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Emirates Islamic Bank cuts Skywards miles by half
4 Attachment(s)
Dubai's Emirates Islamic Bank who used to be very generous in rewarding skywards miles on *any retail spend* has cut miles rewards by more than half from may 16th 2016 onwards. However they have removed the slab system with minimum spend criteria
For instance, Infinite card that used to offer 10,500 miles on 20k minimum spend would now get only 5000 miles for the same spend. Attachment 9843 Attachment 9844 |
Originally Posted by milegentleman
(Post 26627868)
Dubai's Emirates Islamic Bank who used to be very generous in rewarding skywards miles on *any retail spend* has cut miles rewards by more than half from may 16th 2016 onwards. However they have removed the slab system with minimum spend criteria
For instance, Infinite card that used to offer 10,500 miles on 20k minimum spend would now get only 5000 miles for the same spend. Attachment 9843 Attachment 9844 |
I well cancel my card and many of my friend well do the same , this bank was loosing cusromers and now after this they decide to die !! Have the platinium card i pay 700 every year its not worth it any more , well apply for city bank card i also have Amex wich is free if i spend 10000 in 3 month at the begining then its free if i spend 40000 every year also its 1usd = 1 mile
Idiots they well lose after this step , or they should reduce the fees by half also !! |
Amex is also rethinking how it awards miles. There was a big article in the Wall Street Jurnal a week or two ago. Awarding miles are a big money maker for the CC companies but according to this article the airlines are starting to realize they are awarding way to many miles thru cards. They certainly don't want to stop it but they are giving the miles to the cards to cheap. So don't be surprised when banks all over the world start awarding less miles per $,£,€ and on and on.
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Originally Posted by chinatraderjmr
(Post 26631532)
Amex is also rethinking how it awards miles. There was a big article in the Wall Street Jurnal a week or two ago. Awarding miles are a big money maker for the CC companies but according to this article the airlines are starting to realize they are awarding way to many miles thru cards. They certainly don't want to stop it but they are giving the miles to the cards to cheap. So don't be surprised when banks all over the world start awarding less miles per $,£,€ and on and on.
The problem is the price of miles is going up but interchange isn't - especially in the EU which has caps of 0.2% and 0.3% on debit and credit card transactions. Usually you'd see interest paying accounts subsidise any shortfall but I think that is being seen as a unsustainable model, especially with payment technologies moving on and cutting costs/being more convenient. |
Originally Posted by eternaltransit
(Post 26631725)
I don't disagree with the sentiment of your post but you mean awarding miles is a big money maker for the airlines not the CC companies right - lenders have to buy those miles from airlines.
The problem is the price of miles is going up but interchange isn't - especially in the EU which has caps of 0.2% and 0.3% on debit and credit card transactions. Usually you'd see interest paying accounts subsidise any shortfall but I think that is being seen as a unsustainable model, especially with payment technologies moving on and cutting costs/being more convenient. |
Originally Posted by skywardhunter
(Post 26631851)
It's a moneymaker for CCs as well, even with an input cost. Someone signs up for a 450$ a year card and spends the 3k$ minimum to get a 50k miles bonus which cost the CC company 50$ to buy? Big margin
Even so, 450USD, with interchange revenue at around the 1% mark (0.3% in the EU), represents billed card revenue of 45k USD - that's where the credit providers make money, on fees and interest. Change the balance of consumer behaviour though - i.e. interchange revenue drops and whether people carry balances and the cost of rewards soon starts to eat heavily into margins (you get 1.5% but have to pay 1% in reward fees) and sooner or later something has to give. That's why CC providers set up their own schemes - in a co-brand situation, the CC provider cannot benefit from any breakage, i.e. unredeemed or expired points. There is an immediate cost in mileage purchase. If you have to earn say, Chase UR points before conversion at 1:1, Chase benefits from carried UR points balances - and research shows significant percentages of those balances never get used (http://www.ey.com/Publication/vwLUAs...-aeriennes.pdf) - on the order of 15-20%. |
Originally Posted by eternaltransit
(Post 26634360)
That I would argue is a feature of the credit card offer rather than mileage awards - 50k miles is going to cost around 1c per mile (e.g. Avios sell for an average of 0.67p/mile, but BA and IB get a discount), so 500USD - more than the card cost.
