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I asked TPG Special Contributor Eric Rosen to explain which airline credit card benefits are most important to help you decide what to look for when applying.
When it comes to airline credit cards, there are some standard benefits that every one should have, like earning multiple miles per dollar on specific airline purchases, or giving cardholders free checked bags. There are other benefits that are less common, but which should become standard, such as waiving foreign transaction fees and offering award discounts. In this post I’ll outline the benefits you can expect when applying for an airline credit card, and suggest a few that card issuers would be wise to adopt.
1. Airline Spending Bonuses: This should go without saying, but every airline credit card should offer cardholders multiple miles per dollar for spending on the co-branded airline. Some cards are more generous than others in this respect. American, Delta, United, and US Airways cards offer 2x miles per $1 for purchases on those respective airlines. However, others like the British Airways Visa (2.5x), Virgin Atlantic World Elite MasterCard (3x), and the Virgin America Visa Signature cards (3x) offer a greater return.
While 2x miles per $1 is decent, issuers should offer superior earning for the more premium versions of airline credit cards. For instance, you could still earn 2x miles per $1 with the Citi / AAdvantage Platinum Select World Elite MasterCard or the Gold Delta SkyMiles Credit Card from American Express, but you might earn 3x miles per $1 with premium cards like the Citi / AAdvantage Executive World Elite MasterCard or the Delta Reserve card. At any rate, no co-branded airline credit card should earn fewer than 2x miles per $1 for purchases on the airline itself.
2. Other Bonus Spending Categories: While many co-branded hotel cards earn bonus points for purchases outside the hotel—like the Hyatt Credit Card (2x points on dining, airfare, car rentals) and the Citi Hilton HHonors Reserve (5x points on airline and car rental purchases)—it’s rare to find an airline credit card that earns more than one mile per dollar for off-brand purchases. However, it’s not impossible!
The Virgin Atlantic MasterCard earns 1.5 miles per dollar on all purchases (3x on Virgin airfare), and the United Club Card earns 1.5 miles per dollar on all purchases (2x on United purchases). While these are higher-end cards, more airline credit cards should consider adding bonus earning opportunities. Adding even one or two categories such as dining, hotels, or car rentals (which often go hand in hand with airfare purchases airfare) would be an opportunity for both the card issuers and consumers.
3. Elite Status Spending Bonuses: Several high-end airline credit cards target elite flyers and those who spend heavily on their co-branded cards, offering spending-based elite status boosts as an incentive. The Platinum Delta SkyMiles Credit Card from American Express, for example, earns up to 10,000 Medallion Qualifying Miles when you spend $25,000 in a calendar year, and another 10,000 MQMs when you spend an additional $25,000 in the same calendar year. Similarly, the Delta Reserve offers a potential 30,000 MQM’s for spending over $60,000. Meanwhile, the Citi / AAdvantage Executive World Elite MasterCard awards cardholders with 10,000 elite-qualifying miles every calendar year they spend $40,000 or more.
Even airlines with less traditional elite status programs (such as Virgin America and Southwest) offer similar perks on their co-branded cards. For example, the Virgin America Premium Visa Signature card offers cardholders up to 15,000 Elevate status points per calendar year (5,000 points for every $10,000 of eligible purchases). The Southwest Rapid Rewards Premier Visa earns cardholders 1,500 Tier-Qualifying points for every $10,000 in purchases (up to 15,000 Tier-Qualifying points per calendar year). If elite status matters to you and you spend more than you fly, one of these products might suit you well.
4. Other Spending Bonuses: Several credit cards offer everything from mileage bonuses to companion passes for hitting certain spending thresholds, and although the dollar amounts tend to be high, the rewards are often worthwhile.
Perhaps the best known is the “Travel Together” companion ticket you can earn for spending $30,000 on the British Airways Visa in a calendar year. The United Explorer card offers 10,000 bonus miles when you spend $25,000 in net purchases each year, and the Hawaiian Airlines Business MasterCard offers cardholders 40,000 bonus miles for spending $100,000 or more in a calendar year. The Citi AAdvantage Platinum Select World Elite MasterCard gives cardholders a $100 flight discount on American Airlines each year as a cardmember for spending $30,000 or more on purchases. Finally, the Hawaiian Airlines World Elite MasterCard offers 5,000 bonus miles annually when you spend $10,000 or more on purchases.
These spending bonuses are becoming more common, and hopefully more airline credit cards will begin to offer them to stay competitive, and hopefully with lower spending thresholds—after all, a $100 discount for spending $30,000 is literally a 0.33% return on spending, which doesn’t really get the heart rate up.
5. Reduced Mileage Awards: Several credit cards will knock a few thousand miles off certain redemptions, which can add up depending on where you travel. American Airlines offers reduced-price awards to Citi AAdvantage cardholders, which can save you 5,000-7,500 miles on round-trip awards within the US and Canada that originate in the 48 continental United States (between certain cities that change monthly). The personal Hawaiian Airlines World Elite MasterCard from Barclaycard offers 5,000 miles off round-trip award fares from North America to Hawaii. In September, all the Delta Amex cards offered cardholders limited-time access to discounted awards—a feature they should think about instituting permanently, or at least more often.
