New ‘Protect Your Points Act’ Aims To Prevent No-Notice Devaluations

Here we go again with another credit-card-focused piece of legislation introduced by Senator Dick Durbin (D-IL), who has recently drawn the ire of award travelers for his Credit Card Competition Act of 2023 proposal, which sought to limit credit card swipe fees.

Today, Senator Durbin announced a new proposal, the Protect Your Points Act, which seeks to prevent airlines from enacting no-notice devaluations and other similar measures. Let’s examine what’s going on.

Protect Your Points Act

This new act sounds good — at least in theory. If passed, it’ll prevent airlines from changing the cost of award tickets overnight, which is something we see far too often. But it does much more than that. Specifically, it will:

• Require 1 year’s notice for any changes to terms of service for either airline reward programs or co-branded credit cards.
• Require airlines to display the value of their rewards on every page of their website.
• Require airlines to display both cash and points pricing simultaneously.
• Prohibit airlines from charging fees to transfer airline miles to others.
• Prohibit airlines from capping how many miles can be transferred to another account each year.
• Prohibit airline miles from expiring.

Is This a Good Thing?

There’s a lot to chew on in this piece of legislation — and we’re in favor of parts of it. After all, it would be nice to transfer and combine your miles without being charged to do so (looking at you, Delta) or being subject to limitations about their use once you do (looking at you, United).

It’d also be great to never worry about when your miles will expire, especially if you need to take some time off from traveling (looking at you, American).

However, at this point, there’s so much unknown — and so many factors at play here — that it’s simply impossible to tell whether this will be a net positive or a net negative for travelers right now.

If we had to guess, we’d say it’s probably a net positive for the casual traveler but a net negative for those who’ve taken the time to learn the intricacies of airline loyalty programs.

The Protect Your Points Act will also only apply to U.S. airlines, which makes it a bit limited overall. It may also be damaging to loyalty programs and the airlines themselves.

Can Airlines Make This Work?

Imagine needing to quantify the value of an American Airlines mile. Unlike, say, JetBlue or Southwest, the cash cost of your ticket isn’t relevant to how many points you’ll need to redeem. One day, you can redeem your mile at a rate of 1 cent per point; the next, it’ll be 6 cents per point. How will an airline put a value on a mile like that?

There are 2 things airlines can do:

• Specify a minimum value for your individual points without putting a cap on their worth. This will likely cause airlines to lose money because a significant portion of the population redeems miles “badly.” Setting a minimum value will, in all likelihood, increase the value of each point for these people.
• Assign a fixed value to each point (say, 1.5 cents per mile), but then everyone suffers. Say goodbye to any award “sweet spots.”

If airlines are forced to peg their miles at a specific value that is lower than what foreign airlines (which, remember, won’t be subject to the rules of the Protect Your Points Act) offer, there’s a very real risk that U.S. airlines could lose a lot of money.

After all, why would we transfer our points to United and get just 1.5 cents per mile when we can move them to British Airways and score 10 cents in value instead? And why would we spend on our co-branded credit cards when miles are worth so much less?

For U.S. airlines, loyalty program revenue is their biggest source of income, and if it were to drop, we could see all sorts of measures coming forward as airlines scramble to save money.

Those measures could include anything from slashing routes to increasing ancillary fees or reducing elite benefits. We can’t know that now, but it’s definitely something to keep in mind as we examine the Protect Your Points Act.

Final Thoughts

Congress — and Senator Durbin, more specifically — certainly feels like it needs to intervene in our collective favorite hobby. The Credit Card Competition Act of 2023 is still an active bill, but it hasn’t passed either house of Congress.

Now, there’s a new bill on the floor that — at least on the surface — aims to help consumers. But if it passes, we may see fundamental changes to U.S. airline loyalty programs. This is a developing story and we’ll sure to be back with updates as we learn more about the status of this proposed legislation.