Even so, 450USD, with interchange revenue at around the 1% mark (0.3% in the EU), represents billed card revenue of 45k USD - that's where the credit providers make money, on fees and interest. Change the balance of consumer behaviour though - i.e. interchange revenue drops and whether people carry balances and the cost of rewards soon starts to eat heavily into margins (you get 1.5% but have to pay 1% in reward fees) and sooner or later something has to give. That's why CC providers set up their own schemes - in a co-brand situation, the CC provider cannot benefit from any breakage, i.e. unredeemed or expired points. There is an immediate cost in mileage purchase. If you have to earn say, Chase UR points before conversion at 1:1, Chase benefits from carried UR points balances - and research shows significant percentages of those balances never get used (http://www.ey.com/Publication/vwLUAs...-aeriennes.pdf) - on the order of 15-20%. |
Originally Posted by eternaltransit
(Post 26631725)
I don't disagree with the sentiment of your post but you mean awarding miles is a big money maker for the airlines not the CC companies right - lenders have to buy those miles from airlines.
The problem is the price of miles is going up but interchange isn't - especially in the EU which has caps of 0.2% and 0.3% on debit and credit card transactions. Usually you'd see interest paying accounts subsidise any shortfall but I think that is being seen as a unsustainable model, especially with payment technologies moving on and cutting costs/being more convenient. My stepfather has a Citi Bank / American Airlines card which he has had for years, before they put maximum caps on the munt of miles you can earn ac month. He is grandfathered in so he has no limit. Before he retired he was a regular Concorde passenger. Now he has no reason to fly for business but earns enough miles just using his CC to go with my mother twice a year to Europe in F on BA and twice a year to Hong Kong on CX in F.........just off his Citi Bank / AA Card. Granted he spends a fortune von it but if he didn't earn any miles he would still spend the same money on that or another card..............the airlines and baks have created a monster and they are finally realizing it but they can't ( or won't) just cancel the program and piss off so many customers so what can they do? Lower the amount of miles you get per dollar or Durham or whatever |
Originally Posted by chinatraderjmr
(Post 26635853)
Your right, I meant to say airlines (although the banks make a nice profit too....but for the airlines its quick cash with the banks picking up most of the costs like marketing, etc....the problem is they didn't look ahead and see the monster they would end up creating. That goes for the airlines that sell miles cheap as well, not just CC earnings. A round trip tkt from JFK-DXB on Lufthansa in F runs $10-15,000 USD. Forget what its worth, thats what it costs and people do pay it. You can buy 75,000 miles from UA for $1500 and assumed you use you CC for $45,000 in purchases.......thats a free F tkt right there, no flying involved, the 45K on your card you would spend anyway, and $1500 to purchase miles. So anyone who has the time to use the system in a way it was not originally intended flys F for $1500. Not what the airlines had intended, and the fact you don't have to even fly to earn those miles makes it worse
My stepfather has a Citi Bank / American Airlines card which he has had for years, before they put maximum caps on the munt of miles you can earn ac month. He is grandfathered in so he has no limit. Before he retired he was a regular Concorde passenger. Now he has no reason to fly for business but earns enough miles just using his CC to go with my mother twice a year to Europe in F on BA and twice a year to Hong Kong on CX in F.........just off his Citi Bank / AA Card. Granted he spends a fortune von it but if he didn't earn any miles he would still spend the same money on that or another card..............the airlines and baks have created a monster and they are finally realizing it but they can't ( or won't) just cancel the program and piss off so many customers so what can they do? Lower the amount of miles you get per dollar or Durham or whatever After all, mileage seats are intended to get incremental revenue out of unsold inventory - the problem comes when you have so much issuance of loyalty units that in order to reduce breakage (to make your program more attractive), you need to up the amount of availability of rewards. If you look at passenger trends where the number of people who buy full F tickets are dropping, then you have a decision to make if you're at an airline: you know there's demand for your product, but not enough at say, 10-15k USD (say, for a TATL) to make the product viable entirely on its own. You could remove F entirely, but that has consequences for your brand positioning. Or you can open it up to redemptions and shift revenue to the loyalty programme - if F pax are dwindling already then the cost of alienating them with massive amounts of redemptions is an acceptable price to pay. That's an extremely successful strategy: loyalty margins are in the 20-25%, compared to the 5-15% in aircraft operations. Just take a look at AS, QF, IAG