Issued: August 25, 2004
Contact: Jay Sorensen
For inquiries: 414-961-1939
No-Annual-Fee Credit Cards in the Airline Industry
Industry Analysis from IdeaWorks
Co-branded card offers from American, Delta and United are not easily found
and are not promoted alongside their fee-based credit cards.
The IdeaWorks Company has reviewed the no-annual-fee credit cards associated with
the frequent flyer programs of 18 U.S. based airlines. The airlines included in the survey
are: AirTran, Alaska, Aloha, America West, American, ATA, Continental, Delta,
Frontier, Hawaiian, Independence Air, jetBlue, Midwest, Northwest, Southwest, Spirit,
United and US Airways. As a group, these airlines represent over 96% of the revenue
passenger miles flown by U.S. based airlines.
All of the original co-branded credit cards introduced by the major airlines assessed
annual fees to cardholders. While the rest of the credit card industry switched to no-
annual-fee programs, the major airlines were unique in their continued ability to charge
annual fees. However, the ever-competitive airline industry is finally acknowledging the
pressures of the credit card marketplace with 3 major airlines now offering no-annual-
fee cards to meet the growing demands of fee-adverse consumers.
“Airlines typically have held back from offering free credit cards to their customers,”
said IdeaWorks president Jay Sorensen. “But cracks in the wall are beginning to show
with the appearance of no-annual-fee offers from a growing number of airlines.”
The no-annual-fee credit cards offered by American, Delta, Frontier, Midwest and
United are described on page 4 of this industry analysis.
Overview of Co-Branded Credit Cards
Co-branded credit cards allow frequent flyer program members to earn extra miles from
the charge activity associated with card use. These credit cards are currently offered by
all major airlines with a growing number of new entrant and low-cost carriers now
offering the cards to