United Credit Card Signups Lag After Program Devaluations, Onboard Card Pitches Coming

United Airlines President Scott Kirby reported in today’s earning call that the growth rate for their co-brand credit card lags both American and Delta.

And he believes United is adding cardmembers at a slower pace than American even as American discloses that their revenue is suffering because card signups are below projection.

Like at American, there’s no strong diagnosis of why card signups are down. I’ve suggested that major airline loyalty programs aren’t seeing card growth and thus revenue growth as planned at the same time the miles earned off of those cards have become worth less.

Not only are premium cabin award prices way up but MileagePlus didn’t just raise some award fees and eliminate many stopovers they also changed how they price awards — if the computer doesn’t suggest the award, they charge more miles.

One competing explanation for disappointing card signups could be that people just aren’t signing up for credit cards generally, but we know that isn’t true. While the card business is reportedly down at American Express that doesn’t appear to be true at Chase or Citibank.

Kirby said they’re communicating their concerns about signups to Chase, but then backpedaled a bit as it sounded like their co-brand partner was at fault. He suggested one problem is that the “best acquisition channel is onboard” at American and, he believes, also at Delta. (Kirby has recent knowledge of performance at American, since he was President there until late summer, and doesn’t have direct knowledge of Delta.)

Expect to see onboard credit card pitches come to United.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

More articles by Gary Leff »

Comments

  1. Ugh – no one wants to hear those incessant pushes for credit cards on another airline. I’d suggest Chase’s 5/24 rule isn’t helping here.

  2. Really simple explanation.

    1 million 100k Sapphire Reserve accounts.

    Why get a UA card when you can xfer them?

  3. Without the 5/24 rule, I’d get a new card every 2 years 🙂 But now I don’t bother – much better cards are available.

  4. And particularly with their card requiring you to use it to get the bag benefits, it makes it worthless for people who book work travel through their in-house agency. Every other airline card gives me bag benefits for having it.

  5. agreed about the bag requirements. Beyond a sign-up bonus, the only reason to hold on to these cards is for the bag and priority boarding for those without status. Having to use the card when there are better cards for airline spend makes it significantly less appealing

  6. The card is not competitive in the marketplace, period. But Kirby can’t be honest because the stock would tank immediately, the card business is too important.

    Gary, on another topic I’m reminded of while reading this post, my humble feedback is to be very, very careful with the blogroll autostart videos. I know there’s more money in it, but much like the in- cabin credit card push, generally annoying and erodes the experience over time.

  7. CSR getting better return on spend
    5/24 rule
    Change in routing rules
    Bad press

    It doesn’t make sense to spend with an airline co-brand unless you are getting EQD or EQM credits to help with status for those who don’t fly/spend enough to reach upper status levels. Otherwise I wouldn’t bother with an airline co-brand credit card at all.

  8. Does United have a say in whether the 5/24 rule applies to their cards? I just got rejected for a card even though I was less than 3 months out from passing the 5/24 rule.

    5/24 aside as others have pointed out there product offerings just are not very compelling. United can offer club memberships and priority boarding and what else? Their bag fee policy could be improved but really they need to rethink the card rewards. Why use a United card when Chase UR cards have so many more attractive options for spending? And then there are the constant devaluations and lack of award space.

    But hey let’s fix the problem by giving more onboard sales pitches! Yep, clearly all their ails can be solved by a little more marketing.

  9. How sweet it is that after screwing tens of millions of dedicated mileage customers, these airlines are forced to eat their own greed. My fondest hope is that even if they reverse course and restore the meaning of a mile – instead of continuing to have the gall to call their devalued mile an (fake) mile – consumers will give the one remaining true miles airline Alaska the support it needs to take their better brand of customer service to the top!

  10. I basically agree with others. I’d honestly probably have applied and kept a UA card but by the time it was on my radar 5/24 was enforced. Also flexible currencies are become relatively more valuable so for the moment my focus is there. If and when I do fall below 5/24 I am unlikely to put a United card at the top of my list.

  11. The answer is simple: most consumers have concluded long ago that airline FF programs are a scam. And they’re right.

    No, I’m not talking about anyone who reads this blog or any other. You (we) are working hard to game the system, we have a much higher level of understanding of how things work. I’m talking the overwhelming majority of the public, the non-obsessed consumers – average John and Jane Q Public. When you talk to friends about FF programs, don’t you all get the same response: “oh, those programs suck, i’ve never been able to use any miles, they’re all scams.” And these folks are right. It’s a game the airlines control, and the fix is in. Consumers have learned, the game is stacked against them, they’ve correctly concluded there’s no point in playing. We all play around the edges, but for the average consumer, mileage credit cards suck. No airline exec should be surprised.

  12. Hi Gary;

    I think applications are, at least in part, down because of the 5/24 rule for chase, the one app in a family in 24 months rule for Citi, etc.

    Is there any info on renewal rates for the cards? I just had 3 Amex Delta cards cancelled in protest of their latest devaluation.

    In any case, I do agree that revenue from selling miles is down because of their uselessness causing people to spend elsewhere and not renew the cards.

  13. United, and all airlines in general, just aren’t making awards available at decent levels in advance. I flew SFO-ORD yesterday and originally was looking for saver space on UA (coach or first). I started looking in mid Feb and up until this weekend, I only was able to find saver awards w/ stops. Then this weekend EVERY SINGLE FLIGHT had saver availability (of course with the $75 co-pay). I completely understand airlines want to sell the seats, but this is a trend I’ve noticed on UA. How they can be surprised people aren’t continuing to try and accumulate worthless miles? Sure, the miles/points hobbyist can use UA miles for premium long haul flights with more success than on AA/DL, but a majority of people are trying to get their family to Disneyworld or NYC for a long weekend. At some point, and i think we’re at that point, people are finally getting fed up with horrible availability. Gary has done many posts where certain routes will have ZERO seats for a whole year. That’s not managing inventory…that’s just saying F U to your customers.

