American Airlines has two banks that issue their credit cards in the U.S. Barclays markets cards inflight and in the airport (but not within 100 feet of an Admirals Club) while Citibank markets their cards through the rest of the channels.
That’s great for customers because it’s created competition, I even used to hear flight attendants pointing out that if you had a Citibank card you could still get a Barclays card through them.
Last summer Citi adjusted the benefit of their primary AAdvantage consumer card, adding two new bonus categories for spending and introducing the ability to earn a discount on American Airlines travel through card spend. So I’ve been waiting to see what sort of updates would be coming to the Barclays AAdvantage cards. There are several changes that go into effect May 1.
Overall I think these are much more interesting than what Citi announced last summer. Not everyone is going to like them (though I think I come out way ahead with my Aviator Silver card), but they make logical sense from the perspective of wanting customers to use the cards for ongoing spending rather than just signing up for the cards and getting benefits like free checked bags and earlier boarding.
Instead they’ve got some clever ways to get customers to use their cards for everyday transactions, and also to encourage them to take the card out to improve the flight experience.
Barclays Introduces Flight Cents
Customers can choose to ’round up’ purchases to the next dollar and use the extra spend to buy American AAdvantage miles at 2 cents each. They set a dollar limit per billing cycle, up to $500, where they want to do this. For those who don’t want to participate they just won’t set a monthly limit for the benefit.
A year and a half ago I was targeted as part of a test of Flight Cents and was able to buy miles at just one cent apiece through the program. That was huge.
I value American miles at 1.4 cents apiece so don’t recommend buying for two cents.
However dealing with readers and award booking clients I know that many people do this all the time. Indeed they even buy extra miles in conjunction with purchased tickets for more money than that. You’d think elite customers and credit card customers are the savvy ones who would pass on the offers, but the reverse is true. These are the people who like American AAdvantage miles and will pay more than the average frequent flyer collector to accumulate them.
Indeed the fact that this went from a beta test to a regular feature of the card tells me that the numbers were good in testing.
Dan Dougherty, Barclays’ Managing Director of Airline Partnerships, tells me that during testing cardmembers were highly engaged with Flight Cents, and they saw a lot of tipping to get round up one cent over a dollar to maximize the benefit, and a lot of gas pump activity doing the same thing. Cardmembers seem to keep the product top of wallet and use it daily to take advantage of the benefit.
This benefit lets people buy more miles at a discount compared to American’s regular price. Now perhaps 8 months of the year they’ll sell miles for around 1.8 cents apiece, though getting that price usually requires a large purchase of miles. This lets customers get somewhat similar pricing in smaller increments.
Companion Ticket Being Re-introduced
One hallmark of the US Airways Dividend Miles Mastercard that Barclays issued was that the card came with an annual companion certificate where you’d buy one qualifying ticket and you could bring up to two companions on the same itinerary for $99 plus tax each.
That benefit went away with the changeover from Dividend Miles to the Aviator Red card. However a companion certificate, which allows you to bring a single companion at $99 plus tax, will be earned starting May 1 with $20,000 in spend each year.
The premium Aviator Silver card already offers a companion certificate. It required $30,000 in annual spend. Since the Aviator Red card is going to get it with $20,000 spend, the spend threshold for the Silver card’s benefit is being reduced to $20,000 spend as well. The Silver’s companion certificate remains valid for up to 2 companions at $99 plus tax each.
Additional Changes to the Aviator Red Card
The card’s annual fee is going up from $95 to $99. The card gets a new $25 statement credit each anniversary year for inflight wifi purchases on American Airlines flights. And they’re eliminating:
- The 10% rebate on redeemed miles, worth up to 10,000 miles per year
- The $100 American Airlines Flight Discount after $30,000 in purchases in a cardmember year
In addition, legacy cardholders from an old US Airways offer who receive 10,000 bonus miles each year at card renewal will be losing this benefit. Barclays tells me they will “deliver the last 10,000 mile anniversary bonus” coinciding with when each eligible cardmember pays their new $99 annual fee for the first time.
