How Has Covid Affected Co-Branded Credit Cards?
- An ominous sign for U.S. airlines? The Wall Street Journal looks at airline-branded credit cards, which have for years brought riches to airlines and credit card issuers alike. Think of all the money Delta has made selling miles to American Express, which is happy to pay because of all the new customers it can win by offering Delta miles. It’s the same win-win relationship for American and its partners Citi and Barclays, JPMorgan and its partners United and Southwest, Alaska and Bank of America, Barclays and JetBlue, and so on.
But during the Covid crisis, few people are traveling, making perks like free trips, airport lounge access, and seat upgrades less attractive if not irrelevant. The Journal profiles several people who’ve given up their airline cards, which typically charge high annual fees. People more generally are buying more often with debit cards these days, and less with credit cards — Visa for one says credit card spending volume was down about 9% last quarter, while debit volume was up 20%.
Will airline credit cards regain their appeal when the crisis ends? Carriers sure hope so. If not, billions of dollars could be at risk, not to mention a critical source of financial resiliency — the U.S. airline industry often relies on its partner banks to provide liquidity in times of need.