Why is AA steering Admirals Club membership to Citibank Executive
Oct 19, 2018, 7:05 pm
#1
Original Poster
Join Date: May 2002
Location: Arizona
Posts: 5,689
Why is AA steering Admirals Club membership to Citibank Executive
It is obvious from American Airlines Admirals Club Membership marketing emails they are steering customers to join via Citibank Executive Card versus directly. Why? EDITED I can not get the matrix chart to copy properly where it shows all the added benefits of Citibank Executive Card
Relax before the runwayBecome an Admirals Club® memberGain access to more than 100 Admirals Club® and partner lounges worldwide. Plus, enjoy snacks, drinks, Wi-Fi and help with your flights before you board.
There are 2 ways to get a membership:
Admirals Club®
individual membershipCiti® / AAdvantage®
Executive World EliteTM
Mastercard®†
Enjoy these benefits:
Annual Fee
$450†Admirals Club® + partner lounge access for you and guests with you✓✓Admirals Club® access for up to 10 authorized users not traveling with you*✓Elite Qualifying Miles opportunity*✓Global Entry or TSA Pre✓® application fee credit*✓
Relax before the runwayBecome an Admirals Club® memberGain access to more than 100 Admirals Club® and partner lounges worldwide. Plus, enjoy snacks, drinks, Wi-Fi and help with your flights before you board.
There are 2 ways to get a membership:
Admirals Club®individual membershipCiti® / AAdvantage®
Executive World EliteTM
Mastercard®†
Enjoy these benefits:Annual Fee
$450†Admirals Club® + partner lounge access for you and guests with you✓✓Admirals Club® access for up to 10 authorized users not traveling with you*✓Elite Qualifying Miles opportunity*✓Global Entry or TSA Pre✓® application fee credit*✓
Oct 19, 2018, 8:30 pm
#3
Join Date: Jul 2004
Location: SNA
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Posts: 9,239
Easy answer:
AA/AAdvantage, and to be fair they are not alone in the this, has become a credit card affiliate that also just happens to operate airplanes. The CC companies pay them handsomely and that revenue has little to no cost to generate unlike those pesky planes that need stupid things like fuel, pilots and FAs which all cost money. Plus the CC companies never complain if the aforementioned planes they begrudgingly operate happen to have issues.
This article is a bit dated but demonstrates the revenue projections:
In an SEC filing, American Airlines stated that the new agreements will boost its pre-tax income by $200 million during the second half of 2016. It expects the benefit to rise to $550 million in 2017 -- the first full year under the revised agreements -- and increase further to $800 million in 2018.
These contractual improvements will lift American's pre-tax profit margin by 2 percentage points by 2018, relative to what it would have been under the old credit card agreements. The company expects additional (but smaller) pre-tax income gains after 2018.
https://www.fool.com/investing/2016/...redit-car.aspx
AA/AAdvantage, and to be fair they are not alone in the this, has become a credit card affiliate that also just happens to operate airplanes. The CC companies pay them handsomely and that revenue has little to no cost to generate unlike those pesky planes that need stupid things like fuel, pilots and FAs which all cost money. Plus the CC companies never complain if the aforementioned planes they begrudgingly operate happen to have issues.
This article is a bit dated but demonstrates the revenue projections:
American will get a big revenue boost
As has become common in the airline industry, American Airlines is extending its co-branded credit card partnerships long before they were due to expire. This allowed it to get an immediate step-up in credit card revenue, followed by further compensation increases down the road.In an SEC filing, American Airlines stated that the new agreements will boost its pre-tax income by $200 million during the second half of 2016. It expects the benefit to rise to $550 million in 2017 -- the first full year under the revised agreements -- and increase further to $800 million in 2018.
These contractual improvements will lift American's pre-tax profit margin by 2 percentage points by 2018, relative to what it would have been under the old credit card agreements. The company expects additional (but smaller) pre-tax income gains after 2018.