etc. to name a few carriers with very profitable schemes. Now you can spin off the loyalty program to raise a lot of capital quickly (AC and Aimia for instance). The problem now as you say, is the monster created - the brand expectations etc. If you have an airline, such as say, EK, where you have quite solid cash F demand, then clearly you are going to have breakage issues in the FFP - but for them, that's fine. In fact, one of the reasons I would suggest that Skywards is such a poor earn/burn airline, is because there's revenue demand for the product - there's not much need for unsold inventory to be sold off cheaply via miles. However, if you have a lot of loyalty unit issuance and not much redemption power - then people start to turn off your product. But now airlines are addicted to the easy money card co-brands represent: interchange rebates, free mileage revenue with associated breakage profit, the marketing bonanza of having your brand in someone's pocket and the lock-in that represents - what to do? Devalue - can't do that too much otherwise it alienates too many people. So there's only one other option: restrict issuance - which in the case of partners is done through price increases. A lender now has margin eaten up by increased cost of rewards. Carriers don't want to pay as much for brand positioning in the wallet (i.e. commissions on sign ups). Borrowers don't carry balances. What to do - cap costs by limiting issuance, institute annual fees which are pure profit, halve bonuses, etc. I guess the merchants should be happy :D |
Originally Posted by eternaltransit
(Post 26636768)
Definitely - although you have to take into account the initial aims of loyalty programs and how that's morphed into its own business.
After all, mileage seats are intended to get incremental revenue out of unsold inventory - the problem comes when you have so much issuance of loyalty units that in order to reduce breakage (to make your program more attractive), you need to up the amount of availability of rewards. If you look at passenger trends where the number of people who buy full F tickets are dropping, then you have a decision to make if you're at an airline: you know there's demand for your product, but not enough at say, 10-15k USD (say, for a TATL) to make the product viable entirely on its own. You could remove F entirely, but that has consequences for your brand positioning. Or you can open it up to redemptions and shift revenue to the loyalty programme - if F pax are dwindling already then the cost of alienating them with massive amounts of redemptions is an acceptable price to pay. That's an extremely successful strategy: loyalty margins are in the 20-25%, compared to the 5-15% in aircraft operations. Just take a look at AS, QF, IAG etc. to name a few carriers with very profitable schemes. Now you can spin off the loyalty program to raise a lot of capital quickly (AC and Aimia for instance). The problem now as you say, is the monster created - the brand expectations etc. If you have an airline, such as say, EK, where you have quite solid cash F demand, then clearly you are going to have breakage issues in the FFP - but for them, that's fine. In fact, one of the reasons I would suggest that Skywards is such a poor earn/burn airline, is because there's revenue demand for the product - there's not much need for unsold inventory to be sold off cheaply via miles. However, if you have a lot of loyalty unit issuance and not much redemption power - then people start to turn off your product. But now airlines are addicted to the easy money card co-brands represent: interchange rebates, free mileage revenue with associated breakage profit, the marketing bonanza of having your brand in someone's pocket and the lock-in that represents - what to do? Devalue - can't do that too much otherwise it alienates too many people. So there's only one other option: restrict issuance - which in the case of partners is done through price increases. A lender now has margin eaten up by increased cost of rewards. Carriers don't want to pay as much for brand positioning in the wallet (i.e. commissions on sign ups). Borrowers don't carry balances. What to do - cap costs by limiting issuance, institute annual fees which are pure profit, halve bonuses, etc. I guess the merchants should be happy :D |
Was in the bank today to cancel my plat card , they offer me the infinite wich gives you 20k when you got it did my fast calculation here we go
20k miles worth around 3k Most of my spend on credit cards is on resturant , gas ,hotels , tickets and etc etc so most of the time i well got the 4 aed per mile .. Because its deffrent earning from gov or from supermarket is as low as 0.25 miles per dollar from emirates web site its 2 miles huge deffrence Fees 950 but the 20k miles in my opinion is not that bad .. Still Thinking !! |
Coming soon to EK MBNA cards in the UK as per a reliable source.
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Originally Posted by ukdoctor
(Post 26655442)
Coming soon to EK MBNA cards in the UK as per a reliable source.
The other option would be to increase the annual fee. |
Oh no. That's the end of MBNA Emirates card then.. earned 20,000 miles in last 2 months. Sigh
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