Originally Posted by
Nicc HK
Credit Cards are a cash cow for a properly run frequent flyer programme. If you look up posts from a chap called DO0t (or something like that-he advises on FFP schemes) can find out a lot.
Cash is the keyword here! Co-brand credit cards are not necessarily the profit centre for FFPs but rather are the mechanism for programs to generate revenue, which is then realised via redemptions.
Originally Posted by
Magic01273
as for other benefits, like 2-4-1s etc, its unclear whether Amex pays for those, or whether BA contributes/subsidises these in any way - but it is possible they do...
Co-brand contracts wildly vary depending on the parties. The local market, how aggressive the airline/ffp or bank wants to be in the region and what types of customers they're targeting also play a role in who pays for what benefits. Also consider that, perhaps, Mastercard wants to compete aggressively against Visa in a market - Mastercard pay chip in resources (cash, benefits, data, human capital, marketing, reduced fees etc.) in order to support the bank and the FFP.
Generally the party funding a benefit is the one who stands to gain the most from that specific benefit.
Co-brand card deals are long term relationships. All involved parties need to fully commit to ensuring the sucess of the card.
Like the relationship with your significant other..... sometimes you wash the dishes....sometimes they make dinner. The agreements are about doing what it takes so all parties can share in the success, and sometimes, that means investing in a benefit that is a cost, in order to deliver additional revenue through another stream.