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Iberia drops Amex, gives STATUS with its new credit card – BA to follow?

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I recently wrote this l-o-n-g article on how I saw the future of airline credit cards in a world of 0.3% interchange fees.  In summary, I expected to see higher fees, lower miles earning but better benefits – I even speculated that airline status as a card benefit may be on the way.

Three months later, Iberia has done it.

Before I come on to that, let’s look back.  In early 2015, American Express held an investor day in New York which I covered here.  At that event, it was announcing a new IAG contract.  This would include launching an Iberia American Express card, to replace the existing Amex / Visa combination. It never happened.

Two year later, Iberia seems to have dumped American Express.  Whatever deal was signed appears to have been torn up.  This is not surprising, since co-brand Amex cards make little sense with a 0.3% interchange fee.  An airline is better off partnering with Visa or Mastercard because they have far better acceptance in stores and have the same 0.3% interchange fee.

The new Iberia cards are the way forward

It is rare that Iberia shows you the future, to be honest.  They have delivered here though.

Iberia has launched a new premium credit card called Iberia Icon.  It is ONLY available as a Visa.  Goodbye American Express.

It will earn 0.5 Avios per €1 spent.  This isn’t huge, but is probably the maximum that can be funded given 0.3% interchange fees.

There is a fee of €90 per year, waived in year one.

There is a sign-up bonus of 15,000 Avios which is very generous for a €90 fee card.  You get an extra 4,000 Avios if you add a supplementary card.

Full details are on this website, in Spanish.

But here is the key ….

New cardholders receive Iberia Plus Plata status – equivalent to British Airways Bronze status or oneworld Ruby status – immediately when they sign up.

After the first year, you will keep your status as long as you spend €9,000 per year, of which €100 must be on iberia.com.

Iberia Plus Plata / oneworld Ruby status doesn’t give you lounge access.  When flying BA, however, you would get access to business class check-in desks, priority boarding, 25% bonus Avios on your flights and free seat selection seven days before departure.  Not bad for €90 per year.

There are some other small benefits too – Avis Preferred Plus status, which comes with free car upgrade and free additional driver, and access to the VISA Hotels Luxury Collection.

Will British Airways follow?

These Iberia changes are a very surprising development.  Will British Airways follow?  It’s possible.

The flow chart is simple:

As I reported here, Amex recently lost what is (almost) its final appeal against co-branded credit cards being included in the 0.3% interchange fee cap imposed on Visa and Mastercard.   Only Amex own-brand cards can now charge shops high fees.

Are the BA Amex cards now loss making for Amex?  At best, on the free card, they are paying Avios 0.75p for Avios when you spend £1, yet only receiving 0.3p in pseudo-interchange fees (topped up by IT charges and interest payments and FX fees, knocked down by bad debts and admin costs).

If BA switched to Visa or Mastercard, there would be the same cut of interchange fees to play with BUT the cards could be used in far more places, increasing overall billings.

The BA Amex cards currently generate over £1 billion per month in billings.  That should mean a £10m+ monthly income stream to Avios, but presumably a far smaller – following the recent EU ruling – stream of profit into Amex.  Something has to give.

Conclusion

It will be fascinating to see how this plays out.

The Iberia card is pretty much exactly what I predicted would happen given the new market dynamics.

The questions for HfP readers are these:

Would you give up your free BA Amex with 1 Avios per £1 for a BA Visa paying 0.5 Avios per £1, with a £75 fee, but coming with BA Bronze status?

Would you give up your BA Premium Plus Amex with 1.5 Avios per £1 for a BA Visa paying, say, 0.75 Avios per £1, costing £195, but still coming with a 2-4-1 voucher and adding BA Bronze status?

Would you take out a new BA Elite Visa costing £495 but coming with 1 Avios per £1, a 2-4-1 voucher and giving BA Silver status?

None of these cards currently exist, of course. I made up the commercial details – I don’t have any inside information – but I reckon they are not far from where we will end up in a few years.

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Category

British Airways American Express, British Airways and Avios, Iberia and Iberia Plus

Comments (138)

This article is closed to new comments. Feel free to ask your question in the HfP forums.

  • James says:
    26 Oct26 October 05:20

    Is the Amex paying 0.75p per avios figure also made up? I can’t believe they would pay that much.

    To answer the questions, I don’t particularly care whether a card is a Visa or an Amex.

