United Airlines President Scott Kirby believes airfares should be 100% higher. He hasn’t been able to get there, but thinks there must be room in the prices they charge to access United Clubs.
Three years ago after raising lounge membership price, United said they hadn’t increased prices enough. Since people were “still buying” at the $550 general member price point, the airline believed it hadn’t “hit the sweet spot yet.”
In October American Airlines announced an increase in the general member prices for its lounges from $550 to $650. Elites pay less, and premium co-brand cardholders still pay just $450 a year (and no annual fee additional cardholders get access, too). Then a month later Delta announced a price increase too.
United’s website now says,
Effective August 13, 2019, we will no longer require a $50 United Club initiation fee. The new United Club annual membership price will be $650 or 85,000 miles.
Currently general members pay $550, and there are discounts down to where 1K members pay $450 which is also the annual fee of the premium co-brand United credit card that comes with lounge access as well. There’s no mention of lower prices for elites once this change goes into effect. By the way domestic United Clubs no longer offer showers.
Empty soup in United Club Houston
It’s an historical anomaly that US lounges charge for access at all. In general airlines around the world (outside Australia/New Zealand) do not charge for access. It’s provided free to premium cabin and elite customers.
In the US, airlines charge even elite frequent flyers traveling domestically for access. From the time American opened the first airport lounge up through 1974 they didn’t. However the federal government ordered – on anti-discrimination grounds – that airlines either make clubs available to everyone, make clubs available to everyone flying a particular class of service, or make clubs available to everyone who pays.
Paid memberships were a way of ensuring compliance with non-discrimination rules coming out of the civil rights era. Anyone who could pay – regardless of race – could access the lounges.
Once the airlines had a revenue stream associated with the lounges it became difficult to walk away from that. The lounge network starts looking like a separate business unit, with its own profit and loss calculation.
It seems strange to pay hundreds of dollars to access US airline lounges compared to what is bundled with status elsewhere in the world. I’m not saying it isn’t worthwhile — for the handful of times a year I’m delayed by weather or mechanicals, the help I get in the lounges is worth the price of admission.
It’s hard to imagine a Newark-based flyer, with the virtually non-existent lounge situation in that key United hub, being willing to pay $650 a year.
(HT: Sexy_kitten7)
Why would anyone pay this over just getting the credit card. Even if you sock it in a drawer, it’s still cheaper, correct?
Come on @Gary, of all people, I would expect you to understand supply and demand. There are WAY too many fliers in the US, and all lounges (including Amex) are tightening their membership rules/numbers. One way to lower demand is to raise cost. Is ANY domestic club worth $600+/year? No…but as long as people pay it, they will keep raising the rate.
It shocking there is any demand for this “clubs” that are more like airport homeless shelters. I’ll take the terminal for free.
IRS can eliminate tax writeoff for travel and membership costs, demand will reduce, prices will go back to reasonable levels of $100-$200.
I do not think Kirby understands the idea of the value of reoccurring cash flow. Assuming the discount rate is 5%, an infinite stream of $550 is worth $550/5%=$11,000. 1,000 lost customers is $11 million. 10,000 is $110 million. Maybe you make it up with increased fees, maybe not. Personally, I think he is cannibalize the long term value of the firm, for short term profit gains.
OPM easily accumulates 85000 miles.
One doesnt have vacation time or doesnt want to spend the free time flying, because OPM flying takes up too much time anyway.
Buys themselves UC membership to make work flying less miserable.
Sounds like a win-win
United Clubs are substantially outdated and in need of major overhaul. Where’s the news of major renovations to go along with this?
United likely hopes the price increase will drive more customers to their Club Card. I wouldn’t be surprised if they use this newly valued benefit to offset the loss of free close-in bookings.
Maybe Gary would say I’m crazy but I’m a New York-based traveller (and a United 1K) and I do actually pay for the United Club Card, despite being based out of Newark — though obviously that’s $450, not $650. I also have an AmEx Platinum, but there is no AmEx lounge at Newark.
Looking over my travel history, in the past year, I used a United Club on a purely domestic itinerary eight times, six of those at an airport other than Newark and twice at Newark. So I get most of the value when at airports with a United Club other than Newark. Obviously I’m not at all happy with the United Club in Terminal C, as it’s horrible, but access to dedicated agents with no line is huge when there are weather problems, etc. For what it’s worth, I’ve had access to the Polaris lounge at Newark four times in the past year, which obviously is the complete opposite experience (and perhaps one reason why I haven’t defected to Delta by now).
I was just in one of the SFO clubs yesterday and couldn’t find the Wall Street Journal. When I asked one of the attendants at the front desk where they were she told me they have discontinued it as everyone has tablets now. So on top of losing the local paper in clubs a couple of years ago now the WSJ is gone as well. I don’t know if this applies at every club but I won’t be surprised if it eventually will. I don’t know about everyone else but I enjoy reading the WSJ and will miss it. And today I hear about a price increase to access the club even with cutbacks such as this?!
Not only are the US3 airline lounges sub-par in service offerings, but we’ll soon be forced to fly only that carrier/partners to gain entrance for all three.
And then the annual fee is raised by $100. I can’t decide if this is arrogance or incompetence at play.
If foreign carriers are ever allowed to fly domestically, it will be the greatest pro-consumer event in US history.
I do appreciate the work UA has done to refurbish the clubs nationwide, some amazing examples in ORD, LAX, BOS, SFO, etc.
EWR continues to be the armpit of the network, and they don’t seem to care.
Personally I wont be happy till it goes to 1000 dollars a year as I haven’t flown with UA in
18 years after they pis#ed me off long before breaking guitars or dragging customers off planes and beating their customers
Snack towers of sadness. $650 obo.
I am sure they just thought that since they are so crowded in many places, they can just raise the price. Supply and demand. Of course, the problem is the branding – currently UA stands for poor service, dirty, crowded and bad food. Of course, that is pretty much the planes, too. As with any airline, people will fly it if it has the route needed and is cheap, and UA has a lot of the routes I need. But it is hard to charge a premium, if that is their goal, with a brand like that.
I only use mine maybe 3-4 times a year. When the airport is crowded, it feels like an Oasis. However, at 650 dollars, I’m going to really have to think hard about renewing…..and thats what Kirby really wants 🙁