Are banks really an ally of airlines in co-brand credit card offerings?

by | Aug 31, 2023 | Airlines, News

Do banks really care about a customer who is loyal to an airline brand and intends to strengthen this relationship further by opting one of the same airline’s co-brand credit card?

Airlines must delve into scenarios where the bank takes a decision not to issue a co-brand card. There needs to be a mechanism in place for the airline to crack this problem.

More importantly, the issue won’t arise if the same airline is agile enough to offer the same card at least considering the rising frequency of spend on its own routes and air ancillaries, and as a result, members of its own frequent flyer program (FFP) going up the tier ladder.

Timing is another concern. Airlines might chose to wait for offering a co-brand credit card when they issue an upgrade voucher or any communication that acknowledges the activity of their FFP members, but it might not match the intent of FFP members who are looking for a quicker call to action.


Indicators for the airline

Before highlighting a case where the bank chose not to issue the card, it must highlighted that the window of acting for airlines is clearly there.

There are plenty of indicators evaluating how much time a member is spending within the loyalty app or the interactions with the staff at the airport regarding the tier benefits that can be availed. Also, is the loyalty app doing its job by offering the co-brand credit card or an email from the airline regarding the same? To make the matter worse, what if the same customer decides to opt for another airline card just because of an ongoing relationship with another bank, which wastes no time in issuing the card when requested!

This was the case when State Bank of India (SBI), after making me wait for more than two months, decided not to issue a co-brand card with Air India, owing to “a business decision”, that was taken “in good faith and certainly in no way is indicative of” my business worthiness, as stated by the bank.

The follow-up was mostly done by the customer here, with the final verdict also being shared on the insistence of the customer. Also, the disappointment on the emotional count was way higher as there was a long-haul trip planned with Air India when all this was happening.

And in doing so notching up a tier higher with the airline!

Looking at the competitiveness in a market like India, where financial technology (fintech) companies regularly send updates to customers about their credit score and that too from multiple sources (CIBIL, Experian, Equifax etc.), a customer himself or herself can ascertain their payment history, credit card utilisation, credit age, total accounts (bank accounts, credit card accounts etc.), credit “health” report etc. And in no time one ends up receiving offers for pre-approved loans and credit card from fintechs just because one clicked on offers! What is stopping airlines from evaluating the same in a proactive manner (first party data can be availed at least)?

Eventually a bank might chose not to offer the card, but an airline’s relationship with their FFP member takes a beating.


What can an airline do?

As seen in this case, banks have their own evaluations regarding the profile of the customer.

As an expert in this arena, Mark Ross-Smith asserted that airlines need to have a “collaborative” pact with such partners.

Other than finding a way out about such incidents to be updated about the activity of their own FFP member in an earnest manner (may be partners cross-check and corroborate on their respective first party data and in case of airlines, they can go beyond the first party data now that even in developing countries there are several ways to check the profile of the applicant), airlines need to work on options for extending a similar product via another bank.

Also, rather than relying on a partner bank to bring the customer, since the interest of the customer here is to up the ante by parking their spending via airline-involving co-brand card, airlines must identify ways to expand the basket of offerings since its works in their interest, too.

Otherwise, with agile companies like Ross-Smith’s offering a traveller, with strong financial or any other attractive credentials, an option to try out another airline’s loyalty offering, airlines are in risk of losing out.

There comes a time when a traveller expects more in their loyalty cycle and a brand can’t fall short or take an association for granted.


Acting before customer does

In the above discussed case, since SBI chose not to go ahead and Air India clearly wasn’t in the loop (and their communication for the same card came in almost two weeks after I had received a card from Air Vistara), the closure came in the form of one applying for another co-brand card.

Interestingly in this case, since Air India and Air Vistara are seemingly in the process of merging their respective FFPs, as a member of Air Vistara FFP, the gold status eventually paved for the lounge access of Air India in New Delhi. So customers are shrewd enough to find ways to meet their respective goals, as airlines tend to have generous offers and alliances in place. If a customer is made to work hard then chances are the competition will lap up and won’t commit the same mistake.

It would be prudent for airlines to validate how their members, be it for active or inactive ones in terms of flying or spending, are progressing on parameters that are deemed correct to issue co-brand cards. This can be done with partner banks or even risk management organisations (for e. g. credit score specialists).

May be it is time airlines look for partners who are willing to make the experience for a traveller better and contribute in a meaningful way in the overall loyalty lifecycle.


Article by Ritesh Gupta