Ansett and banks still at nil all

THE demise of Ansett has raised questions as to the arrangements banks and credit card providers have with their alliance partners.

Both Westpac and BankWest had an arrangement with Ansett whereby bank customers were given frequent flyer points – Westpac through its Global Rewards program offered on its credit cards and BankWest through its Jetaway Home Loan and credit cards.

Other banks also were left exposed through the collapse of Ansett, either through direct loan facilities with Ansett or through the Global Rewards program.

While Westpac and BankWest have been quick to reassure customers that efforts are being made to recoup and honour frequent flyer points issued through joint arrangements with Ansett, they remain coy as to what other arrangements the banks hold citing commercial confident-iality.

Following the collapse of Ansett, Westpac spokesman David Lording revealed to Business News that the bank had paid $200 million for frequent flyer points on behalf of customers since the Ansett alliance was established in 1995 – an amount growing at the rate of $10 million a month.

Yet, while the bank was paying for the points, ownership of the points rested with the credit card holders. They have now become creditors to Ansett, apparently leaving Westpac with nothing to show for the money it had spent.

Mr Lording said Westpac was very concerned with the position Ansett had left it and its customers in.

“We are taking the issue very seriously. We are currently in negotiations with Ansett on behalf of our customers to recover the points,” he said.

While the bank has spent big money with Ansett, the value of the frequent flyer points still to be redeemed remains unclear.

Besides the money Westpac stands to lose through the Global Rewards Program, the bank also has a direct exposure of $6 million with Ansett in the form of loans.

While the bank has shown its hand in relation to the Ansett all-iance, it would not provide de-tails of the arr-angement it has with General Motors through its Holden MasterCard.

Unlike the Ansett alliance, which is administered by Ansett, the Holden MasterCard offers a rebate system, with the rebates being held by the bank on behalf of the customers.

However, rebates earned by card holders through purchases at a array of national retailers can only be used toward the purchase of a new Holden merchandise – not unlike the sole arrangement between Westpac and Ansett through the Global Rewards program.

A Westpac spokesman said it was unlikely that Holden would ever go the way of Ansett.

“It is not in any way shape or form like the Ansett arrangement. They (Ansett and Holden) are in completely different industries. Its like comparing apples with oranges,” the spokesperson said.

“However, the bank would have to make a call as to what it will do in such an event.”

While Westpac was happy to reveal what it had spent with Ansett, the bank was unwilling to divulge how much is being paid to General Motors for the rebate scheme.

“We cannot go down that road. They are confidential private agreements,” the spokesperson said.

The Commonwealth Bank also cited commercial confidentiality when approached by Business News as to the arrangements it had with its aligned partners through its True Rewards programs.

“We are not allowed to divulge any information on that. They are confidential private arrangements,” a spokesperson said.

“However, if any of the businesses fold, we will still keep the points.”

BankWest had to withdraw its Jetaway Homeloan from the market but has made a commitment to its customers to channel the points into other reward programs.