Wednesday 23 May 2012

Why Credit Card Companies Do not want to tie-up with the airlines in India?


When you have to do a flight booking, it is quite natural to search for the best airfares prevailing on that day across all the airlines and travel companies. It is very seldom that you would not search for the cheap air tickets but rather go for your preferred airline at the very first instance and do the booking. It is precisely this reason of an agnostic consumer behaviour which prevents consumers from being brand loyal that is prompting the credit card companies to end their alliances with the airlines. The recent move of the Citibank and Jet Airways to put an end to their 13 year long alliance of co-branded cards is the result of this consumer behavior.
India being a price-sensitive market, the people in India are willing to leave one airline for the other if that other airline is offering better air tickets rates and deals. Customers are not loyal when it comes to buying the flights. Further, the fragmentation in the industry has restricted the growth in the customer base of a single airline. There is a demand from the customers that they shall be allowed to accumulate their rewards points from the different airlines and redeem the same. The co-branded cards fall short of the customer expectations in this regard since the customers are not given the desired flexibility of accumulating the points and getting these redeemed.
The moves also points to some other facts, such as:
  1. No single airline has been able to gain customer loyalty due to deep fragmentation of the industry.
  2. Credit uptake is again on the upswing and the card companies might be willing to be more flexible for earning greater revenues.

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