American Airlines has two issuers of its U.S. credit cards: Citibank and Barclays. Barclays can pitch cards inflight and in airports, but not within 100 feet of an American Airlines lounge) while Citibank got the rest of the card acquisition channels.
Mostly this allowed Barclays to retain its very profitable back book of customers, as well as replenish its cardmember base since even long-standing customers do cancel cards. Barclays had gotten the deal to issue US Airways cards when America West acquired US Airways, essentially funding that transaction. They eventually bought the back book of 10,000 remaining Bank of America US Airways card customers as well.
Barclays just isn’t big enough to bid effectively for the whole American AAdvantage card portfolio. Citibank had the chance to take the whole thing, and also to offer points transfers to AAdvantage as part of its ThankYou-brand card product suite. But they balked at the price. Ultimately American got the biggest deal possible by leaving two card issuers in place.
Now CNBC is reporting that once again American is talking with Citi about exclusivity, which would leave Barclays by the wayside. It is not clear what such a deal would look like.
- Barclays might retain a deal to continue servicing its existing cardmembers, with existing benefits and mileage-earning, and just no longer issue new AAdvantage cards.
- Citibank could buy the back book of Barclays cardmembers.
- Or Barclays AAdvantage cardmembers could lose their AAdvantage cards – either being moved to a Barclays-branded product, or cut off completely (though this last seems least likely).
As a customer I like the current arrangement.
- Remember that you can get both Citibank and Barclays AAdvantage card products today. Flight attendants on board American Airlines flights often remind passengers of this. That means more miles than under a single issuer.
- There’s still some competition to offer a better product, not just in comparison to other co-brands and bank-branded cards, but even within AAdvantage offerings.
- The Barclays Aviator Silver, which I have, is unique in that one of the federal tax payment processors treats at least a subset of cards as debit for fee purposes. I can pay federal estimated taxes and any balance due for a flat $2.50 rather than ~ 1.9%.
I am hopeful that my Aviator Silver will last through this deal, if indeed Citi gains exclusivity (so hopefully it’s only the exclusive right to issue new cards). And ultimately I prefer two issuers. But the question for American is going to be which will generate more revenue for them which is a function of just how much Citibank is will to pay this time – but beyond the deal terms, also which arrangement is likely to drive more card spend and thus more miles purchased by the bank issuer.
When the most recent co-brand deals were negotiated, the American Airlines card portfolio generated more annual spend volume than Delta’s and than United’s. That’s no longer the case – Delta’s Amex deal has the largest spend volume, and Chase’s United deal outpaces American, which the airline admitted at its investor day. Both United (202) and Delta (2019) have re-upped their card deals more recently than American.
Two months ago during the second quarter earnings call American described negotiations as “in the fifth inning” rather than close to the finish line, while also noting that “Citi wants to be involved in more and deeper ways.”
I would rather have two issuers as well, but it would be nice if Citi could have a card that earns 2x or 3x and then can transfer to AA. I get the bonuses on the AA cards and keep them for benefits, but never use them since 1x is not worth it compared to almost every other card.
No I don’t want point transfer to AA
How do you get the Aviator Silver? Is it truly invite only? Any details on how to get an invite?
care to share which processor treats the silver as debit?
I have both Citibank cards and the Barclays card. The Executive Citi Card (or whatever it’s called) I use to book flights and cash upgrades because of the 4X earning. I use the other 2 for hotels, meals and everyday expenses. I see huge value in the Barclays card over Citibank.
Wait – you can pay estimated taxes with a Barclay’s card for a $2.50 fee? And get points? Sign me up!
Is that correct, Gary?
Which IRS payment system lets you pay only $2.50 to pay taxes? I’ve had the Aviator Silver and never seen that before.
Gary – same as others I’m curious which federal tax payment processor treats the card this way.
I recently downgraded my Citi AAdvantage Executive Pretentious Name World Elite to a free Citi AA MilesUp card.
Why: with my BA Gold status, I no longer need to pay for club access, and I didn’t want to take the hit for closing a line of credit.
I have a Barclay Silver (yes, you need to apply for Red first- Google it) and spend will still happen on that card to ensure EP status for next year.
If anything this positions me well for a bonus on whatever new card Citi will come up with to entice people to flock back to them.
I would suggest that folks that don’t have Barclay’s sign up and take that bonus now. It’s 60k miles, whic is nice.
Barclays can always fall back on their European hotel bill default currency swindle (where they charge in your home-country currency, instead of the local currency, by default, and collect a 3% fee).
What is the interval between cancellation of Barclay’s Aviator cards and the time when I can again qualify for an account opening bonus? Thanks.
Bad news for points enthusiasts. Citi is super tight with approvals and their interface blows.. Flying AA is no joy either. Constant mechanical issues, delays, and dysfunction is the norm these days.
To answer my own question, the Barclay’s T&Cs say that “Any bonus associated with this offer may only be earned once. You may not be eligible for this offer if you currently have or previously had an account with us in this program.”
Wonder if this is applied in practice?
I have had multiple BC Aviator cards over the years with no issue getting the bonus each time. Great card as only one purchase required.
While Barclays US operations aren’t as big, Barclays Internationally has just as much money as Citi so there must be more to this than just asset levels.
I would hate for AA to drop Barclays but if they left the legacy cards in place I guess I’d be OK with that.
If I was Barclays and AA pulled the rug out from under them I would offer to switch those AA cards for many of their other airline cards.