Membership Rewards Will End Relationship with Continental
September 15, 2010, 11:46 am
By RON LIEBER

Updated 12:25 p.m.

American Express announced this morning that it would no longer allow its charge card customers to redeem their Membership Rewards points for frequent flier miles in Continental’s OnePass program come Sept. 30, 2011.

Why would the company do such a thing? Well, it’s almost certainly not Amex’s doing. Instead, it has to do with the fallout from the coming merger of Continental and United.

For decades now, American Express charge card customers have hoped for a simple, permanent way to turn their points into miles on American or United Airlines. Once Continental and United announced their merger, United customers realized that they might finally be able to pull off this transfer.

First, they could move a bunch of Membership Rewards points into a Continental OnePass account. Then, once the merger was finalized and OnePass and United’s Mileage Plus programs were combined, the customers would have successfully turned Membership Rewards points into Mileage Plus miles (or whatever the frequent flier program of the combined airline will be called).

This creates the possibility of a lot of increased liability for miles for the combined airline, which isn’t a good thing under any circumstance. But the party that was probably most instrumental in this move was Chase, which issues credit cards that earn both United and Continental miles.

If you’re overseeing Chase’s card business, you don’t want customers of either airline to be able to also earn miles via an American Express card. And since you at Chase probably spend hundreds of millions of dollars each year buying miles from the two airlines, you can effectively tell them to end the relationship with American Express, or else.

Is that what happened here? No, said Gail Hurdis, a Chase spokeswoman. “Our cards are clearly differentiated and the value they offer the Continental traveler is unmatched in the marketplace,” she said in an e-mail message.

Whatever it is that went on behind the scenes, kudos to American Express for giving a year’s warning on this (or to Continental, or whomever it was that insisted on the early notice).

Amex is also trying to hang on to some Continental and other airline fans with a new benefit for Platinum and Centurion (a.k.a. “Black Card”) customers. Starting December 1, you can register your favored airline with Amex and it will waive up to $200 in fees (like those for baggage checking, in-flight food purchases, airport club day passes and flight changes) with that airline each year.