Why Isn’t American AAdvantage A Citi ThankYou Rewards Partner?

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On Tuesday I wrote a post comparing the Chase Sapphire Preferred® Card and Citi ThankYou® Premier Card, which are two of the most compelling flexible points currency cards on the market.

In that post I explained how the Citi ThankYou Premier has a more compelling earnings structure than the Chase Sapphire Preferred, but Chase Ultimate Rewards points are more valuable than Citi ThankYou Rewards points, in my opinion.

As a reminder, here are the transfer partners of both programs:

Chase Sapphire Preferred® CardCiti ThankYou® Premier Card
British Airways Executive ClubAir France/KLM Flying Blue
Korean Air SkyPassCathay Pacific AsiaMiles
Singapore Airlines KrisFlyerEVA Air Infinity MileageLands
Southwest Rapid RewardsEtihad Guest
United MileagePlusGaruda Indonesia Frequent Flyer
Virgin Atlantic Flying ClubMalaysia Airlines Enrich
Hyatt Gold PassportQantas Frequent Flyer
IHG Rewards ClubQatar Airways Privilege Club
Marriott RewardsSingapore Airlines KrisFlyer
The Ritz-Carlton RewardsThai Airways Royal Orchid Plus
Amtrak Guest RewardsVirgin Atlantic Flying Club
Hilton HHonors

Not surprisingly, you’ll notice that the transfer partners sort of go down “bank” lines. For example, Chase issues co-branded credit cards for a majority of their transfer partners, and the same stands true for Citi.

There’s one glaring omission, though, for Citi. Why doesn’t American AAdvantage belong to the Citi ThankYou Rewards program? The Citi ThankYou Rewards program doesn’t have a single US based airline as a transfer partner.

American-777

So I figured I’d share some general thoughts, along with whether or not I think they’ll eventually be partners.

Co-brand partnerships are big business

I know I’m merely stating the obvious here, but credit cards are huge businesses for the airlines. When the airlines aren’t making operating profits, it almost seems at times like they’re operating exclusively to justify their co-brand business.

Arguably Citi even helped prevent American from liquidating when they were in bankruptcy. In 2009, Citi advanced American one billion dollars to pre-purchase AAdvantage miles. That’s how big this business is, and that’s how much of a risk Citi was willing to take to keep American alive.

One-Billion-Dollars

For example, as of last year American Express Platinum cards no longer get you into American Admirals Clubs. I’d be willing to bet that relationship didn’t end because American wasn’t making money off of it, but rather because Citi wanted a bit more “monogamy” from American, if you will. After all, Citi’s relationship with American should be a unique selling point for them.

I’m sure adding American has been discussed

I’m sure American AAdvantage being added as a Citi ThankYou Rewards partner has been extensively discussed.

Citi and American have a strong relationship, so it’s not like this hasn’t been on the table. And that seems to suggest that up until now the two parties couldn’t reach an agreement.

Like all things in the industry I’m sure this is constantly being evaluated, especially as Citi is very clearly trying to line up the Citi ThankYou Premier Card with what’s being offered by Chase and American Express:

  • American Express has Delta SkyMiles as part of their Membership Rewards program
  • Chase has United MileagePlus as part of their Ultimate Rewards program.

So American AAdvantage is obviously the “odd man out” in not being part of the transferable points currency of their co-brand partner.

Can the value of miles be maintained with transfer partners?

There’s something to be said for not adding a bunch of transfer partners if you want to maintain the value of your miles.

Award availability is extremely limited nowadays, so it’s tough in good conscience to introduce a nearly unlimited supply of miles when award availability won’t improve. In a way, you’re doing your “loyal” members (whatever that means) a disservice.

So I’m not suggesting this is the reason, but there is something to be said for not adding more transfer partners if you want to maintain the value of your miles.

My prediction

If I were a betting man (and I have no inside knowledge here), I would guess that American AAdvantage will be added as a Citi ThankYou Rewards partner within the next year or so:

  • Citi has only gotten serious about adding ThankYou Rewards airline partners in the past seven months
  • American has been in the middle of a big merger, using the slogan “integrate, don’t innovate,” basically putting off any changes until they’ve been able to successfully integrate
  • I wouldn’t be surprised if AAdvantage were added as a transfer partner once the merger is complete and the award chart has possibly been devalued (which is inevitable sooner or later, given that the AAdvantage award chart has more or less remained the same for a long time now)

Citi TY

What do you think? Will AAdvantage eventually be added as a ThankYou Rewards partner? And do you want them to be?

