Here are the takeaways from today’s morning briefing, you can Sign up Receive in your inbox every morning:
United Airlines (UAL) is revamping its rewards program in the latest effort to win over credit card customers in the escalating war on benefits.
But it does so in a counterintuitive, carrot-and-stick way.
The overhaul isn’t just focused on adding benefits for loyalty members and credit card holders, but also includes denying non-holders certain ways to earn miles and save money.
This is a new kind of gatekeeping because other premium travel credit cards have high annual fees.
Call it subtraction addition. Or a company trying to increase the value of full membership in its club by creating exclusions is sure to anger at least a segment of the public already stressed about air travel.
It’s not new for companies to reserve special benefits for their highest-paying customers. Consider Costco’s executive membership, which allows these privileged guests to spend an extra hour shopping in their warehouse before the general public on Gold Star enters.
But United’s shift is noteworthy because it specifically offers cardholders some previously common perks, like frequent flyer miles.
United said in a statement earlier this week that MileagePlus members who do not have a United card will earn fewer miles on United flights than members with a United card. Cardholders also enjoy other benefits, including 10% off every United award flight booked.
Meanwhile, non-cardholders will no longer be able to earn any miles when booking basic economy, thereby losing even more status.
All of this highlights the importance the airline industry places on strengthening the relationship between credit cards and their passengers.
Building a credit card relationship with cardholders and potential upsells is big business. Quality customers are where the money is.
Last month, Delta Air Lines reported that revenue from its premium seats would exceed those from its economy seats, a clear sign of the industry’s shift toward luxury and adjacent luxury seating.
United’s program overhaul comes amid an industry-wide push for loyalty program memberships.
Redeemable miles, upgrades, airport lounge benefits and other perks are helping drive more customers to use airline co-branded credit cards to buy flights, a significant revenue stream for an industry that has struggled to make a profit from the actual business of selling affordable tickets.
American Express and Chase have both recently revamped their high-end travel credit cards, offering customers a slew of benefits while raising the cards’ annual fees to nearly $1,000.
