Could Big Changes Be Coming Soon to American Airlines Credit Cards?

Along with the recent news of Capital One buying Discover®, there could be more big changes happening in the world of credit cards. A March 4 report from Bloomberg said that American Airlines wants to make more money from its airline credit cards -- and it's in talks with its partner banks to renegotiate its credit card deal.

Let's look at what it might mean for airline frequent flyers and credit card customers if American Airlines makes changes to its cobranded AAdvantage® credit cards.

Big news from American Airlines Investor Day 2024

On March 4, 2024, American Airlines hosted its annual Investor Day where it gave a presentation to stock market analysts, investors, and airline industry journalists to discuss the company's plans for 2024. One of the interesting news items to come out of this Investor Day was that American Airlines is renegotiating its credit card deal.

American Airlines is unusual compared to other U.S. airlines, because it works with two different banks for its frequent flyer program credit cards: Citibank and Barclays. Most airlines only partner with one bank at a time. American Airlines' Chief Commercial Officer Vasu Raja was quoted in Bloomberg as saying that the airline wants to work with "a bank that can create the largest branded credit card" and wants to increase its revenue from cards to 10% in 2023-2026 (up from 7% during 2019-2023).

Does this news mean that your American Airlines credit card might be getting replaced, or getting a new logo? Not exactly. American Airlines has not yet announced any specific changes to its card partnerships. It might keep working with both Citi and Barclays. Any changes to its credit card deal might happen behind the scenes in ways that customers won't hear about right away. But there could be some exciting changes on the horizon.

How could AAdvantage® credit cards change?

Another tidbit from the American Airlines Investor Day was that the airline is currently earning 80% of its revenue from AAdvantage bookings, and from "premium content" (higher-priced tickets that are more expensive than basic economy). That's up from 70% in 2017. This trend means that frequent flyer programs are becoming more important to the airline industry, and that airline customers are willing to pay extra for more legroom and a better experience.

Possible future changes to American Airlines credit cards and the AAdvantage program could help accelerate this shift to premium travel. The airline recently announced that, starting with tickets issued on May 1, 2024, AAdvantage miles and Loyalty Points (which help earn elite status) can only be earned by booking directly with American Airlines, eligible partner airlines, or preferred travel agencies.

American Airlines wants to own a larger portion of its customers' bookings -- that likely means less money for "non-preferred" travel agencies, but more rewards for loyal customers. The company's Investor Day slide deck showed a few ideas for how AAdvantage is changing, starting in 2024:

• Make it easier for AAdvantage members to earn frequent flyer miles
• Offer exclusive benefits, redemption opportunities, and premium content (higher-value tickets and upgrades) to customers with elite status
• Offer more ways to redeem AAdvantage miles, including cash and miles redemptions for events, experiences, and vacations

American Airlines ultimately wants its customers to deepen their relationships with the airline. The airline makes more money -- and can offer customers more value -- when customers buy more than just basic economy from a discount travel agency. By buying higher-fare tickets directly from American Airlines, by joining the AAdvantage program, and getting elite status, customers can unlock the most value from their airline experience -- especially when using American Airlines credit cards.

What the AAdvantage changes mean for the airline industry

No matter which logos are on the front of the AAdvantage cards, this news from American Airlines could ultimately be good news for airline credit card customers. Airlines are likely going to keep giving better and better deals to their most loyal customers, while gently encouraging cost-conscious customers to spend a little extra for a higher fare class.

If you're a budget traveler who always buys the cheapest nonrefundable basic economy ticket you can find, this shift in the airline landscape might be sad news for you. But if you're a frequent flyer who enjoys navigating the latest travel rewards credit cards, this might be exciting. If you enjoy the perks that come from airline elite status, and if you're willing to spend a bit more on airline credit cards to earn miles and free upgrades, the future of airline credit cards could help you get even more value from your travel experiences.

Bottom line

This news about American Airlines renegotiating its deal with banks is a sign that the airline is trying to get more creative and drive more business with its AAdvantage® credit cards. And since airlines are always following trends and trying to keep up with their competitors, that means there could be similar changes coming to other airline credit cards and frequent flyer programs.

Most of these changes could be good for airline credit card customers -- perhaps creating more value-added premium travel experiences for people who are willing to commit to booking more flights with their favorite airlines.