Yesterday I uncovered details on the new United Explorer credit card from Chase, a bit before they had intended to launch it, and divined some details on the future of the Mileage Plus program from the card’s terms and conditions.
One of the interesting things was that holding the card would prevent miles in your account from expiring due to inactivity (I guess this would be useful to people who keep the card and never use it, pay the $95 annual fee for the card, and never earn or redeem miles in their account, there can’t be that many of those people).
That was a giveaway that in the combined United-Continental program, miles would expire. United has had 18 month mileage expiration. Continental hasn’t expired miles. I fully expected that this would be the approach the combined program would take, though I doubt they intended to roll out expiring miles through the launch of the Chase credit card, and in that card’s rather buried terms and conditions.
Well, the card has officially launched today, and United has more details to share on Milepoint.
And there are some bombshells.
- Upgrades on Reward tickets for Elites. Unlimited domestic upgrade benefits apply the same to award tickets as to purchased tickets “beginning in early 2012” for those elite members with the card. Presumably for upgrade prioritization, award tickets will be treated as the lowest fare class, so Premier Executives on award tickets will be below Premier Executives on paid tickets but about Premier members.
- Last seat availability on standard awards will be restricted to elite members and cardholders. This is a huge break in the value proposition of the program — previously any Mileage Plus member willing to spend enough miles could have a seat on any United flight. That is no longer true. Following the Continental model where only their elite members had true last seat availability for additional miles, the combined program will offer this only to their own elites and now also to cardholders. Everyone else will have additional inventory for more miles, but not any seat on any flight.
These are big changes to the program, and unsurprisingly it represents a huge incentive towards getting members to adopt the card. In the case of non-expiring miles with Continental and last seat reward availability on standard (extra mileage) awards with United, it represents taking away benefits that were previously part of the program for everyone and telling members that they can only retain those benefits if they adopt the airline’s co-branded credit card.
None of which is surprising, I’ve long said that United flew through bankruptcy in order to support the underlying credit card business. The issuer of the United Visa provided debtor-in-possession financing for the airline entering bankruptcy, it provided their exit financing, and pre-purchased half a billion dollars worth of miles to provide liquidity. The card product is a major revenue source, and angling to get its combined 80 or 90 million members engaged with the card is a priority.
Still, and while I don’t like taking away benefits or holding them hostage in exchange for members taking specific actions like getting a credit card, I understand it and do like offering upgrades on award tickets. United is going a step farther than anyone else in the US market. Delta offers an option but
prioritizes award tickets lower than othersof course with Delta full fare at lower status trumps even paid fares, here your status matters regardless of the fare paid. In other words, a loyal customer is important every time they step on a United or Continental aircraft, not just when they pay enough. The miles are the rewards for the behavior that the program incentivizes, just like Priority Club / Intercontinental Ambassador refusing upgrades on award nights I’ve never understood making elite members sit in back just because they were using their points.
So by the beginning of next year, this benefit would seem to suggest that every Mileage Plus member likely to fly domestically on an award ticket ought to get the card.
That means, interestingly enough, that members may recalculate a bit their purchase versus redemption decisions. Sure, they’ll need to purchase enough tickets to requalify for their status or reach for the next level. But 100,000 mile flyers might start using their miles more on domestic flights for personal travel instead of buying tickets out of pocket, when they’d previously likely have purchased those tickets in order to receive upgrades.
Apparently, Continental Onepass Plus cardholders will just ‘get the benefits’ without switching to this card, they do seem to see this card as a re-branding of the Onepass Plus card for the new combined airline (albeit with a $10 higher fee). United Visa holders can switch to this card with a phone call to Chase (provided Chase agrees).