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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.

  • ee says:
    26 Oct26 October 06:46

    Shame this Iberia card is only available to Spanish residents!

    • Anna says:
      26 Oct26 October 07:06

      I can’t see anything saying it’s only available to Spanish residents, or are we assuming that their system will only accept a Spanish address?

      I don’t fly enough to have anything more than blue status so would definitely be in the market for one of Rob’s hypothetical cards. Even better if it also came with some of the benefits of the Amex platinum charge card!

      • ee says:
        26 Oct26 October 07:11

        When you start the application process it states “Para cursar su solicitud es imprescindible ser residente en España” along with some other prerequisites.

        • Anna says:
          26 Oct26 October 07:20

          I must have missed that bit. It also says on the Iberia website that you can spread the cost of Iberia ticket purchases over 3 months and that the additional card holder has to spend €200 to get the 4000 avios bonus.

          All a bit moot though if they’re not going to offer it up to UK residents!

  • Nick_C says:
    26 Oct26 October 07:02

    Fast track security?

    Really?

    I thought this only came with OW Emerald status.

  • edd says:
    26 Oct26 October 07:14

    I think the acceptance of Amex is much worse in Spain, isn’t it? I can see why a Visa is more attractive for that market.

    I cannot concieve BA giving away Silver. From a marketing perspective it devalues the aspirational part of miles and points collecting and makes Club Europe less attractive. Operationally it would clog up lounges and leave BA liable to huge costs when the influx of new sapphire members visited lounges elsewhere.

    Like others say, I could imagine 150 tierpoints (‘half the way to bronze’) or 300 TP as annual incentives. But to be more pessimistic, perhaps we really are heading to revenue based qualification and it may be more like ‘1000 Qualifying Euro’ of spend….

    • Rob says:
      26 Oct26 October 07:53

      Remember that Amex Plat gave Cathay Gold (=BA Silver) for free for three years not so long ago. That was when Plat was only £350 and not £450 too.

      • edd says:
        26 Oct26 October 09:22

        Yes, but anecdotally weren’t BA really unhappy at AMEX about this? I’d also heard that it costs BA about $49 a throw when a Gold member visits the Cathay First lounge in Terminal 3- I know Silver lounge access with partners is going to be a lot less, it’s just there’s real cost to BA from offering free status, whereas the actual cost of a 241 is significantly less.

        • Klaus-Peter Dudas says:
          26 Oct26 October 10:12

          That is an interesting number as that is more than the fare component on many of the short-haul flights out of T3. Where did you get that number?

          • Rob says:
            26 Oct26 October 11:07

            The cost of paying for fast track security is probably more than the fate component on super-cheap Eco tickets! BA has to live with it.

            That fee seems right if you think about the quality of the (table served) food and free flowing champagne on the F side.

        • Rob says:
          26 Oct26 October 10:19

          Yes, that’s why it was a ‘secret’ benefit and not mentioned on the UK Amex Platinum marketing page. Head for Points was the only place promoting it.

  • Jeff says:
    26 Oct26 October 07:18

    Since the 0.3% change, card % fees for merchants have crept up with small additional fees being added as well. I don’t know how it is split up, but if we, as a business, take AMEX we are charged 1.9% and settle directly with AMEX unlke using the same card machine taking Visa or MasterCard where we settle with the machine provider. Do they really only end up with 0.3% ?? If AMEX was making a loss on all UK/EU transactions why would they offer these spend bonuses on BA AMEX cards?

    • Rob says:
      26 Oct26 October 07:49

      Avios seems to make certain promos contractual. I spoke to a partner recently who is obliged to run a special deal every now and then.

    • RussellH says:
      26 Oct26 October 13:35

      Good point Jeff. While the likes of Tesco, Shell and the Rail operators will be paying Amex a lot less than 1.9%, it is still going to be usefully more than 0.3% (and how does Amex have an interchange fee anyway, given the the merchant deals direct with Amex?). The fee for a terminal or an online gateway is (certainly was in my day) identical whether Amex was included or excluded, though I imagine that they will have to pay a very small fee to the terminal or gateway operator. But even if Amex are charging a medium sized business just 1%, it is still the case that most of that will be going to Amex.

      With Visa / MC the cost chain is much more complex – merchant fees are set by the merchant aquirer – Worldpay, Elavon, Sage or whoever – not the card issuer (though they will obviously have significant input). So just how much of the 2% that is paid on Visa / MC transactions goes to the card issuer who is issuing the points??

  • Tait says:
    26 Oct26 October 07:22

    Would definitely be dumping the card if it goes to a lower Avios earning rate just for lower tier status. Think many people would love an Avios visa/Mastercard however many people’s yearly major Avios haul would of been on HMRC so that would likely sway decisions after next year with regards to personal credit cards??

  • Maurits Kalff says:
    26 Oct26 October 07:30

    I have a BA Amex Premium card and silver status. I would immediately drop this card for BA Visa Élite card that gives silver status.

  • Paul says:
    26 Oct26 October 07:37

    Interesting thoughts.

    I get my BAPP free as it is a grad fathered benefit of Amex Platinum. Losing it would be a blow but would allow me to churn and possibly save some money. Amex would lose me as a £450 a year customer as I would then churn the platinum too. I am certainly not paying £600 plus a year for any cards or a combination of cards.
    The loss of 241 would be disappointing but my last 4 241 have been used for a return trip to FRA and one way to Cairo. I simply have not been able to plan 355 days ahead and when I did get 4 F seats to KUL I paid well over £2000 in fees. Qatar the came along with £1000 fares to where I wanted to go ( rather than KUL which was a transit point) and I cancelled the redemption booking in favour of silver cards for all, a bucket full of avios for the family account and a much better travel experience.
    What we need in the U.K. is family accounts from American Airlines or Qatar backed by reasonable earning credit cards. Then BA is in real trouble. White company bedding just is simply lipstick on a pig!

    • Rob says:
      26 Oct26 October 07:51

      We have never booked a redemption 355 days in advance and rarely struggle. That includes the 4 CW seats to Dubai this current half term, albeit we are returning on Emirates.

  • Mike says:
    26 Oct26 October 07:51

    I’d pay £2k for a BA Centurion equiv. that gave me BA Gold and the rest 🙂 Not going to happen though!

    • Ronster says:
      26 Oct26 October 12:40

      Rob

      I would be interested in a card offering BA Silver. However its all about the 2-4-1 voucher.

      What BA needs to look at as I mentioned in 2015, is adding a new twist on that

      How interesting things would become if they offered a 2-4-1 voucher, that could be used on ANY oneworld carrier?

      Ronster

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