Magazine article American Banker

New Product Seen Giving AMEX Edge in Airline Fight

Magazine article American Banker

New Product Seen Giving AMEX Edge in Airline Fight

Article excerpt

American Express Co. and Delta Air Lines Inc. have developed a reward card that observers called the most expensive in the airline cobranding sector and evidence that the companies' partnership would survive Delta's proposed acquisition of Northwest Airlines Corp.

The Delta Reserve card, which Amex and Delta unveiled Tuesday, carries a $450 annual fee. David Rabkin, the vice president of Delta cobrands for Amex, called the product "a super-premium card, the most elite card in the market," in an interview this month.

Amex will not "market it as broadly" as its other airline reward cards, "because we don't think that it's a card for everybody," he said. "We're pretty confident that people ... will find us."

Cardholders can accumulate "medallion-qualifying miles" - those that earn automatic seat upgrades, companion tickets, and waived baggage fees - at a faster rate than other cards offers. Also, the cardholders can share those miles with family members and friends. Other perks include airport-lounge access, concierge service, and priority boarding and security lines.

Issuers are eager to maintain their airline cobranding programs, one of the few that can still command fairly high annual fees and attract affluent customers.

The Delta-Northwest deal has raised the question of whether Amex, which issues Delta's SkyMiles cards, or U.S. Bancorp, which runs the Visa-branded WorldPerks card program for Northwest, would win control of a combined program.

"I try not to bet against Amex," said Doug Miller, a senior analyst at the New York market research and consulting firm Corporate Insight Inc. "If the merger goes through, I certainly see them making a better offer," though "you never know how these agreements are written."

One thing that is clear is "Amex doesn't think it's about to get boxed out of being the Delta issuer," Mr. …

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