It is believed that the nine-year relationship ended because of pressure on margins in a fiercely competitive co-branded credit card landscape.
“Marketing these types of credit cards is expensive, and a lot of banks are looking to discontinue them,” said a source from within the financial industry.
“Marketing these types of credit cards is expensive, and a lot of banks are looking to discontinue them,” said a source from within the financial industry.
“There is a lot competition and the cost of maintaining these programmes has risen 10 to 15 per cent in the past two years.”
The Citibank Cathay Pacific Visa card is one of the city’s more popular credit cards, and is believed to possess more than 200,000 customers.
However, a source said that frequent flyer programme (FFP) credit cards in general may not always be in a bank’s best interests, because of the spending profile of many cardholders, despite above-average usage levels.
“FFP credit cards are popular and are a very popular way of earning miles,” said the source. “But that is obviously a cost for the banks and banks make money on revolving credit. Frequent travellers are not often strong revolvers on credit. You have to look at the cost of the credit cards and any revenue opportunities that exist.”
In addition, the source pointed out that issues surrounding the ease of mileage redemption can play a factor in the performance of FFP credit cards.
“It’s getting harder and harder to get a redemption seat,” said the source. “That impacts the proposition for the cardholder.”
The new Citbank PremierMiles Visa Platinum Card will retain an alliance with Cathay Pacific programme Asia Miles, but will also link with Singapore Airlines’ KrisFlyer, Thai Airways’ Royal Orchid Plus and Northwest Airlines’ WorldPerks.
Together, the four programmes represent 53 airlines.
“Our relationship continues (you will still be able to convert Citi points into Asia Miles) but this particular card product has served its purpose after nine years so it is being withdrawn,” said Cathay Pacific Loyalty Programmes general manager Dominic Purvis. “From our side, we are still working through our options.”
While Cathay Pacific counts mileage arrangements with nine Hong Kong banks, the Citibank product was its only co-branded credit card.
In recent years, a number of airlines and banks have co-operated on co-branded credit card offerings in Asia.
Singapore Airlines operates four co-branded credit cards with American Experess, JCB, Mitsui Sumitomo and Standard Chartered.
Even the region’s low-cost carriers have begun to leverage their activity. AirAsia counts co-brand cards with DBS and Citibank while Tiger Airways offers a co-branded product with UOB.
