Gazing into The Future of the US Airways Credit Card

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It did not take long for Barclaycard, the issuer of the US Airways credit card, to send an email blast to cardholder’s reassuring them that they are still a relevant card issuer. Fresh on the heels of the merger announcement this email had the air of a desperate card issuer who knew that they may be thrown to the trash heap as another victim in the consolidation of the airline industry.

I will be using my magic crystal ball to discover what it is you can expect to see in terms of mileage credit cards from the NEW American Airlines .

This email was also a smart move by Barclaycard, many times people panic about the safety of their miles when two airlines are merging and Barclaycard is doing their best to reassure people that nothing is going to change with their credit card. Of course it helps them to keep all their cardholders on as long as possible so they can leverage this asset into some type of value once they are taken to the chopping block.

USAirways Dividend Miles Credit Card

For all of Barlcaycard’s reassuring words that the merger changes nothing, we all know that’s true only until one day when you wake up and everything’s changed.

US Airways will most likely be the airline to stop their co-branded credit card, the new airline will fly under the American Airlines brand, and that most likely means Adios to Barclaycard’s relationship with the NEW American Airlines.

The announced merger of the two airlines was just days ago but the “transaction” of merging the two won’t be completed until October 2013, which says nothing about getting a single operating certificate from the FAA that would allow both airlines to operate under the American Airlines name or the streamlining of the dueling credit card products, but I suspect the two credit cards will stick around for quite some time past that October 2013 date.

Airline Mergers & Airline Credit Cards

In order to see if my assumption about the timing of a new AAdvantage credit card is right I decided to take a look back at the last two monster mergers between legacy carriers; United Airlines & Continental Airlines and Delta Airlines & Northwest.

Whether my theory is right or wrong I don’t know but I will have a better idea of when the credit card unveiling happens in the merger cycle of airlines.

United & Continental Lesson

My anecdotal evidence begins with what happened when Continental and United had their merger and they eventually debuted a brand new credit card that replaced both of their individual airline credit cards.

Here is a timeline of major events in their merger and where their new MileagePlus Explorer card falls in that acquisition:

United Airlines and Continental Airlines MileagePlus Credit Card

It was over fourteen months from the time the merger was officially announced to the day that the Chase United MileagePlus Explorer card made its debut. That is a pretty large window of time to wait for a unified credit card but it works better for you because you can get their other products before the changes happen. The new United Airlines had not even been granted the ability to operate both airlines under the name United before they unveiled their new credit card, that is telling.

With the new Chase MileagePlus Explorer card for United, Chase added language into the terms and conditions so only first time costumers could get the bonus miles:

This one-time bonus offer is valid only for first-time United Airlines personal cardmembers with new accounts. Previous and existing United Airlines personal cardmembers/accounts are not eligible for this bonus offer.

The card was also unveiled with an underwhelming twetny-five thousand point offer for regular members, plus five thousand for additional user and ten thousand after $25,000 spend requirement, while targeted offers where floating around for up to 60,000 miles.

What ended up happening was people would get approved for the basic offer, then secure message chase with a screenshot of the 60,000 mileage offer, and try to get matched offers.

Could we see something similar from the new American Airlines?

Northwest & Delta Lesson

Let’s go back to another merger that also stirred up the airline industry, Northwest and Delta Air Lines.

Delta Air Lines and Northwest Merger, Airline Credit Cards

Back in 2008 when this merger was announced, the credit card crunch came down to Delta’s American Express card and Northwest’s WorldPerks card issuer, U.S. Bank. It actually got really nasty with U.S. Bank taking the airline to court over the issue but U.S. Bank eventually ended by settling for a deal that had “mutually agreeable terms”.

But again the acquiring airline, Delta Airlines, was the one who came out on top in the battle for the business of the new airline after U.S. Bank came out saying that by July 17, 2009 their WorldPerk cardholders would no longer be earning Northwest WorldPerks, or receiving any benefits.

American Express launched the New Delta campaign against a hostile ex-card issuer and this might have forced them to skip launching an entirely new product and just bump up features, bonus miles and waiving the annual fee for the first year. I can only wonder what AMEX could’ve/would’ve done if they were the card issuer for both Delta and Northwest, would you have seen a redesigned lineup like Chase did for the new United? I would think that probably was on the table.

But alas, the new Delta American Express marketing campaign came out with offers of 25,000 SkyMiles, which at the time was a big deal, added extra “features” and they even waived the annual fee the first year.

Nothing revolutionary but it was evolutionary. Would we see a similar scaled response for a “new” AAdvantage card?

Current AAdvantage & Dividend Miles Cards

[This section contains links to credit cards that advertise on my blog and with every approval help me pay web hosting, design and development costs of my blog. I appreciate it if you use my links by clicking on the card images below. Thank you.]

Until the time when there is a new AAdvantage card you will leverage the cards you can apply for and find the best uses for our miles. No reason to ignore them, especially because this could be a perfect opportunity to earn a lot of miles and still start fresh if a new card comes along post-merger to take the title as the best airline credit card. You don’t want to miss out on that chance.

