Thursday, August 6, 2009

Why I think WestJet teamed up with RBC Royal Bank and MasterCard

A conversation on Twitter last night had me answering some questions as to why I think WestJet went with RBC and MasterCard for the credit card that will be associated with their frequent flyer program and here is what I came up with:

- Why RBC? I would have to speculate that RBC was chosen because WestJet wants (and should be) affiliated with a major Canadian bank. It could not be CIBC as they are heavily tied into Air Canada/Aeroplan, BMO has Air Miles and although they had a previous relationship together the new WestJet program will technically compete with Air Miles, TD has put a lot of time and effort into their new cards and in all reality since you can redeem for any travel, the TD points earned can simply be redeemed for WestJet bookings so no real need to tie in with WestJet, which leaves RBC and Scotiabank. Scotiabank is one of the weakest in the travel rewards department while RBC has proven their might in the industry with the Avion, British Airways and Cathay Pacific cards, hence the link up with RBC.

- Why MasterCard? I believe there are a few reasons why MasterCard was chosen. Many people are asking why because RBC is traditionally a VISA supplier. First, WestJet's previous credit card that was tied into Air Miles was a MasterCard and it was quite successful leading me to believe WestJet has a comfortable and good relationship with MasterCard. Second, MasterCard may have pushed WestJet as MasterCard is not partnered with any major airlines in Canada for a direct airline branded credit card. The closest they come to is the Alaska Airlines MasterCard but Alaska only serves B.C. and Alberta, so while they a major U.S. airline, they cannot be considered the same in Canada. Compare this to VISA who have Air Canada, American Airlines, British Airways and Cathay Pacific cards in Canada. With this link up MasterCard will have a major airline to call their own, although soon enough WestJet will not be the only one as there are hints of another major U.S. airline launching a credit card here. Some may say why the RBC and MasterCard connection when there are many other MasterCard issuers in Canada. I would have to answer that outside of BMO with whom WestJet will now compete, all the MasterCard issuers in Canada are U.S. based banks and to team up with them just does not have the same marketing prowess as being teamed up with a Canadian bank, if fact some people may have been angered if WestJet had teamed up with one of the U.S. banks (Keep it Canadian right?)

So there you have it, when you look at all these factors the whole WestJet-RBC-MasterCard connection seems to make sense. Now we just have to wait and see with great anticipation how the rest of the WestJet frequent flyer program looks.

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