Korean Air’s Sleek New Credit Cards End Boring Airline Designs

19-May-2020 Intellasia | Forbes | 6:02 AM Print This Post

Out are boring credit card designs with random motifs and patterns. In are Korean Air’s new designs from sleek to geek: window views of a sunrise or the aurora borealis, a card resembling a boarding pass or luggage tag, and technical designs based on aircraft rivets.

Korean Air hopes looks and perks will tempt consumers to its first directly issued credit cards, giving the airline greater control and value in the lucrative mileage and card businesses.

The four cards comprise three general types and one for elite “Morning Calm” frequent flyers.

General cards are in four designs: The Pass (boarding pass with flight number KE901, Seoul to Paris), The Tag (luggage tag barcode with KE707, Seoul to Tokyo), The Craft (fuselage rivets with markings for KE017, Seoul to Los Angeles) and The Wing (flaps with KE017).

The elite card, called “The First” has two designs: Sunrise and Aurora.

Korean Air used to rely on about 10 banks issuing cards with Korean Air Skypass mileage benefits. Those loose partnerships required less work of Korean Air but also gave limited benefits.

Credit card earnings bring revenue diversification at a critical time. Korean Air does not expect a meaningful COVID-19 passenger recovery until at least autumn.

Revenue from credit card partnerships is softening the blow for Korean Air minority owner and joint-venture partner Delta Air Lines DAL.

“Our card spend has not fallen off nearly as dramatically,” Delta CEO Ed Bastian said last month in comparison to ticket revenue.

Delta reported $992 million in revenue during the first quarter related to loyalty programme marketing agreements, mostly tied to credit card spend. It has a long-term exclusive relationship with American Express AXP. Loyalty revenue has far higher margins than flying.

Most credit card spend is for everyday ground-based purchases, although airline miles are the attraction on a co-branded card like Delta-American Express.

American Express CEO Stephen Squeri said last month that most “of our co-brand spend is off the co-brand partner. So if you think about Delta, you think about Marriott, you think about Hilton, less than 10 percent of that spending is actually at those properties.”

Korean Air’s new offer is locally termed a private label card, which in the US can only be used at the company issuing the card. But in South Korea private label means the company, and not banks, drive the card. Korean Air’s card is in partnership with Hyundai Card, and they started work last year.

Korean Air wants its new card to be used widely. Transactions are processed through MasterCard MA and there are bonuses on spend at department stores and golf courses.

There is no large sign-up bonus, but basic earning is slightly higher at one mile per 1,000 won (81 US cents) spend. Many of the bank-issued Korean Air cards give one mile per 1,500 won ($1.22). Korean Air is adding further benefits like lounge coupons and a ticket discount voucher.

The Sunrise and Aurora cards are only for elite frequent flyers and have further benefits, but also higher annual fees at 500,000 won ($405). The other cards have annual fees from 30,000-150,000 won ($24-$121).

https://www.forbes.com/sites/willhorton1/2020/05/17/korean-airs-sleek-new-credit-cards-end-boring-airline-designs/#3a9810af5a36

 

Category: Korea

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