Citi Is Trying To Be American Airlines' Only Credit Issuer

It is a tale as old as time, or as old as the US Airways and American Airlines merger at least. A tale of two banks issuing the same co-branded partner's credit cards and the desire of one to have it all. We saw it back in the day when Hilton cards were issued by both Citi and American Express. We now see it again with American Airlines, Citi and Barclays. Maybe Citi still feels the sting of losing out on that Hilton card portfolio all these years later? Because Citi is trying to be American Airlines' only credit issuer. This isn't a new battle though, as we have seen them try this in the past. Will the ending be different this time around though?

The Backstory

Some backstory on this lover's triangle between American, Citi and Barclays… Wait, did I just compare a credit card offering like we are back in the Twilight saga days, with people yelling team Edward or team Jacob? Have no fear Twilight lovers, we can fill that void with the ability to now shout team Citi or team Barclays from the rooftops. Lets get those t-shirt print presses humming! Okay, I have now jumped the shark a bit, and we are getting ahead of ourselves here … how embarrassing.

Anywho, this team Barclays and team Citi drama kicked off as a blood feud back in 2013. Barclays was team US Airways and Citi was team American Airlines. Barclays was automatically on the losing side of that one as the US Airways livery hit the dumpster behind the airport and American Airlines became the big new baddie on the block.

For a while after the merger nothing really changed. Once the dust settled on the merger Citi started licking its chops thinking about all of those sweet, sweet Barclays cardholders. They were even touting the ability to make American Airlines a full fledge ThankYou points transfer partner. They went so far as to give us a taste of it for like four and a half hours or whatever. The problem was they balked at the price Bella American was asking to make the deal a reality. Because of that the deal crumbled and we were left with the set up we have today.

What Is The Current Set Up

Once the Citi takeover attempt came to an end American decided to go the safe route and play both sides. They showed favoritism to their old pals Citi though, giving them the lions share of the opportunity. Here is how it broke down in reality:

• Barclays can promote their cards in-flight and at the airport
  • Although not within 100 feet of an American Airlines lounge (like a restraining order or something)
• Citi is allowed to market everywhere else

As you can see, Citi comes out way ahead here. Barclays being such a small player in the credit card space left them accepting the scraps. They were likely happy to do so because of their catalog of old US Airways cardholders and how valuable that is to their business. Being able to hawk new cards on the planes, and in the airport, likely lets them replace any defectors. I doubt the set up has led to much cardholder growth (if at all) in the long term.

Citi Is Taking Another Run At It

Citi has once again decided to not be happy with the status quo, or maybe they just can smell that American Airlines debt in the water, and are trying to swoop in to kill off team Jacob Barclays once and for all. Edward Citi definitely has the leg up being the bigger lender and card issuer. According to CNBC, Citi also has higher spending cardholders and a lower default rate than what is seen with Barclays cardholders. It has also been said that Barclays has looked to divest their co-brand credit card business away from airlines, focusing on retailers and tech companies instead.

Would This Be Good For Us?

Now to the all important question, would Citi issuing all of the American Airlines cards be good for us, the end user? It usually isn't good for us to have less options and less competition in the marketplace. I would be all for this change if one thing happened though. Before I get into that, let's look at the different possibilities on how this could play out. This is of course assuming these talks actually go somewhere this time around.

• Citi takes over everything and buys up the legacy Barclays cardholders
  • This would be a negative change for anyone that values the perks of their Barclays American Airlines card account.
• Citi gets to be the only credit card issuer going forward but Barclays gets to keep their current portfolio of cardholders.
• Citi takes over the all new cards going forward but doesn't take over the Barclays accounts. Barclays then transitions current American Airlines cardholders to another Barclays product.

What Do I Think Will Happen If A Deal Goes Through

I have had all of these things happen to me at some point throughout my credit card carrying days. I think Barclays transitioning people into something else is the least likely if all of this plays out. That is because they have moved away from their own currency cards and pretty much only deal with co-branded cards now. If they were still issuing the Arrival+ then I think this could be a more likely scenario.

That would leave either Barclays continuing to service their customers while not issuing any new cards, or Citi buying their “book” of cardholders. Which way it goes would likely depend on how realistic the price request was from Barclays for their cardholders.

Why I Think This Could Be A Good Thing

I think Citi taking over issuing all American Airlines credit cards could be a good thing if it is paired up with an addition of American Airlines as a ThankYou points transfer partner. They were willing to do it with Bilt for a time, so it wouldn't be out of the realm of possibilities. I believe that American's asking price was much too high for Citi last time around. Would they be willing to come down off that high rate this time? I wouldn't be surprised if that was an issue with Bilt when the latest agreement came up for renewal. Or, was this all a precursor to American looking to go with one card issuer and becoming a part of their bank currency program?

Citi Is Looking To Take Over All American Airlines Credit Cards: ToP Thoughts

This will be a fun story to follow along to see how it all plays out. Losing another credit card issuer, and the additional welcome offers provided, would be a blow to us the consumer. It could end up being a net positive if American Airlines becomes a full fledged partner of the Citi ThankYou Points ecosystem. That would give us more opportunity to earn AAdvantage miles than having Barclays as a continued credit card provider could offer.

Let me know what you think about this potential change over in the ToP Facebook Group.