Forget free flights — the next type of frequent-flier reward may be the fee-free flight.
As airlines have tacked on fees for various services, passengers have grown disgruntled, and the banking companies that issue cobranded frequent-flier cards have seen the usefulness and marketing power of these programs decline.
JPMorgan Chase & Co. and Continental Airlines Inc. are now trying to appeal to consumers by waiving checked-bag fees for some cardholders. Observers said the move could prompt other carriers and issuers to roll out additional types of airline cobranding rewards.
Continental, a Houston air carrier, said Tuesday that it will no longer charge a $15 checked-bag fee to passengers who have one of its frequent-flier credit or debit cards issued by JPMorgan Chase. The airline said cardholders will still have to pay $25 to check a second bag, unless they have Continental's Presidential Plus World MasterCard; these cardholders will be able to check two bags per flight at no charge. (The card carries a $375 annual fee.)
Continental also said it will waive checked-bag fees for customers traveling with JPMorgan Chase cardholders, if they are listed on the same reservation and check in at the same time.
Chris Theoharides, the president of the card advisory service Advantage Consulting Group Inc., said in an interview Wednesday that waiving checked-bag fees "is something that will probably go a long way with the cardholders... A lot of consumers are getting fed up with a lot of the fees charged by airlines now."
And other issuers are likely to follw suit, Mr. Theoharides said.
"Anytime an airline can add unique benefits for its cardholders on top of the miles they earn, it always creates strong loyalty," he said. "If it's something that other airlines and issuers believe helps stimulate loyalty and attraction," such rewards are "absolutely a benefit you'll see put out on other airline cards, and it might end up becoming a standard," as priority-boarding privileges are now.
Mr. Theoharides, who has advised several airlines and issuers on their cobranding relationships, said that Continental is likely to absorb the fees rather than have JPMorgan Chase pay them. (Spokeswomen for Continental and Chase would not discuss the financial arrangements.)
Continental said the primary reason for introducing waived-fee rewards is to benefit existing cardholders, though it also hopes to attract additional cardholders.
Mark Bergsrud, Continental's senior vice president of marketing programs and distribution, said in a press release Tuesday that "waiving the first checked-baggage fee offers a significant benefit to" cardholders.
Stephanie Jacobson, a spokeswoman for JPMorgan Chase, said the waived-fee rewards will provide a "great value for existing customers and hopefully will show added value for potentially new customers as well."
JPMorgan Chase, which also issues United Airlines Inc. cobranded cards, does not offer similar rewards with these cards, and Ms. Jacobson said she would "not speculate" whether the banking company might do so.
Other major issuers said Wednesday that they do not offer similar rewards. A spokesman for Barclays PLC's U.S. card division, which issues US Airways Group Inc. cobranded cards, wrote in an e-mail that waivers for baggage or other fees are "not currently a benefit" for cardholders.
A spokeswoman for American Express Co., which issues Delta Air Lines Inc.'s Skymiles cards, wrote in an e-mail, "We do not have a similar program."
Spokespeople for Citigroup Inc. and U.S. Bancorp did not return calls.