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We’ve known for a while that American Airlines’ credit card deal with Citi was being renegotiated as the current deal draws to an end and we’ve been waiting to hear what any new deal has in store for customers. Today we should start to find out as American Airlines announced a new deal with Citi and, somewhat surprisingly, a new deal with Barclaycard US.
Citi has been a long-term partner of American Airlines but Barclaycard only came on board as part of the US Airways takeover of American Airlines. Barclaycard was the issuer of the US Airways Dividend Mastercard which was closed to new customers when the takeover was complete and which was converted to the Aviator Red credit card for existing customers.
It was widely expected that Citi would continue to be the credit card issuer of choice for American Airlines but I’m not aware of too many people, who thought that Barclaycard would be signed up on another contract – it was generally assumed that Barclaycard would be allowed to continue to administer its existing Aviator customers but no more.
Details of the deals don’t appear to have been released yet but here’s what we know so far:
Citi
The new agreement with American Airlines will allow Citi to continue offering all its current American Airlines co-branded credit cards to new customers “through multiple exclusive channels such as digital – including aa.com – mobile, direct mail, and Admirals Club lounges.”
Barclaycard US
Barclaycard US will be allowed to offer its American Airlines co-branded credit cards to new customers in airports (where you’ll find Citi advertising as well) and exclusively onboard aircraft on flights from 2017 onwards.
What’s In It For American Airlines?
According to the Wall St Journal:
In a securities filing Tuesday, American estimated that the new card deals would add $1.55 billion to its pretax income over the next 2½ years, compared with what would have been the case under the prior credit-card arrangements.
Thoughts
While we’ll have to wait for more details my initial thought is that this is excellent news for American Airlines flyers.
Having two credit card companies issuing American Airlines credit cards means competition and competition is usually a good thing for consumers.
Citi have appeared to be a bit too lackadaisical in their approach to American Airlines credit cards and have sat on their laurels for a bit too long – that’s why I gave up my Citi AAdvantage Executive card late last year…it wasn’t worth it to me.
Barclaycard, on the other hand, seem to have been a lot more inventive with their cards and the benefits they provide. Take the AAdvantage Aviator Silver card which Barclaycard introduced to, presumably, compete with the Citi Executive card I gave up:
This offers 3 miles/$ on purchases made directly with American Airlines (the Citi card only offers 2 miles/$) and offers bonus points for hotel purchases which the Citi card does not.
The Aviator Silver card also offers 5,000 Elite Qualifying Miles (EQM) after $20,000 spend and a further 5,000 EQM after $40,000 spend while, with the Citi card, you have to spend the full $40,000 before you get the 10,000 EQM.
The Aviator Silver card doesn’t come with Admirals Club membership (perhaps that will change under the new agreement) but then its annual fee is $195 as opposed to the $450 annual fee for the Citi AAdvantage Executive credit card.
What We Don’t Appear To Have Been Told
While financial institutions and shareholders will be interested to know how much Citi and Barclaycard will be paying American Airlines for these credit card deals customers will be waiting to find out something else – we still don’t know if any of the issued AAdvantage credit cards will offer a way of bypassing the soon-to-be-introduced Elite Qualifying Dollar requirement for Elite status.
I’ll be watching this very closely and updating the blog as and when anything is mentioned.
Bottom Line
First and foremost this is good news for consumers – especially for those who have looked at the Aviator Silver with a tinge of envy but not been able to apply for it, now they should be able to.
I’m going to be interested to see how this news will affect the benefits offered by the various credit cards that the two banks offer – I suspect, this will be a much-needed kick in the pants for Citi who will have to up their game a bit now that there’s some competition in town.
