American Airlines and US Airways may have chartered their course for the future with their recent merger, but the fate of their rewards programs still hangs in the balance.
That should be of some concern to both Citigroup and Barclays, who run the rewards programs and issue the rewards cards for American Airlines and U.S Airways, respectively. According to American Banker, the two airlines are operating independently and with their own rewards programs for the time being, but will need to choose one issuer when their merger is complete sometime in Q3 2013.
There’s plenty at stake for both issuers. Citi runs the Citi Advantage program with American Airlines: the oldest program in the frequent-flier sector dating back to 1987. The length of that partnership – plus Citi’s cardholder base – would seem to place it in the front running for the merge’s profile.
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“The American card with Citi is in a more dominant position,” says Ron Shevlin, senior analyst at the Aite Group. “But when you deal with mergers and takeovers, it’s more about the organizational structure, who wins, who gets put in charge.”
And considering that point of view, Barclays may be in the lead after all. The US Airways Dividend Miles MasterCard program may not be quite as lucrative or successful as its Citi counterpart, but US Airways is in the position of strength in terms of the merger.
US Airways CEO Doug Parker will run the combined airline once the merger is complete, and so has the ultimate deciding power in which issuer will rule the skies. That could lead in Barclay’s favor given US Airway’s previous relationship with the company.
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Despite that relationship, though, Shevlin said Citi’s portfolio and experience still make it the favorite to retain and expand on its partnership.
“If you made a rational comparison and listed all the features and functions, the nod would go to Citi,” Shevlin said.
To read more about Citi, Barclays and their rewards program battle, see the full American Banker article here.
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