Corporate Insight, a market research and consulting firm, recently took a look at co-branded airline credit cards. The report examined 38 cards and discovered that 24 different airlines have co-branded affiliations with major card issuers and that 75 percent of these cards carry an annual fee. Annual percentage rates (APR) tend to be high and only one card currently features a zero percent introductory rate on purchases — a perk that was once much more prevalent. The report states that many of the firms provide information about their cards in a haphazard way, either by burying fee or APR information within the online application or by presenting card options in confusing and footnote-heavy product pages. Most fee-bearing cards offer one mile per one dollar spent with most offering two miles for spending with the co-brand partners. Fee-free cards generally offer one mile per two dollars spent and are a growing segment of the airline card business. Initial use bonus offers varied greatly, even with cards of similar fees. Among the highest fee cards, those charging $55 or more per year, three cards offer 10,000 bonus miles or less, 10 give between 10,000 and 20,000 miles and seven give mileage bonuses greater than 20,000.
The writers of the report made these recommendations to the airlines:
1) consolidate choices — offering very similar cards only confuses prospective customers; 2) offer accelerated miles earning for loyalty purchases on all cards and bonus miles for renewal; 3) re-introduce zero percent introduction APR offers; 4) make APR and fee information more transparent.
The report concluded that co-branded airline cards will continue to be an important, high-margin product and that those with the most options for users in terms of fees, earning and bonuses will have the competitive advantage.
