Star Alliance, HSBC launch an Australian credit card

The new Star Alliance credit card, first teased in May of this year, is now live in Australia. Launched in partnership with HSBC, the first of its kind co-brand credit card allows members to earn Star Alliance Points and elite status with seven partner airline loyalty programs.

Star Alliance is delighted to launch this industry-first loyalty product together with HSBC and Visa. This is very much consistent with a key strategy of Star Alliance which is to offer a loyalty proposition that others talk about.

– Jeffrey Goh, CEO of Star Alliance

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Partner earning potential

Cardholders will earn one Star Alliance point for each Australian dollar spent, up to $3000 per billing cycle. After that earning drops by half.

Points can be transferred to the loyalty programs of Air Canada, Air New Zealand, EVA, Singapore Airlines, South African Airways, Thai Airways, or United Airlines. The transfer process incurs a toll of 20% from the points; 1,000 Star Points transferred would lead to 800 points in the partner program.

The math is not overly complicated, but the changing numbers comes off as more challenging than it likely needs to be. The 0.8x multiplier used – while almost certainly tied to HSBC’s costs to make the transfers and what the company can recognize in revenue from the spend transactions – feels like an insult to users who have saved the points are are now finally ready to use them, only to immediately be hit with a reduction in the balance.

Individual programs could offer promotional bonuses to encourage transfers at a higher rate, but that would be on the airline loyalty teams to initiate.

As for the other 19 members of Star Alliance, the group’s Director of Loyalty Renato Ramos pointed out that redemptions remain available through the seven transfer partners. He also noted that the seven airlines participating directly represent 92% of the traffic carried by Star Alliance to and from Australia.

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Solving the status-lite co-brand conundrum

Typically a co-branded credit card offers status-lite options to consumers. That could be in the form of waived fees (e.g. checked bags, priority boarding), lounge access, award pricing discounts, or increased access to award inventory. The cards can also deliver add-on benefits for those who already hold status. Delivering those benefits via a card not tied directly to a program could be more challenging. To solve that challenge, Star Alliance chose to tie those benefits to a spending threshold, and grant status in the partner programs directly.

Ramos is especially keen on this benefit of the card, stating that “Status is the real hero here,” during a media briefing. He also noted that earning status solely on credit card spend is not something previously offered. Even with the premium United Airlines cards, for example, a minimum number of segments flown is required.

New cardholders receive a fast track to elite status with any of the partners. A$4,000 spend will get the equivalent Star Alliance Gold tier in the program for the first year. In the following years members must spend A$60,000 to keep the Gold status. At A$30,000 spend holders will earn Silver status in the partner program.

A bigger future for Star Alliance in Australia

Australia is, for now, the only market where this offer is being rolled out. Ramos does not believe the alliance will seek other markets in the near future. And he especially emphasized that the group would not seek to launch the product in a market where an existing alliance member is based.

This means that Star Alliance will not seek to add an airline member in Australia anytime soon. Virgin Australia would be the only truly viable candidate at this point. And Ramos acknowledged that “Conversations happen every day” around potential new members. But the group are also “happy with the offer we have to the market with 26 partners” and Australia would now seem to shift to the bottom of the priority list.