American Airlines FCU, Alliant CU Partner With Banks to Pull Switch on 14 Chicago ATMs; Pact Seven Years in Making

CHICAGO – It took seven years but two airline-based credit unions-American Airlines FCU of Dallas and Alliant CU of Chicago-have finally struck a deal to operate a fleet of ATMs at Chicago airports. Under an agreement with the City of Chicago and its airport authority, the two airline CUs, supported by the giant Dutch-owned LaSalle Bank and a smaller minority bank here, will help in the operation of 14 ATMs at O’Hare International and Midway airports. Details of the contract terms were not disclosed. The extraordinary partnership culminated years of sometimes tortuous negotiations and numerous delays but now represents what management of the airline CUs claim is a retail milestone for CUs in receiving notoriety and visibility in high traffic zones. “Each party brought different strengths, ATM experience, and positive arguments” to the final package “and most importantly known presences in the city to meet the needs of the public and airport employees,” declared John M. Tippets, president and CEO of American Airlines FCU and long a supporter of CUs having a strong airport presence. Credit union-operated ATMs have been in airports in Utah since June 2000 when American joined by Mountain America FCU; Delta Employees CU, Atlanta, Western FCU of Los Angeles and the CO-OP Network of Ontario, Calif. landed the franchise in the Salt Lake City airport with an eye at gaining visibility at the 2000 Summer Olympics. The Salt Lake CU group managed to underbid a banking consortium which at the time was considered a CU coup. Since then, there have been other CU-run ATM installations in Denver, Los Angeles and Sacramento. But regarding the more recent Chicago deal , the city under actually awarded two contracts – one led by LaSalle Bank with the two CUs – and a second one for ATMs awarded to a group apparently anchored by the $51 billion Harris Bank of Chicago. At O’Hare and Midway, the American/Alliant/LaSalle ATMs sit side-by-side with the Harris Bank machines. Tippets said AAFCU and Alliant are each 15% participants in the joint venture with LaSalle as the lead institution. The ATMs, noted Tippets, “will have a LaSalle Bank surround look but show all four financial institution brands” on the machines. It was noted that the $62 billion LaSalle, a subsidiary of Netherlands-based ABN Amro Bank with operations in 60 countries, performed the “detailed negotiations” with airport officials. Also in the venture is the Seaway National Bank, a black-owned bank on the city’s south side. Tippets maintained the Chicago pact underscores “a positive way banks and credit unions can work together to get things done” noting that “had we not worked together, it is possible not one of us would have been able to win the bid.” This spirit of cooperation, he said, runs counter to the ongoing bank attacks in many parts of the country. “Sadly,” stressed Tippets, those attacks end up “definitely giving all banks a black eye” with lawmakers and “may only nick credit unions.” But the Dallas CU executive said the idea of working together with banks has proved highly successful since “they have strengths and advantages which we don’t and we have some they lacked.” “Together we were stronger than either party by itself,” said Tippets. The negotiations to get all this done not only meant countless meetings with local aldermen but also extended to Washington since parties had to win approval of the ATM installation by several agencies including the Federal Aviation Administration and Homeland Security. “There was a political process that we had to deal with and it was fortunate that we have had LaSalle Bank as the champion and the focal point for us in serving as a mouthpiece,” said Robert Newcomb, senior vice president of operations and technology at Alliant. Tippets said this deal is significant because airport branch locations are “deeply prized and difficult to get, and the ATMs offer another way to reach members. He said AAFCU either on its own or in partnership currently has 130 ATMs, two-thirds of which are in 19 airports. Surcharge and interchange income helps to defray operational and support costs, he said, which are often higher in airport environments with many airports charging significant rent for prime, publicly accessible ATM locations Tippets said that a major percentage of the CU’s 204,500 members are both active airline employees “and over the past year other air transportation industry employees have also been able to join.” “Similar to most occupation based credit unions, work place convenience is the credit union’s core location advantage,” said Tippets. “About half of our branches are in airport terminals or on airport property.” At Dallas Fort Worth, the CU has branches in all three of the terminals “which have significant American Airlines activity and at Chicago’s O’Hare Airport, the credit union also has three branches.” Service reps at the branches, he said, “do not dispense cash and avoiding cash operations in branches has had many benefits” in keeping down costs. Yet, airport/airline employees have cash needs and even if branches had cash and were open on normal days and hours of operation, they would probably meet less than 40% of the employees’ needs who work all kinds of crazy hours. Both Alliant and AAFCU said they hoped the Chicago contract might serve as a model for other CUs across the country in developing joint partnerships with banks and/or CUs “or other third parties” to win ATM concessions. Over the years AAFCU and other CUs have attempted to land contracts at the big East Coast and Southern airports and on that point Tippets conceded “in fact, we have made a couple other such proposals where we have been unsuccessful.” AAFCU was successful in a pact at Los Angeles and Ontario, Calif. airports where the CU partnered with Western FCU “and with the support of the CO-OP and PULSE networks” developed a deal that includes 32 ATMs. But in pursuing the bid process, Tippets said “there is no cookie cut formula” in dealing with airports. The requirements, terms, qualifications and “circumstances vary significantly,” he said. Newcomb of Alliant said one particular benefit of the Chicago deal is the ability for the former United Airlines CU “to work with Seaway Bank” and gain helpful input in addressing the needs of minorities. “We can learn more about the minority philosophy” in serving members, he said. Discussing the cooperative spirit among the parties, Tippets said his own dealings on the Chicago pact underscore “positive experiences over many years working with banks and thrifts.” That was the case, he said, “in getting a consumer-positive Home Equity (and HE LOC) borrowing option in Texas.” He also noted a two-year term on the Federal Reserve’s Thrift Institutions Advisory Council and on the PULSE Board of Directors all of which show that “working together banks and credit unions can get lots done.” -