While we’ll see how this plays out, CNBC is reporting that Citi wants a closer relationship with American, and that would come at Barclays’ expense.
In this post:
Citi wants American to dump Barclays
Loyalty programs (and in particular, credit cards) are big businesses for airlines. For the “big three” US carriers, a large chunk of their profits come from their lucrative credit card deals. Delta partners with American Express, Chase partners with United, and American partners with both Citi and Barclays.
As you can see, American is the only one of those airlines to partner with two banks. That’s because back in the day, American partnered with Citi and US Airways partnered with Barclays. When the two airlines merged in 2013, those contracts were renegotiated, and in the end neither bank was willing to pay a premium for exclusivity.
That seems to be changing now. American is reportedly in talks with Citi about the two companies developing an exclusive co-branded credit card agreement. At this point these are just negotiations, and nothing has been finalized, and a timeline isn’t even known.
The reality is that American is lagging Delta when it comes to the profitability from the co-branded credit card portfolio. Last year, Delta made nearly $7 billion from its deal with American Express, while American made $5.2 billion from its deal with Barclays and Citi.
Any potential exclusivity deal also comes with potential regulatory risks, especially with the Department of Transportation (DOT) increasingly scrutinizing loyalty programs. If there were to be an exclusive agreement, it remains to be seen if Barclays could maintain its existing portfolio and just not issue new cards, or what.
Currently the two card issuers have different channels through which they can market — Citi is allowed to market cards online, via direct mail, and in airport lounges, while Barclays is allowed to market cards inflight.
These agreements were last renegotiated in 2016, but negotiations are once again starting up, and that’s why the discussions of exclusivity are happening. Citi’s American portfolio is reportedly more profitable than Barclays’. Not only is it bigger, but people spend more on the cards, and have a lower default rate.
A Citi spokesperson has stated that the bank is “always actively working with partners, including American Airlines, to look for ways to jointly enhance customer products and drive shared value and growth.”
My take on an exclusive credit card agreement
There’s simply no denying that American having an exclusive credit card agreement would be much more efficient, both for the airline and the credit card partner.
Let me start with the obvious downside for consumers — currently you can earn welcome bonuses on both Barclays and Citi cards, so that would go away with just one issuer. Those of us into miles & points aren’t going to be fans of that.
But in every other way, this seems way more efficient:
- The card portfolio could be marketed globally, rather than having such a fragmented marketing strategy
- The card products could be refreshed with a more tiered setup for cards, similar to what Delta does (where there are several tiers of cards, and personal and business versions of each), instead of the current portfolio, which has little differentiation
- More marketing dollars could be put into actually getting people to spend on the cards, rather than putting so much money into acquisition bonuses, given how cards are hawked on American flights (“you can get X number of miles by just buying a cup of coffee or pack of gum”)
- Citi could negotiate AAdvantage miles being part of the Citi ThankYou transfer program, but then again, Citi needs to decide what it wants to do with that currency, since it’s not really doing much to expand it
Personally I think an exclusive contract could be good for consumers in the long run, if executed correctly. Citi executives say they want to grow their wallet share in the travel space, so a renewed focus on the American co-brand deal plus the Citi ThankYou program could help accomplish that.
Bottom line
American and Citi are reportedly in negotiations over the possibility of an exclusive credit card deal. Currently American partners with both Citi and Barclays. Citi wants to grow in this sector, and presumably thinks there’s more money to be made (plus synergies) if Barclays is no longer in the picture.
It’s going to be very interesting to see how this plays out…
What do you make of the prospect of American having an exclusive credit card deal?
If they do this, could they finally make sure their damn cards work with Google Wallet? The Citi Exec AAdvantage card can be added to Apple Pay with no issues, Samsung Pay with no issues, but try to add it to Google Wallet and you're told the card isn't eligible. Despite *years* of customers reporting this, no one at Citi or American can explain why or get it fixed, even though Citi's non-AAdvantage cards can...
If they do this, could they finally make sure their damn cards work with Google Wallet? The Citi Exec AAdvantage card can be added to Apple Pay with no issues, Samsung Pay with no issues, but try to add it to Google Wallet and you're told the card isn't eligible. Despite *years* of customers reporting this, no one at Citi or American can explain why or get it fixed, even though Citi's non-AAdvantage cards can be added to Google Wallet and American's Barclay cards can as well. It's a ridiculous limitation that no one has an explanation for, and it's insane not to be able to use a premium card in a major mobile wallet in 2024.
I’ve never signed up for Barclays. Their welcome mile offers are always less than other cards.