Oct 20, 2018, 2:43 pm
#4
Join Date: Jun 2005
Location: AUS
Programs: AA Exec Platinum/MM, DL Gold/MM, Hilton Diamond, Accor Platinum, Hertz Presidents Circle
Posts: 6,976
And the recently announced membership price increase, while holding the CC fee unchanged, is further encouragement to become a member via the CC. Just add your family members as authorized cardholders and you effectively get a household membership thrown in for free.
Oct 20, 2018, 2:49 pm
#5
Join Date: Sep 2008
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Posts: 4,035
if one is requires to fly AA (and some partners) to enter the lounge with AA club membership vs flying AA only via Citi credit card. not sure if AA cares about Admiral club membership anymore.
Oct 20, 2018, 4:43 pm
#6
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Join Date: Aug 2010
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Posts: 50,262
AA makes a lot of money from the Citi relationship. Not only for the card itself but in the miles it sells to Citi. That more than makes up for the price differential, even the new $100 extra.
Citi also has a say in what the card fee is and I doubt that Citi has any interest in an increased fee for one of its cards.
Citi also has a say in what the card fee is and I doubt that Citi has any interest in an increased fee for one of its cards.
Oct 20, 2018, 9:56 pm
#7
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And all members, regardless of whether purchased or via the Exec card, will have to show an AA, AS or one world same day boarding pass for access as of 1 November 2019.
The discussion is here: https://www.flyertalk.com/forum/amer...ns-2019-a.html.
Oct 20, 2018, 10:26 pm
#9
Join Date: Apr 2017
Location: WAS
Programs: Free Agent
Posts: 1,757
Someone in the bean-counting department of AA may have found that CC pax were more profitable per visit than annual fee or per-visit passengers.
Alternatively, they may intend for most consumers to gain access through a credit card, and aim the higher-priced club membership at business travelers whose employer will buy them a lounge membership.
Alternatively, they may intend for most consumers to gain access through a credit card, and aim the higher-priced club membership at business travelers whose employer will buy them a lounge membership.
Last edited by Beltway2A; Oct 21, 2018 at 7:31 am
Oct 21, 2018, 7:27 am
#10
Join Date: Mar 2017
Location: CLT
Programs: AA ExecPlat
Posts: 103
Why are people assuming Citi isn't going to raise the fee on the card? Did I miss Citi's announcement that the card fee will be held constant? They don't have to announce an increase for a few months still, even for renewals.
Oct 21, 2018, 9:46 am
#12
Join Date: Aug 2016
Posts: 165
Not assuming anything here, and Citi could certainly do so. However, I think it might think twice about it. If they increased the fee to $550 it would be higher than the co-branded cards for the other airlines and would put it at the same fee as the Amex Plat, which offers significantly more benefits and ways to offset the annual fee via fee credits. Given the reduced access, I’m sure it would lead to lots and lots of cancellations of the card.
So my WAG is that it will not increase, also bc I bet there is some sort of deal behind the scenes that still makes the Executive card profitable to both Citi and AA, even at current pricing.
So my WAG is that it will not increase, also bc I bet there is some sort of deal behind the scenes that still makes the Executive card profitable to both Citi and AA, even at current pricing.
Oct 21, 2018, 9:58 am
#13
Join Date: Aug 2015
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I doubt it. American is generally quite data-driven so I would think that there was analysis that went into this. Heavy AA domestic flyers who use the clubs will likely continue to hold their Citi Exec cards and if anything there will just be a shift from AA-direct AC memberships to the Citi Exec memberships, losing the fringe population in either group along the way. After all, AA doesn't need to care about flyers who make use of their clubs and don't actually fly with them. While I personally am not a fan of the new policy, from an AA perspective, why subsidize flyers who aren't that loyal?
Oct 21, 2018, 10:10 am
#14
Join Date: Oct 2006
Programs: AA EXP
Posts: 1,635
Agreed. Also from AA perspective, why provide a lounge to make flying other airlines such as Southwest or Jetblue a more pleasant and comfortable experience?
Oct 21, 2018, 10:18 am
#15
Join Date: Aug 2015
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