After failing to win a tender against ICC-Cal-Mastercard to provide a credit card for El Al Airlines' Matmid frequent flyers club, credit card company Max is using a different format in the aviation industry. Today, the company launched Skymax, a non-bank credit card, with the points accumulated with the card being usable in booking airline tickets.
Tickets can be booked on a special website createdd for Max by Talma Tour and Travels group subsidiary Smartair at sky.max.co.il.
Points accumulated in purchases with a Skymax card can be used to book flight tickets and buy supplementary products (suitcases, seating, etc.) through the special website, with the points serving as a means of payment. Max points and a combination of points and money can be used to pay for the flights on a variety of airlines, including low-cost airlines, offered on the website.
Skymax offers to consumers several advantages. First of all, payment for the ticket includes everything, including airport taxes. In using frequent flyer points from other clubs for bonus tickets, the airport taxes need to be paid separately. Airport taxes range from tens of dollars per ticket to over $100 on flights to London, for example.
Furthermore, there is no restriction on the number points that can be accumulated each month, in the following ratio: NIS 1 is accumulated for each NIS 160 spent, while on payments to the authorities (Israel Electric Corporation, municipal property taxes, water, etc.) the accumulation ratio is NIS 1 per NIS 320. No card fees will not be charged for the first six months, after which a NIS 20 monthly card fee will be charged, i.e. NIS 240 a year. The customer receives a gift of 100 points when joining the club. Each point is worth NIS 1 in buying a flight ticket.
One restriction that Max does impose is that points must be used within three years, similar to the points accumulated by members of El Al's frequent flyers club.
Another interesting point is that points can be accumulated with a Skymax card while also accumulating points in a frequent flyers club through the flights themselves. This means that frequent flyers continue to accumulate points or miles for tickets purchased with Skymax points, depending on the frequent flyers club to which they belong.
Max CEO Ron Fainaro compared Max's product to the open skies policy that revolutionized civil aviation worldwide and in Israel, doubling the number of Israeli passengers to over eight million a year. Many people travel more than once a year. The parallel is that Skymax points can be used for almost any airline, including El Al.
"Open skies haven't reached the credit card companies, which still offer only a partial and restrictive solution," Fainaro says. "Today, we're changing all of the rules of the game with a new credit card that gives the consumer real freedom of choice in buying flights. The consumer can enjoy competitive market prices and maximize the benefit from each point."
Max is embarking on this campaign six months after separating from Bank Leumi and becoming an independent financial concern. According to Max's business model, it does not charge a commission or fee for each flight booked; it relies on the monthly card fees, and mainly on what it calls "loyalty and commitment" that this accumulation format will create among its cardholders, who will increase their use of the card in order to accumulate more points.
Competition with El Al's Fly Card
Max's main competitor, albeit not a direct competitor, because it operates in a format of only one club, is El Al's Fly Card. 330,000 of the 2.25 million members of El Al's frequent flyer club hold a Fly Card. Max intends to attain this number of holders of the non-bank credit card that it is launching today.
The card fees for a Fly Card are NIS 20-40, depending on the status of the card. El Al's point accumulation ratio is NIS 1 for each NIS 250 spent with the card and NIS 1 for each NIS 500 paid to the authorities.
Isracard also recently launches an aviation venture in the form of a credit card for the frequent flyers club of Turkish Airlines, which operates ten daily flights from Ben Gurion Airport to Istanbul, and flies more than one million Israelis a year.
Max's points can be used to pay for tickets as priced on its special website. According to an example cited by the company. NIS 8,000 has to be spent monthly for 11 months to pay for a $180 flight to London.
Fainaro believes that the competition that Max will arouse with its credit cards will put pressure on prices, and that "Within a year, I believe that a competitor on a similar format will arise."
Published by Globes, Israel business news - en.globes.co.il - on November 17, 2019
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