6. Mileage Refunds: One of the most valuable benefits of the Citi AAdvantage personal cards (and now the US Airways Premier World MasterCard) is that they refund cardholders 10% of their redeemed AAdvantage miles (up to 10,000 miles per year). Getting 10,000 American miles back is like being refunded $170 (based on TPG’s most recent valuations), which is nearly double the annual fee for several of these cards.
7. Companion Passes: One way to offset annual fees is to take advantage of companion ticket offers. Though many of those currently available are valid only for economy travel within the 48 continental United States, they can still end up saving you hundreds of dollars. Both the Platinum Delta Amex and the Delta Reserve cards offer a domestic economy class companion certificate each year upon renewal, while the Alaska Airlines Visa Signature offers a $118 coach companion ticket to cardholders each year.
The Hawaiian Airlines World Elite MasterCard offers a one-time companion discount of 50% off for round-trip travel in coach between Hawaii and North America, and a $100 companion discount every year after that. The $99 companion pass that comes with the US Airways Premier World MasterCard will no longer be offered in 2015 as it transitions into an American Airlines credit card, but it would be great if Barclaycard figured out a way to keep this benefit around.
8. Anniversary Mileage Bonuses: These bonuses are becoming more rare, but certain cardholders who signed up for the US Airways Premier World MasterCard in the last few years will get a 10,000-mile bonus on their card (though this benefit should end in 2015). Southwest Rapid Rewards Premier cardholders get a bonus of 6,000 Rapid Rewards points on their cardmember anniversary each year (worth roughly $85 in Wanna Get Away fares).
9. In-Flight Purchase Discounts: While these are less exciting than the big ticket benefits, getting 20%-25% off in-flight purchases (such as snacks or entertainment) is still useful, especially if you’re a very frequent flyer. Currently many airline credit cards offer such discounts, including the Citi AAdvantage Platinum Select World Elite MasterCard and US Airways Premier World MasterCard (both of which have a 25% discount) and the Delta Amex cards (which have a 20% discount). The real winner in this category has to be the JetBlue Amex, which offers a 50% statement credit for in-flight purchases, including cocktails, meals, and movies.
10. Free Checked Bags: Unless you’re primarily flying Southwest and JetBlue or have elite status with your airline, chances are you’re paying about $25 each time you check a bag, and those fees can add up quickly. Thankfully, many airline credit cards offer the first checked bag for free as a benefit, which is usually extended to some number of companions on the same reservation. For instance, the Delta Gold Amex, Delta Platinum Amex, and Delta Reserve Card allow cardmembers to check their first bag free on all Delta and Delta Connection flights, and the benefit extends to up to 9 people traveling on the cardmember’s reservation.
The United Explorer means your first checked bag is free for you and a companion when you fly United, while the United Club Card gets you get two free checked bags for yourself and a companion. Among other cards, the Citi AAdvantage Platinum Select World Elite MasterCard provides a free checked bag on American Airlines for the cardholder and up to four travel companions.
11. Priority Boarding: Some of the best airline credit card perks mimic elite status, and this is one of them. Every airline credit card should offer cardmembers some form of priority service (like check-in and/or boarding) so you can get on the plane first and snag overhead space for their bags. It’s a simple, tangible benefit of loyalty. Fortunately, many airline credit cards do just that, including the Citi AAdvantage cards, the United Explorer card, and the Delta American Express cards.
12. Priority Award Space: Though this usually occurs at high mileage levels, some credit cards offer members exclusive access to award seats. For instance, primary United Explorer cardholders can use miles to book any available seats on a United-operated flight at the Standard Award level with no restrictions or blackout dates. If you’re a Delta Amex cardholder and log into your SkyMiles account before searching for awards, you can check the “I am traveling” box to find extended domestic coach award space as well (a benefit discussed at length in this FlyerTalk thread). Making more awards accessible, even at higher mileage levels, is a great way to boost customer satisfaction and encourage cardholders to use their cards to earn more miles.
13. Waived Foreign Transaction Fees: Forex fees are one of the biggest bugaboos for international travelers, and rightly so. Why pay a 1-3% premium just to use your card in another country, especially when that credit card is an airline card predicated on travel?
Although some major airline credit cards incur these fees (it depends more on the issuer than the airline), fortunately many others do not, including the United Explorer, the American Express Delta cards, and the Southwest Rapid Rewards Premier Visa (even though Southwest still has relatively few foreign destinations). This is a major selling point for international travelers, and should come standard on airline cards these days.
What benefits do you prize most on co-branded airline credit cards?
Citi® / AAdvantage® Platinum Select® World Elite™ MasterCard®
|Intro APR||Regular APR||Annual Fee||Foreign Transaction Fee||Credit Rating|
|N/A||14.24% - 22.24%* (Variable)||$95, waived for first 12 months*||0%||Excellent/Good|