Now onto the current roster of US and AA credit card offerings and what you should do with them:

US Airways Credit Card

Apply Soon- This product could be going away in the next 12 months.

This card is now for two types of people; those looking to use US Airways and/or their star alliance chart before they join oneworld and those hoarding the Dividend Miles until they transfer to AAdvantage miles at a 1:1 ratio at some point during the merger.

The credit card features First Class Check-in, Zone 2 Boarding status, and two $99 roundtrip companion tickets that require a minimum fare purchase of $250 for continental U.S. or Canada flights on your card, which are all average benefits when compared to its peers.

The downside is that even though you are applying for the Premier version of the card Barclaycard could downgrade you to the normal version which earns you only 10,000 Dividend Miles after your first purchase. That is a full 20,000 less miles and they do not have to warn you before they approve you for the weaker card, it just happens.

The Premier card also has an $89 annual fee that is not waived and the downgraded version has a $49 annual fee, again not waived that first year.

Look, it’s not as if the US Airways Dividend Miles program itself has no use, read the dollar value of Dividend Miles for evidence, there are many reasons to think about earning them.

It’s just that the us airways credit card has no mind blowing feature that gives you tons of swagger or a killer signup bonus that you want to brag about to your friends. It’s just consistent. Not that there’s anything wrong with that but it just would not come to mind as a revolutionary card. But its still worth getting for frequent US Airways flyers or just for the signup bonus offer.

American Airlines Credit Card

Neutral - Mid Product Cycle and no HUGE bonus offers available. Might be best to wait.

I love my American Airlines credit card, both of them, but if I was starting without any today I would not go running out to apply for these cards.

Why? Because my crystal ball shows that there could be a new product coming out in the next 12-18 months and you might not want to miss that. In the past you could not get a new AAdvantage card if you were a previous cardholder in the past, wait for it, 12-18 months. While the data point is mostly anecdotal from the frequent flyer community and not something in the fine print of the card offers, it has been a surprisingly accurate rule of thumb.

I do love the priority security gate lanes that I get with my AAdvantage cards when going through TSA checkpoints. They help me avoid some of those obnoxiously long lines and straight to taking loose change out of my pockets.

Another great feature of the card is the ability to earn 10% of your AAdvantage miles back on reward flights you may have taken over the course of the year. This is a really generous feature and I hope that if they make changes to the card features after the merger that they won’t “enhance” it out of existence.

Final Thoughts

Now what type of conclusions can we draw from these past experiences to impose upon this latest merger announcement and the New American Airlines Credit Card rumor mill…

1. It looks like you will be seeing the New American Airlines credit card offers staying with Citibank. In the United/Continental and Delta/Northwest mergers the airline that kept their name also kept their card issuer, I expect this trend to continue with American Airlines.

2. Citibank will have either a nice new Credit Card product to launch or a fresh marketing campaign re-branding their old AAdvantage credit cards. This perfectly coincides with American Airlines unveiling a new logo, livery and marketing campaign and is a good time to launch a fresh new credit card. I think it will be a brand new card.

3. I expect the new AAdvantage product to be announced in a little over 12 months. From the announcement of the merger American Express took 12 months to start their new Delta Campaign and Chase took 14 months for the launch of their new United Campaign; American will follow a similar product cycle.

4. I would not be surprised by “only first-time American Airlines card members” language making its way into the new credit card terms & conditions. We saw this with the Chase Explorer card and I would not put it past Citi to do the same thing so they can have some type of control on this deal. I do think Citibank is sitting on a lot of AAdvantage miles that they are willing to part with but they will try to make sure they are gaining valuable consumers. This type of language is their way of doing that.

5. You will see a 50,000 mile signup bonus offer. I am going on a limb and saying Citi is gonna pay out big to attract new consumers. Citi are limited by the geographical location of their bank branch locations and American is by their airports but they can use their credit card to bridge that gap to acquire new assets they normally would have no access to. This should be a part of their plan to be the worlds biggest airline and not just because a merger allowed them to say so. I feel confident with 50,000 miles because we have consistently see Citi give that amount or more on their current card and this would be an occasion that should command a high signup bonus. I can’t say what the minimum spend requirement will be but I can all but guarantee it won’t be a “after first purchase” offer.

I don’t think that you will see any litigation between Barclaycard and Citibank the way you did with U.S. Bank and American Express. But that is not guaranteed because Continental and United both had their cards issued by Chase so you had no chance of seeing what would happen. In the current climate where the card issuers buy up so many miles in advance the battle to be the preferred card of the new airline could get fierce.

I would love you to share you think is going to happen with this merger over the course of the next 12-14 months by writing your reaction and thoughts in the comments section below. I look forward to reading every single comment and   responding to as many as I can.

To Your Frequent Flyer Miles Success!
My Sig

 

 

 

 

 

Photo: Pasukaru

written by

Head of Travel Swagger Squad at The Travel Abstract Headquarters

9 Responses to "Gazing into The Future of the US Airways Credit Card"

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