American Express, Capital One, Chase and Citi are squaring off with the largest US airlines in a “colossal struggle” for traveller loyalty, according to a new report from IdeaWorksCompany.
Titled ‘Kong vs. Godzilla’, the report finds that competition between banks and airlines is creating better rewards, more lounges and new travel booking options, but it’s also reshaping the balance of power in the travel industry.
Jay Sorensen, president of IdeaWorksCompany and author of the report, said that banks “hold the cards” over their airline partners and rivals.
With hundreds of millions of credit card accounts and vast consumer data, the four largest card issuers (named above) can influence spending habits and can even determine the financial stability of airlines.
Their travel platforms now operate like online travel agencies, offering flights, hotels and lucrative reward bonuses.
On the other side of the equation, airlines “control the experience”, said Sorensen.
Loyalty programmes, free checked bags, seat upgrades and extensive airport lounge networks give airlines a home-field advantage.
Reward travel can be deeply discounted since airlines “own” their inventory, and this inventory provides the latest battleground between the two forces.
“American Express, Capital One, and Chase are investing heavily in premium airport lounges, directly competing with airline-operated clubs,” the report notes.
“Banks see lounges as aspirational perks to lure consumers, but airlines still dominate in sheer scale and prime airport real estate.”
Co-branded cards versus bank travel cards is another fast-developing battleground.
While airline cards lock in loyalty through flight-specific perks and fee-free cancellations, bank-issued cards appeal to “free agent” travellers, offering flexible rewards across multiple airlines and hotels.
Going forward, the report notes that Capital One will be an important player to watch, as it is now the largest credit card issuer in the US, following the completion of its acquisition of Discover in May this year.
“Travellers are being wooed on all fronts,” said Sorensen. “Today, banks and airlines are colliding over who owns the customer relationship.
“For consumers, the question is simple: Are you loyal to the airline, or the bank?”