American Airlines and American Express today announced a new co-branded corporate card specifically targeted at midmarket companies and offering cash rebates as high as 10 percent on up to $1 million in annual AA bookings.
Available in the third quarter, the American Express Business ExtrAA Corporate Card will provide a quarterly rebate based on all AA bookings in first, business and full economy class, as well as certain additional refundable coach tickets, regardless of point of sale. Despite a growing interest in lower-bucket, nonrefundable fares excluded from the program, "eligible fares represent 50 percent to 65 percent of a typical midsize company's air spending," according to Anre Williams, American Express Corporate Services senior vice president and general manager for the middle market.
AA vice president of global accounts Frank Morogiello added that American "understands the pressures" facing budget-minded corporate travelers and that "we are not trying to get them to buy up" from cheaper, nonrefundable fares.
Though quarterly cash rebates can run as high as 10 percent, those companies with an existing American Airlines discount program only can earn up to 5 percent in additional rebates.
The AA-Amex card is integrated with BusinessExtrAA, American's small-business loyalty program. Unlike rebate eligibility, all spend on AA contributes to BusinessExtrAA point accrual, which earns clients certain rewards, including free tickets, upgrades and airport lounge access. The card also entitles corporate users to pre-negotiated supplier discounts on a bevy of products and services through the Savings at Work program.
American Express noted the co-branded card "carries the core features" of reporting, flexible billing and payment, employee controls and other expense management features. "Most airline co-branded cards are designed for individuals or small businesses," Williams said. "This is for the middle market and has rebates, which make CFOs happy."
American Express defined the target market, encompassing "hundreds of thousands of companies," as those companies with annual revenues between $10 million and $1 billion. American defined midmarket as companies spending up to $1 million annually on AA tickets. Any spend over $1 million in a given year will not count toward the rebate. There is no minimum threshold.
"This offers us an excellent opportunity to increase penetration in the critical midmarket, traditionally tougher to reach," Morogiello said. "We have cut a layer of the salesforce, so this card helps us get into the marketplace where our own breadth of coverage would not allow."
Amex and AA dismissed any link between this new program and an earlier distribution arrangement
(BTN, Nov. 21, 2002).
American Express would not comment on potential modifications to the co-branded card agreement in place with Delta Air Lines, other than describing the Delta arrangement as "consumer and small business."
Qualifying flights are limited to American, American Eagle and American Connection, excluding services offered by all AA codeshare partners.