I have three (3) AA Cards: one (1) Citi Executive, one (1) Citi Platinum Select, and one (1) Barclays Aviator Red. Should AA discontinue their relationship with AA, what would happen to my Aviator Red card and standing with Barclays? Would they just cancel the card, evaporate my available credit, and ding my credit score?
"Should AA discontinue their relationship with AA..." I meant to say their relationship w/Barclays.
AA people, get ready for your Admiral's lounges to be shoulder-to-shoulder.
I hope this isn't the Citi of 2016. I changed to Barclays after years of frustration with Citi's poor customer service. Barclays has been significantly better and would hate to see them exit.
I also switched to my delight and never looked back. I already fly so little on AA that I will just use my AMEX and call it a day.
It would not be good for consumers. Citi is randomly discriminatory for no reason, and having a second issuer (Barclays), gives options. Of course, both have horrible customer service still, but I can only assume it’d be worse if we cut out the options.
I gain Gold status easily just on spend but gain little benefit from it other than a free bag, priority seating and occasional upgrades to business. Have both Citi business card and Barclays. So would obviously pick up any new card that Citi/AA come up with. In the mean time I'm just applied for a Hawaiian Airlines card with 70K after first purchase. I'll then add those to my Alaska pile for upcoming Europe trips...
I gain Gold status easily just on spend but gain little benefit from it other than a free bag, priority seating and occasional upgrades to business. Have both Citi business card and Barclays. So would obviously pick up any new card that Citi/AA come up with. In the mean time I'm just applied for a Hawaiian Airlines card with 70K after first purchase. I'll then add those to my Alaska pile for upcoming Europe trips and bargain awards for non-stop AA flights from Mexico-USA.
Barclays customer service is poor. Citibank is a fee junkie. Drop both and bring in Capital One.
Less competition is never better. I doubt Citi will replay the Barclay Red card with anything nearly competitive. Yes, Barclay serves s*cks. It's AAdvantage business cards offer paltry non-competitive lines of credit and random purchase denials, but I'm not convinced that a Citi complete takeover is the answer that is better for consumers. It just gives Cit more pricing and benefit power with no guaranteed upside for the consumer.
I have both but prefer the Barclay. Only US card with a PIN that can be used at international Kiosk's - trains etc.
I get great service from Barclay. And I like the Barclay 15K LP at $50K spend and the Citi 20K LP for just earning 90K LP. Citi may have screwed themselves with some of the changes - don't need to spend on Exec card to get the 20K LP.
Citi can set up 6 digits PIN
Unless Barclay's steps up (pays up) and invests in this program, it should go away anyways. I have 3 AA cards with CITI and have stayed away from the Barclay's cards for a few reasons: they stopped taking apps on 4 of the 5 cards, weak bonuses, read about dismal customer service, and the Silver Card or Biz card I really wanted is not available. Plus I have read that there are not quarterly/monthly offers like CITI has.
If you are a big spender on the Silver card they treat you real well. Don't need promos. You get a cert for two $99 companions on a regular discount ticket at $30K spend. 2X on hotels. The 3X on AA flights - now not as good as Citi 4X.
Yes I am, but I don't want to get the Red (only card available for like the last 2 years now) and then have to wait a least a year to request to upgrade to Silver. I think Barclay's should stay with AA, revamp the cards, and open up all of the "family" of cards to everyone again. Doesn't instill confidence in me as a consumer to seem like they are closing up at this time.
For Citi cardholders, weaving AAdvantage miles into the ThankYou Rewards program would be an overdue, positive improvement.
As an American Airlines flier, I had the Barclay's card and there were frequently
nuisance charges added that Barclay's refused to correct.
I switched to the Citibank card and never saw any of these nuisance charges and I am pleased with the service and professionalism of Citibank.
If Barclays loses AA, what do they replace it with?
Maybe they can issue U.S. based foreign airline credit cards.
Barclays will NOT product change one brand into a different brand. They will either 1) keep existing AA cards as legacy cards, 2) product change them into a non-co-branded card, or 3) cancel existing AA cards outright. There is the potential of Citi buying the AA business from Barclays. Citi wouldn't want to pay but AA could require it. If it happened, the big question is what happens to the Aviator Silver - it's reward structure is too rich for Citi.
Barclay service is terrible. I cancelled cards with them years ago.
If Barclays was bigger in the US, AA would be in a stronger negotiating position.
Not only is Citi calling the terms - which is why AA execs have said they are in the 5th inning of negotiations - nowhere near a settlement - but AA itself is not in a terribly strong position regarding its operations. AA's much weaker position over the past 3 years in a number of major markets like NYC and...