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Comments

  1. i think they eventually will be added… probably not this year but sometime in 2016.

    …and i don’t want them to be added. CX F from JFK is almost impossible to come by already as it is… same for Qantas F.
    there are too many AA and AK miles outstanding already.

  2. Putting Loyalty in quotations seems a little snarky. Two years ago, I was crazy loyal to Delta. They had decent flights, an acceptable award chart, solid earnings for flights, and generally made me feel like a truly valued customer. In return, I bordered on fanatically loyal. Sure, I never got a single upgrade in my years as a medallion, but so what? That’s what loyalty means.

  3. Right now the closest you can get to having AA as a transfer partner is the 1.6x tickets-for-points purchase option with the Citi Prestige card. So 25,000 TYPs buys a $400 AA ticket; 30,000 TYPs buys a $480 AA ticket. In other words, this work-around already effectively makes AA a transfer partner for domestic economy tickets. And for “cash” purchases such as these, there are no capacity constraints or “saver” space finding issues.

    You do have to have the Prestige, however. The Premier buys AA tickets at only 1.3x rather than 1.6x.

    I’d be disappointed if they ever kill the 1.6x thing. Since it’s kind of a stand-in for AA transfers, that might logically follow.

    The other issue is how adding AA as a transfer partner would affect the AA Citi $450 Executive Card. They surely don’t want to cannibalize that business!

  4. They will need to enhance the Executive card by waiving the close in $75 fee for award bookings (similar to what chase is doing with the club card)

  5. I think your spot on here, Ben. AA is clearly reluctant to “print” more currency while award supply is so low. I agree that AAdvantage will become a Citi TY partner once AA inflates their award chart (and hopefully, as a result, begins releasing more premium award space).

  6. I hope they don’t. I actually belive this is one of reasons aa has devalued their miles and think we have a shot a better redemption rates if people can only earn aa miles from credit card spend or flying.

  7. Wasn’t there a rumor from a fairly good source about 2-3 years ago that this was about to happen, but obviously never did.

  8. I am with John.

    I hope Citi TX points are NOT added as a transfer partner. We don’t want to devalue AA miles.

  9. Mega dittos on Tom’s comment above ^^. If you simply book through the CC company’s travel agency, there are no blackout dates. that is why Cap. One and Barclay’s are doing such a bangup business with their cards.

    As for the question of the day, I can only see 2 reasons why AA hasn’t been added to TY rewards. 1) Citibank has been unwilling to pay AA whatever Doug Parker wants to compensate for so many new AAdvantage free tix, or 2) Citibank is making a fortune off the AA cards and doesn’t want to to dilute them. (Notice that Chase has no problem with CSP undercutting the rationale to get the UA Explorer card.)

    Will AA get added to TY? It’s all about the Benjamins.

  10. I think worries about AA devaluing as a result of adding TYP are misplaced. AA is going to devalue at some point, irrespective of whether or not they join TYP, it’s just a question of timing.

    @Tom – “The other issue is how adding AA as a transfer partner would affect the AA Citi $450 Executive Card. They surely don’t want to cannibalize that business!”

    All they’d have to do is add a benefit or two to that card to offset it.

  11. If I have all three point transfer cards – Chase Sapphire Preferred, Citi Thankyou Premier, and Amex Gold, what is the best transfer partner that can take all of those miles. I know that Singapore Krisflyer and Virgin Atlantic takes all three, but they don’t get me where I need to go.

  12. @ J.G. — Where do you need to go? Those are indeed the only transfer partners all three have in common.

  13. I assume that ThankYou will add American eventually as a transfer partner. I also assume that American will devalue once the merger is completed–possibly by late 2015, and certainly by early 2016. I’ve already burned all of my AA miles in anticipation of the devaluation, actually…

    …while continuing to use the SPG Amex cards (personal and business) for all SPG and non-bonus spending, since they transfer to AA or 30+ other airlines (including almost every one of the Cit TY transfer partners). I use the Citi TY Premier in lieu of the AA credit cards (I have the AA Aviator Red from Barclay and the AA Business card from Citi) when the category spending bonus is appropriate.

    I therefore have SPG points to transfer to AA when needed, and Citi TY points to transfer when needed–and to AA if and when TY ever adds AA as a partner. In the meantime, though, my SPG and TY points protect me from the coming AA devaluation.

    Since SPG points already transfer to AA, I can transfer to AA as needed while protecting the opportunity cost of my credit card spend by using the SPG cards.

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