Star Alliance, the world’s largest airline alliance, plans to launch a co-branded credit card. That’s something we’ve never seen before from a global airline alliance. While it sounds exciting, I’m skeptical.
Credit card will earn miles on any Star Alliance airline
Star Alliance CEO Jeffrey Goh has this week revealed that the airline is working on a co-branded credit card:
- The credit card is expected to launch later this year
- The credit card will let members earn miles that can then be transfered to any of the 26 airline partners
- The credit card will initially be launched in one country, and if successful, the concept will be expanded to other countries
There are a lot of questions that are unanswered as of now, including which bank will issue the card, what the rewards structure will be like, and even what country the card will be issued in. Logically you’d think the card would be launched in the United States, given that it’s the most lucrative credit card market in the world. But who knows, maybe Star Alliance is launching in a smaller market first, to test out the concept.
This is creative, but will it be lucrative?
The most interesting implication here is that the Star Alliance as such will seemingly introduce some sort of a central mileage currency. Currently you can earn miles with any Star Alliance frequent flyer program for travel on any Star Alliance airline, but there hasn’t been a single currency for the Star Alliance as such.
It sounds like we should essentially expect a Star Alliance transferable points currency. Only time will tell whether the introduction of this has any other practical implications beyond the credit card (in other words, will there be any means for racking up these rewards that don’t involve credit cards?).
While this is no doubt creative, I question the extent to which this will be lucrative:
- One benefit of picking up an airline credit card is typically that you get benefits for travel on that airline; unless the card offers Star Alliance Gold status (which is highly doubtful and impractical), a Star Alliance credit card won’t really offer much in the way of benefits
- In the United States, frequent flyer programs are the single most profitable part of airlines, and co-branded credit card deals are a big part of that; you can bet that United won’t be down with Star Alliance having a more lucrative credit card than MileagePlus’ card portfolio
- We already have incredibly lucrative card ecosystems, like Amex Membership Rewards and Chase Ultimate Rewards, which allow us to build a portfolio of cards and take advantage of a variety of bonus categories; this card needs to be really compelling to be able to compete with those offerings
- If this card is launched outside the United States then the value proposition might be significantly more compelling, since there’s not as much competition (then again, with lower interchange fees, it may also be too costly to provide a lucrative rewards structure)
The Star Alliance is planning on launching a credit card later this year, with rewards that can be transfered to any of the 26 member frequent flyer programs. This is an innovative concept that we’ve never seen before from a global airline alliance, and I’m curious to see what Star Alliance comes up with.
I’m skeptical as to whether the value proposition here will be great, but this is exciting to see nonetheless.
What do you make of the Star Alliance’s plans to launch a credit card?