Why American Airlines Cards are Being Forced to Compete Against Each Other With Bigger Bonuses

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Having more than one bank issuing credit cards for American Airlines is working out great for consumers, because Citibank and Barclays are forced to compete for our business.

They weren’t supposed to have to compete. Barclays gets exclusivity marketing on American Airlines flights and in the airport (but not within 100 feet of an American Airlines Admirals Club, where Citi has exclusivity). Citibank gets everywhere else — online including the American Airlines website, direct mail, etc.

In practice though this exclusivity over marketing channels doesn’t protect them from competing against each other all the time for consumer attention, even through some of those same channels.

  • Barclays gets to pitch their cards inflight, but passengers get free access to American’s website inflight even if they don’t purchase wifi — and the front page of American’s website features Citi’s credit cards.

  • Citibank gets exclusivity marketing cards online, but Barclays is allowed to feature a website for the cards so that customers who learn about them via airport display ad have a place to apply.

More importantly, while marketers like to track the source of an application and attribute each card approval entirely to their source (because it’s easy to do) the truth is that customers often don’t apply for a card the first time they hear about it.

  • They see it mentioned in an article, they hear about it inflight, maybe they apply the next time it’s convenient to do so.
  • If they hear about a big card offer on the plane, and then they get a mailing piece about the card offering fewer miles, they aren’t as likely to apply. So Citibank needs to match Barclays offers.
  • Similarly if a customer saw an ad for the card on American’s website, and then the offer on the plane is for fewer miles, someone who remembers “hey wait a minute, I should just go online to get a better deal” is going to acquire the card from Citi and not Barclays.

Not every consumer knows the difference. That explains the persistence of SkyMiles. However enough know the difference at the margin that banks ensure their offers are competitive, at least Citi and Barclays seem to be doing so.

New Bigger Offer for the Barclays Personal Card

Barclays just increased the offer on its AAdvantage Aviator Red World Elite Mastercard to 60,000 bonus miles after first purchase in the first 90 days and paying the card’s $95 annual fee (the fee on this card is not waived the first year). (HT: Doctor of Credit)

Citi Just Came Out With Great New Offers a Week Ago

Citi’s best-ever 70,000 mile business card bonus offer is still available. The CitiBusiness® / AAdvantage® Platinum Select® World Mastercard® still has the best offer I’m aware of that they’ve ever made for the card, a 70,000 mile initial bonus after spending $4,000 within the first 4 months of account opening. This card has a $0 annual fee the first year (then $99).


American Airlines Boeing 787-9 Business Class

Their premium card with club membership has the biggest offer I’ve seen in years. The Citi® / AAdvantage® Executive World Elite™ Mastercard® will award 75,000 miles after $7500 spend within the first 3 months of cardmembership. (Offer expired]

This $450 annual fee card comes with American Airlines Club membership — and it offers authorized user cards at no additional annual fee. You can have up to 10 authorized user cards, and each gets access to American Airlines clubs as well (and each can bring in up to 2 guests).


American Airlines Admirals Club New York JFK

Barclays just upped their personal card offer to 60,000 miles right as Citi just ended a run at 60,000 and refreshed its Citi® / AAdvantage® Platinum Select® World Elite™ Mastercard® with a 50,000 mile offer after making $2,500 in purchases within the first 3 months of account opening. [Offer expired]

Citi’s Newest AAdvantage Card Competes With United and Delta, Not Barclays

The American Airlines AAdvantage MileUp℠ Card which just launched is in some sense a new product, it’s got a new name and new earning structure. In any sense it’s a refresh of the old no annual fee Bronze AAdvantage card that earned just one mile for every $2 in spend.

They’ve become really aggressive in the no annual fee segment. This card earns 2 miles per dollar on American Airlines purchases and at grocery stores and 1 full mile per dollar everywhere else. It offers 10,000 AAdvantage bonus miles and a $50 statement credit after spending $500 in purchases within the first three months after account opening. So you can make money on the card in year one.

Delta and United recently launched their own no new annual fee cards, with Delta’s earning one mile per dollar spent.

In some sense it’s a competitive response to those new products. More broadly these co-brand portfolios don’t want to ignore customers whose spending volume doesn’t justify an annual fee rewards card. And rewards at the no annual fee level have just gotten better over the last several years, you can get a no annual fee 2% cash back card like Citi Double Cash.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. AA probably loves what’s happening. Each new highest-ever bonus means they’re buying more and more miles. Makes me wonder if we’ll see more deals where a single airline/hotel pits multiple banks against one another.

    It also begs a comparison to Marriott’s dueling Chase and Amex deals. Seems like the banks might have created an oligopolistic structure where they don’t go head-to-head on any cards, and Marriott might benefit a lot less than AA seems to be.

  2. @Ben – Sign-up bonus miles are often put up the airline, not the bank. If the airline is paid for the bonuses at all it’s often at a very steep discount.

  3. @Adam – yes they’re paying a price dramatically lower than you or I would, but the bank is still buying points from the airline. That’s how AA earns $X billion thru its co-branded credit card deals. Sure, some fraction of that is letting Citi/Barclays just put the AA logo on the front of the card, but the majority is giving consumers a tangible reason to open and use the cards — i.e. selling points to the bank, which then provides them to consumers.

  4. Meanwhile Chase and Amex are colluding with each other to prevent customers from getting sign up bonuses and lowering benefits and earning rates on cards. Really wish Marriott didn’t buy out Starwood….

  5. I have both cards, Citi for years, and Barclay’s for just over a year, so sign up bonuses do not benefit me. Those holding both cards have a choice as to which one to use. Why aren’t the cards offering deals to make their card the one existing cardholders choose to use?

    As an aside, I am sick of having to listen to the FAs hawk the Barclay’s Aviator card in flight. They are supposedly there “for our safety,” rather than salespeople.

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