 2, according to The Air Current.

While Kirby views the shift of Newark's air traffic control to Philadelphia positively, he noted that the FAA is still facing a shortage of about 3,000 air traffic controllers.

"I anticipate a controller shortage will persist for years," he remarked. "I believe [the FAA] is doing their best under the current limitations."

To reduce flight disruptions, United cut back its Newark schedule last summer and this summer, resulting in a 6.5% decrease in departures in the third quarter of 2024 compared to 2019. However, the airline offset this by using larger aircraft on many routes, leading to an overall increase of nearly 7% in available seats, as reported by Cirium Diio schedules.