If Barclays was bigger in the US, AA would be in a stronger negotiating position.
Not only is Citi calling the terms - which is why AA execs have said they are in the 5th inning of negotiations - nowhere near a settlement - but AA itself is not in a terribly strong position regarding its operations. AA's much weaker position over the past 3 years in a number of major markets like NYC and LAX doesn't
DL has done a herculean job of extracting plenty of money from Amex and UA is working furiously to catch up = and is already passing AA on several credit card related metrics.
Will be interesting to see where this all goes
throw in more focus in Washington DC on credit card and processing fees and on airline loyalty programs and the peak of revenue from airline/credit card relationships might have peaked.
lol
Oh tim
It must be so difficult coming up with these tropes to help yourself sleep lol
Are you really this stupid?
Amex calls the shots at delta. It’s why delta’s own customers can’t get into their own clubs
God you’re dumb
AA isn’t god’s answer to life but they’re trying to preserve a balance for their own customers, something delta gave up years ago
you do work overtime trying to butt into any conversation that you think you can disrupt.
Amex card members have much higher rates of spending than on other brands and yes, DL benefits from Amex' non-DL cards.
spare us the "balance for their customers" nonsense. AA hasn't made money flying planes in decades. They would absolutely have taken the deal DL got w/ Amex if they could have negotiated it.
None of which...
you do work overtime trying to butt into any conversation that you think you can disrupt.
Amex card members have much higher rates of spending than on other brands and yes, DL benefits from Amex' non-DL cards.
spare us the "balance for their customers" nonsense. AA hasn't made money flying planes in decades. They would absolutely have taken the deal DL got w/ Amex if they could have negotiated it.
None of which changes that the value of AA to a credit card company falls w/ that airline's falling presence in NYC and LAX and size in the overall domestic market.
AA has walked away from dozens of routes from NYC and LAX; DL is more twice the size of AA in NYC now and UA is about to take over the #2 position at LAX - which is pretty hard to imagine since AA was #1 just 3 years ago.
and other bloggers say part of the hangup for AA with a new deal w/ Citi is that Citi wants greater opportunity to influence what AA does. YOU are the one that is dumb if you don't realize how much someone that shovels billions of dollars into your bank accounts wants - and you as an airline just have to be good enough and smart enough to know what to say yes to and what to say no to.
All of the evidence says that DL is the lead position with airline loyalty programs and AA is falling further back - a position Citi is not exactly willing to settle for and still shovel billions into AA's back pocket
Leave it to the dunce to bring delta into an AA post
AA isn't trying to renegotiate its credit card agreements because AA has been a success.
The value of AA's credit card profile has fallen not just relative to what AA got in the past but also relative to its competitors
I addressed UA in my comments as well but you focus only on what hits your nerve despite the fact that UA has figured out many of the reasons it underperforms DL and is trying to address them while AA is not.
I'm Timmy Dunn and I know everything and everyone else with any knowledge is just super jelly of me and stuff!
If I understand correctly, Citi stopped offering travel interruption protection a while back whereas Barclays still provides it. (I've used Citi's benefit in the past when they had it, and it was a godsend.) If this is true, then Citi either needs to up their game or take a hike. (I have both cards; I've navigated away from using Citi's for this reason alone.)
And Barclay still offers MasterRental Coverage - worldwide. Many no longer offer - and excluded some countries.
Does Citi still limit the number of online payments you can make per month?
‘ Let me start with the obvious downside for consumers — currently you can earn welcome bonuses on both Barclays and Citi cards, so that would go away with just one issuer. Those of us into miles & points aren’t going to be fans of that……. given how cards are hawked on American flights (“you can get X number of miles by just buying a cup of coffee or pack of gum”)’
So, I...
‘ Let me start with the obvious downside for consumers — currently you can earn welcome bonuses on both Barclays and Citi cards, so that would go away with just one issuer. Those of us into miles & points aren’t going to be fans of that……. given how cards are hawked on American flights (“you can get X number of miles by just buying a cup of coffee or pack of gum”)’
So, I guess with your assessment, the flight attendants won’t be fans of it either. They would no longer be able to say you can earn this many amount of miles with just a purchase of a cup of coffee or a pack of gum.
@ Stanley C -- It's interesting to note how Barclays bonuses are often unlocked after a single purchase, while Citi bonuses ordinarily require thousands in spending.
Yes. @Ben. I totally agree. I hope you understood my silly joke.