Roughly speaking the card loses 10,000 miles each year you redeem 100,000 miles from your account, picks up a companion ticket at $20,000 spend (which is better in my view than a $100 discount after $30,000 spend), and picks up the Flight Cents benefit. By the way I’m hearing Citi is losing the 10% rebate also the question then is do we get value added in exchange?
Whether you see these changes as positive or negative depend on whether you’ll spend to obtain the companion certificate and whether you value buying American miles at 2 cents apiece. I suspect there will be more people disappointed to be losing the 10% rebate on redemptions but if Citi is losing it too then that part may have been inevitable.
However what I can appreciate is that the changes are clearly geared towards getting people to use the card every day (Flight Cents) and for a significant spend over the course of the year (companion ticket). This shifts the product from one that gets you checked bags and early boarding, but you can stick in a drawer, to one that many cardmembers will use. (No doubt some will decide that without the 10,000 annual mileage rebate it’s no longer worth keeping, but most are likely customers not spending much on the card to begin with so I imagine that’s folded into the calculation.)
Additional Changes to the Aviator Silver Card
You can’t apply for an Aviator Silver card directly, this is the Barclays premium card that’s offered as an upgrade to Aviator Red customers.
I’m an Aviator Silver cardmember and I spent $50,000 on the card last year. I was disappointed when it was announced the card would no longer earn 6000 elite qualifying dollars for $50,000 spend, and instead just 3000.
American Airlines benefits are richer with Silver than Red, for instance priority boarding and checked bag benefits apply to up to 8 passengers on the same itinerary.
The card already offers incremental benefits for spending:
- 5000 elite qualifying miles after $20,000 spend in a year
- $99 companion ticket (valid for up to 2 companions at $99+tax each) after $20,000 spend in a year (effective May 1, being reduced from $30,000 spend)
- 5000 more elite qualifying miles after $40,000 spend in a year
- 3000 elite qualifying dollars after $50,000 spend in a year
The card’s annual fee is going up from $195 to $199, a $4 increase. And it too loses the 10% rebate on miles redeemed (up to 10,000 miles annually).
However it’s getting new benefits in addition to Flight Cents:
- $50 in statement credits each cardmember year for inflight Wi-Fi purchases on American Airlines operated flights.
- $25 in statement credits for inflight food and beverage purchases each day that you fly American Airlines operated flights
This last benefit is huge for regular American Airlines customers, at least those who find themselves in economy. To be sure, sandwiches are only available as buy on board on flights 3 hours or longer. And Executive Platinum and ConciergeKey members already get a free snack and drink when seated in economy.
However Barclays is buying the snacks and the drinks for Aviator Silver cardmembers. And those who are not traveling with family I suspect will be picking up drinks for their row quite often.
Here’s what’s brilliant about that: Aviator Silver cardmember picks up the tab for drinks. Seatmates naturally ask how they’re able to get free drinks on American, and that very naturally leads to a conversation about the credit card — just as a flight attendant is about to make a pitch for an American Airlines card (albeit for the Red rather than the Silver card). It’s great peer endorsement, and it’s demonstrating the benefits of the card in action. I would love to see the data on how use of the Silver food and beverage statement credit correlates with inflight applications.
As for me, if I fly American 50 days a year that’s potentially $1250 in food and beverage I can consume — even mini bottles to take with me for later, I suppose. And the statement credit doesn’t know whether you’re in first or business, I’m going to have to sort through how to use the card for buy on board even when I’m up front!
Changes, Good or Bad?
The loss of the 10% rebate on redemptions, up to 10,000 miles each year, is disappointing. Citibank should be losing this benefit as well. Annual fees go up $4 a year.
The cards become a bit less valuable just to have and never use, although they still make sense even that way for a regular American Airlines flyer who doesn’t travel enough to earn elite status.
But you’re going to start pulling the cards out for inflight internet, thanks to the statement credit, and pulling out the silver card inflight to cover buy on board food and drinks. This last is a big plus for someone like me that flies American all the time.
There’ll be more companion tickets out there, which is great. As for Flight Cents I’m not going to use it myself though I know some people will.
Ultimately how you see these changes depends on how often you fly American, I think, and how much you want American AAdvantage miles. And from the bank’s perspective that’s the right tradeoff since they want the customers who will use the card on American and to earn American miles and not just sticking it in a drawer.