    However, I’d rather pay £495 to go on a TP run and earn silver status that way, rather than paying it to a card company. When you go on a TP run, you also get a flight and some food and drink (in the lounge)….

    As I am unable to use 241s I’m not sure how to value them in the context of the £495 though I can see how they might be worth that if I could use them.

    • Rob says:
      26 Oct26 October 07:03

      Amex pays more than 0.75p I understand.

      Avios seems to pay out 0.5p to 0.55p per point when redeeming. The company makes 20% profit and has massive overheads. I doubt anyone pays much under 1p.

    • Chris Cannon says:
      26 Oct26 October 07:40

      Please show me how silver is achieved for £495 on a TP run. This would be very handy

      • Rob says:
        26 Oct26 October 07:47

        Trickier than it used to be, I admit. Even the Tallinn runs earlier this year were still £1 per TP. Was easier when AA gave 210 TP for business class.

      • Klaus-Peter Dudas says:
        26 Oct26 October 10:04

        But even if you can’t get all of the way to Silver for £495, it may be enough to push you to silver when combined with the travel you’d do anyway.

        Paying £495 to get Silver would not be interesting at all to me as I can hold Silver anyway with the travel I do, I’d rather use that money on some upgrades to Premium Economy (all Economy travel policy at work but allowed to upgrade / pay the difference). If the £495 get me 600 TPs, however, then I’d be really interested as Gold is very borderline for me.

  • David says:
    26 Oct26 October 05:24

    There is another benefit Iberia credit card holders get – which they have had previously and seems to be carried over onto these new cards – a 10% discount on Iberia ticket bookings!

    This would be very welcome for BA to follow (I say this as someone who still mourns the 10% shareholder and bmi diamond club member booking discounts on BA flights)

  • Genghis says:
    26 Oct26 October 05:33

    I guess many HfPers have some kind of status earned through flying anyway meaning the proposed cards would not be as valuable. Offering TPs linked to spend (that you proposed in your last article) would give most people something to aim for.

  • Polly says:
    26 Oct26 October 05:36

    Amazing move by Iberia. But surely this is an IAG decision…not Iberia??? Would they be thinking along the same line for BA sooner than later as a hugely increased income stream?
    Q1&2 are possible if you have some paid flights that can get you to silver,,plus similar bonus system
    Q3 def a possibility, could be a winner. ONLY if they continue to give a similar bonus that the platinum currently earns, and the current referral bonus system etc. Pro rata refunds etc
    After all their income will be way more than when it was an Amex product. lets hope it doesn’t come to this too soon.

  • Matt says:
    26 Oct26 October 05:54

    It depends how it’s done – if you get the card and that adds 300TP to your account then that would be great. If you get the card and that puts you at bronze but you still need 600TP to get to silver then that’s (almost) worthless.

  • JamesB says:
    26 Oct26 October 06:20

    Your future predictions are based on a BA perspective which assumes the status quo in the credit card market. While these are likely to be true in the short term what about the medium to long term? Is it likely amex will wave the white flag to visa and mastercard? I would doubt it, I think it is more likely they will aggressively target greater amex card acceptance in the UK and EU which are the only places these new 0.3% fees are an issue to best of my knowledge.

    In answer to your questions for HFP readers going forward, probably NO in all respects as far as I’m concerned. Avios offer poor value relative to revenue flights at the moment in many, if not most, cases and this value will decrease with lower card earning rates and almost certain future devaluation in avios. The other benefits are not attractive either, most BA FF will have silver or better status anyway and nobody with any sense would pay €90+ for bronze if they are light BA travellers. The sense of these cards to me will largely depend on the sign up bonus and whether they can be churned.

    • W says:
      26 Oct26 October 08:58

      This is a good point. I’m a very infrequent flyer so status doesn’t mean anything. It wouldn’t attach me to a product.

  • Kauppias says:
    26 Oct26 October 06:30

    What they need to offer to make the status appealing is xxx TP points to give the status and also make it worthwhile to those going for higher status. So if the card came with 300TP one may be intrested if going for silver or gold but bronze is not really useful if youre allready gold 🙂

  • Michael C says:
    26 Oct26 October 06:35

    Visa a lot easier for paying taxes etc.!
    A BA Elite at that price (Avios aside) would be competing with Amex Plat + it’s lounge access & various card-matching aspects.

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