Case Study 8: DIAL’s Strategic Entry into Co-Branded Credit Cards (CBCC)

Problem Statement / Strategic Rationale

GMR, as the operator of India’s busiest airport, Delhi International Airport (DIAL), presides over a massive, captive, and high-value ecosystem of millions of passengers annually. Despite this, the group’s relationship with these passengers was largely transactional and limited to their time at the airport. This presented a significant untapped opportunity:

Unmonetized Customer Base: A vast pool of affluent and high-spending passengers was using other banks’ credit cards for their travel and retail expenditures at the airport and beyond. GMR was not capturing any value from these off-platform spends.
Lack of a Loyalty Ecosystem: Without an integrated loyalty program or financial product, there was no mechanism to build lasting customer engagement or brand loyalty beyond the physical airport experience.
Missed Data Opportunity: GMR had limited insight into the broader spending patterns of its passengers, which hindered its ability to personalize services, optimize its retail offerings, and create new revenue streams.
Need for New Revenue Streams: There was a strategic imperative to develop new, high-margin, and recurring revenue lines that were not solely dependent on aeronautical or traditional non-aeronautical income.

Approach

To address this, the leadership team undertook a comprehensive initiative to launch a co-branded credit card (CBCC) program. The approach was methodical, involving a detailed design of the business model, a rigorous partner selection process, and the creation of a compelling value proposition.

A Tri-Partite Partnership Model: The strategy was built on a partnership between three key entities:
- GMR/DIAL (Co-Brand Partner): Responsible for providing the brand, access to its large passenger database, and exclusive airport-related benefits and privileges.
- Issuing Bank: A partner bank would be responsible for all financial aspects, including credit underwriting, card issuance, and managing the financial receivables.
- Card Network: A network partner (like Visa, Mastercard, or RuPay) would provide the payment infrastructure and support the program with their global acceptance and marketing muscle.
Robust Financial and Business Model: A detailed business plan was created to ensure the program’s profitability for GMR. The revenue model was designed to capture value from multiple sources:
- Interchange Fee Share: GMR would receive a percentage of the merchant discount rate (MDR) charged on every transaction made with the card, both at the airport (“on-us” spend) and outside (“off-us” spend).
- Fee-Based Income: GMR would receive a share of the joining fees and annual fees paid by the cardholders.
- Network Incentives: The selected card network partner would provide significant financial support, including upfront payments, marketing funds, and volume-based incentives to drive card acquisition and usage.
Rigorous Partner Selection: A critical part of the approach was a detailed and data-driven process to select the most suitable card network.
- Comparative Analysis: A thorough comparison was conducted between major networks, including Visa, Mastercard, and RuPay, evaluating them on financial offers, brand fit, and marketing support.
- Negotiations: Extensive negotiations were held to secure the most favorable commercial terms, including minimum revenue guarantees and marketing commitments.
Compelling Customer Value Proposition: The card was designed to be highly attractive to frequent flyers and airport users by offering a unique set of benefits:
- Integrated Loyalty Program: A rewards program where points could be earned on all spends and redeemed for airport services.
- Exclusive Airport Privileges: Benefits such as complimentary lounge access, priority check-in, and discounts on airport parking, food & beverage, and retail shopping.
- Tiered Offerings: The plan included launching multiple card variants (e.g., premium and super-premium) to cater to different customer segments.

Impact and Projected Outcomes

The co-branded credit card program was projected to have a significant and multi-faceted positive impact on GMR’s business.

Creation of a Significant New Revenue Stream: The program was forecasted to be a major contributor to GMR’s revenue. The financial model projected a net revenue of approximately ₹1,500 Crores for GMR over 10 years, with a projected Equity IRR of over 100%.
Building a Digital and Data-Driven Ecosystem: The program would provide GMR with invaluable data on passenger spending habits, both inside and outside the airport. This data would enable highly personalized marketing, optimization of the retail environment, and the creation of a broader digital ecosystem around the traveler.
Enhanced Customer Loyalty and Brand Equity: The card would transform the relationship with passengers from being purely transactional to one of constant engagement. It would serve as a powerful tool for building customer loyalty and elevating the GMR/DIAL brand from a utility infrastructure provider to a premium travel and lifestyle brand.