BA climbdown as new deal signed with Amex

Sunday, 21 Jul, 2005 0

British Airways has done a U-turn on its refusal to accept credit card payments on discounted net fares for corporate clients.

It has written to all its key clients saying it will now pick up the tab for credit card transactions, typically 2% or 3%.

The climbdown emerged after BA and American Express announced the renewal of its joint credit card programme. It will be joined by a new co-branded corporate card targeted at small to medium sized business.

The deal represents the healing of a major conflict between the two companies when, in 2002, both sides were taking legal action against the other. Amex claimed the refusal of BA to accept credit cards for corporate net fares was in breach of contract while BA regarded Amex’s merchant rate – traditionally higher than other cards – as too expensive.

The matter was settled out of court last year.

BA said that following a review of its credit card arrangements, and following feedback from clients, it has reversed its decision.

“We have made a change of policy and from October 1 will accept credit cards for corporate net fares,” a spokeswoman said. “We have saved £650 million in distribution costs over the past five years and that remains key. But we must also remain competitive. We have listened to our corporates and based on feedback and a review of cost and revenue, have reversed the policy.”

She admitted the policy had become uncompetitive with clients claiming it made payment processing “time consuming and complicated.”

An Amex spokesman said: “American Express welcomes BA’s decision to resume card acceptance for net fares. This is great news for our customers.”

The new deal with Amex will see SME’s who are members of BA’s OnBusiness programme rewarded with free business travel while employees will also earn BA miles on all of their card expenditure.

“There has been unprecedented growth of SME companies over the past few years and this unique product will enable them to earn the air travel savings that have typically been enjoyed by larger companies,” said vice president head of commercial card UK and Benelux Paul Abbot.

BA head of global sales and distribution Tiffany Hall added: “The SME market is extremely important to BA and we have worked closely with 13,000 OnBusiness customers over a number of years to deliver tailored product to help maximise their travel budgets where possible.”

Report by Steve Jones