Throughout the effort to win public support and regulatory approval for their planned merger, American Airlines and US Airways have argued that the combined airline will be good for "competition, consumers and choice." But just days before the merger's anticipated Dec. 9 closing, changes the airlines have made to a popular credit card reward may end up having the opposite effect.

American Express notified customers this week that beginning in March, its "Airport Club Access Program" for Platinum and Centurion cardholders will no longer include access to American's Admirals Club or US Airways Club lounges.

Instead, the Citibank-issued Executive AAdvantage World Elite MasterCard will be the only U.S. credit card that includes a membership to Admirals Club lounges.

Citi's top-tier American Airlines affinity card previously included the club membership perk, but the new arrangement makes Citi the only U.S. issuer that can offer full Admirals Club membership benefits to cardholders. The arrangement does not change any of the current benefits for Citi/AAdvantage cardholders.

The exclusive deal represents an expansion of Citi's 26 years of working with American Airlines and puts the affinity card at the "top of the market," Ralph Andretta, head of product management for Citi Cards, says in an interview. The agreement with American Airlines also positions Citi as "incredibly competitive" in the frequent flier card sector, Andretta adds.

In addition to the Amex program losing access to the American and US Airways clubs, travelers who are members of the Priority Pass Club — which charges a fee to access various airport clubs — will not have access to Admirals Club in the future, American Express spokesperson Melanie Backs says.

"We are disappointed to report that American Airlines and US Airways elected not to renew this benefit," Amex says in a statement released to its customers.

Speculation in the card industry has centered on what might happen with airline affinity cards in light of the pending American Airlines and US Airways merger, Backs says.

"The airlines industry is changing tremendously and as these things [mergers] happen, it affects various partnerships," she says. "American Express is now concentrating on what we have to offer and in creating a good mix of benefits."

Amex is moving toward creating its own airport lounges at high-traffic airports, called Centurion Lounges. The card brand opened one in Dallas in October and plans to open lounges in San Francisco and New York next year.

Citi plans to counter other lounge offers in the airlines industry through the value it believes the Elite Card will offer.

"People recognizing value will do the math and see that the value is there with this card," Andretta says.

Citi currently offers six different American Airlines-branded affinity cards, most with an annual fee of either $50 or $95. The AAdvantage World Elite MasterCard has a $450 annual fee, but includes access to the airport lounges, which otherwise costs $400 to $500 for an annual pass, depending on a consumer's frequent flier status. Consumers can also pay for the annual passes with frequent flier miles.

The club membership, combined with other rewards like mileage bonuses and free checked bags, offset the annual cost quickly, Andretta says. The card will continue to offer 24-hour concierge service, priority check-in, and various options to earn extra miles on the card.

Andretta could not disclose whether the exclusive membership offer for the Citi card meant that the bank and airline have come to an agreement over what will happen to the bank's portfolio of American Airlines cards once the merger with US Airways is completed.

In May, Citi petitioned the federal judge overseeing the American Airlines bankruptcy to require American to make a final decision to continue to honor the affinity card contract — a move that Citi downplayed as merely a procedural requirement of American's bankruptcy and merger process.

The answer to the card-issuing question likely rests solely on the ability of American Airlines' parent company, AMR Corp., to get out of bankruptcy, and what US Airways has in mind for card portfolios after the airlines merge.

The airlines continue to work out the logistics of the merger, but when things become clearer, Andretta says, Citi would work with US Airways to "fold them into the best value" that Citi cardholders currently obtain at American Airlines.

In an e-mail, an American Airlines spokesperson said the airline has nothing to share at this time regarding what will happen with card issuing once the merger is complete. US Airways did not respond to press inquiries.

But the timing of the exclusive lounge membership in March is a clear signal that the merging airlines have come to some type of agreement on who will issue and process the frequent flier cards in the future, says Richard Crone, chief executive of San Carlos, Calif.-based payments consulting firm Crone Consulting LLC.

"It would fall right in line with how long it would take, about nine months or so [since the merger was made known], to get the other very complex systems, such as passenger registration, in place for shortly after the merger is official," Crone says.

The frequent flier cards represent a "critical function" for the bank because the cardholders view use of the lounge as a prized privilege, while the accumulation of miles operate as "currency available for the banks' and airlines' most valuable customers," Crone adds.

Citi and Barclays, as the issuing banks behind the two airlines' branded cards, understand that frequent flier cards represent the type of value-added service needed to extend customer loyalty and motivate new and current cardholders, Crone says.

"Integration of these cards when the merger is complete is a key," Crone says. "The banks know their most prized customers are at risk if they don't get this right."

Executive AAdvantage World Elite MasterCard cardholders will not have to change anything related to the use of their cards in March, Andretta says.

"They bring their card, plane ticket and identification to the attendant, and they are done [with the process]," Andretta says.

The card operates with EMV chip-and-signature technology commonly accepted in other parts of the world.

As the EMV smart card becomes more prevalent in the U.S. in the coming years, Citi will continue to monitor chip-and-signature vs. chip-and-PIN as technology options, Andretta says.

American Airlines does not disclose how many AAdvantage cardholders it currently serves. Andretta also did not want to venture to guess how many potential US Airways Dividend Miles cardholders could be converted to the American Airlines card after the merger.

"Numbers now and numbers in the future don't really mean much to me," Andretta says. "I believe that if you build a product with great value, they will come."

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