  14. If they removed the card from the 5/24 rule that would help, and it doesn’t make sense to have the UA cards with the CSP and CSR, especially when URs transfer 1:1 to MP. If they would redo the earning structure on the Explorer card to be more like the CSP where you get 2x miles on all travel and dining, not just UA travel (or 2x miles on everything to slightly beat the CSP) and the UC Card to be like the CSR (except you get UC access instead of the $300 travel credit) with 3x earning on all travel and dining (or 3x miles on everything to beat the CSR) I would sign up for them. UA also needs to offer the 50,000 bonus as the base and up to 75,000 or 100,000 in promos to match CSP and CSR.

    Or alternatively UA could open up a new class for saver seats for CC holders, and maybe guarantee that X number of saver seats on each flight will be open to CC holders as saver seats are usually not available in premium cabins until a few weeks prior to departure.

  15. Mrs. Tramp and I have each had about a dozen AAdvantage platinum cards in the past couple years… I can promise you that without 5/24, United would see better signup numbers. I will assist them personally, even.

  16. @brad B – I think the opening up more award space for card holders or maybe following some other airlines and given 10% of points back on award redemptions for having the card. Would be way with little upfront cost to really increase credit card uptake.

  17. They really need to offer elite qualification earning with credit cards.

    AA and DL do it.

    UA has nothing on the open market.

  18. Easy – the free bag benefit is too difficult to make use of. Can’t remember how many times I’ve checked in at a United kiosk, tried to figure out why it wants to charge me $25 to check a bag, when I remember it’s because I’ve charged the ticket to my Amex platinum to get the 5X MR points instead of the UA card.

  19. Devaluing the miles or charging or miles does not help. As another saI’d requiring one to use their card to get a free bag hurts too, some companies and the USG employees are required the travel card. Delta and American give the free baguette having their card.
    Some coworkers of mine tell me they find having a cash back cards is better they can chose the airlines they fly instead of being stuck with one airlines especially they airlines charges almost double the miles to get onto the quickest international flight and sometimes the fastest international is the cheapest when paying cash.

  20. Have to agree with some people comments here, get rid of 5/24 for this card, united absolutely have a say in this, Hyatt card isn’t under 5/24 so why can’t united? Also the stupid freaking bag rule, I have to buy ticket with your card to get free check in bag? Change these and also offer a higher signup bonus and you’ll probably see more sign up, or just move to Citi altogether 🙂

  21. Just my 2¢ . . . probably worth far less. Keep the change.

    The short answer is, of course, “all of the above.” But with the growth in “transferable points” cards — and the CSR *was* merely the one with the highest visibility (until Amex Platinum came out with 5x points on air travel) — co-branded cards with only one of the three legacy airlines are simply far less relevant today. Were it not for the 5/24 rule, I would have gotten a CSR, too! (And there is no way I’m not getting another card until I’m out from under that monstrosity!) And in terms of baggage, some cards have credits to cover fees, and/or tickets themselves.

    But I have to agree with Gary, when he wrote above that credit card signups are down because the continual point devaluations mean “the miles earned off of those cards have become worth less.” Indeed, “worthless” to some . . .

  22. There is such thing as market saturation. And, to add to the echo, 5/24 doesn’t help. I’d get a new card every two years if I could, but right now I can’t.

    It seems as if “the game” has yet to reach equilibrium, and that what we’re seeing is a variation of statistical whack-a-mole.

    What is absolutely driving me nuts is I do get offers for Chase branded cards that I am not eligible for. These days, they all have the 24 month limitation printed, but their computers should be smart enough to know that I don’t meet their profile for approval right now.

  23. Why are the Chase United cards the only one that require you to purchase a ticket with it in order to get the free checked bags? Not so with American and Delta co-brand cards. Super annoying, especially since UR points at 1.5 cents per point is a better value than most of the awards United is pricing out nowadays.

  24. They need to up to 3X United purchases and add 2X bonus categories for hotel and car rental, for example. They should bring back the old Presidential Platinum. The bag rule is stupid and greedy. The current UA credit card is for people not paying too much attention.
    I’m dumping mine as the big benefit was upgrades on reward flights–well I can’t get upgrades on any flight not to mention reward flights so that is useless.

  25. For folks who want to blame 5/24 bear in mind this excludes an order of magnitude of about 5% of applicants who tend to spend less on the card and keep the card a below average amount of time.

  26. @Gary Leff ,
    Those are poor criteria to measure the impact of 5/24. The 5/24 rule plays an essential role in the decision making process. Any reasonable person falling below 5/24 will be conservative most likely will pick CSR and/or CSP ahead of this cards. Many would even pick one of the SW cards since the bonus counts towards the companion pass .Few will pick this card compared to other 5/24 cards offered by Chase.

  27. It’s all because of Chase’s lame 5/24 rule. Eventually, they’re going to run out of people who qualify. United is too stupid to see that.

  28. Dear United,
    Nobody wants your worthless miles or your useless cc. Before you force me to listen to your marketing blah blah when I am a captive on your plane allow me to turn on my noise canceling headphones first. The problem is the product not the marketing.

  29. The 5/24 rule makes sense to me, and those complaining about it simply want to cycle bonuses and earn and burn, thus devaluing the value of the existing miles stock.

    With that said, I’m closing my Chase Utd card – the return on spend isn’t worth it, and the Utd devaluations is sending me elsewhere.

  30. Not everyone “simply want[s] to cycle bonuses and earn and burn, thus devaluing the value of the existing miles stock.”

    I’ve never “churned” a card in my life. But I was over the 5/24 rule due to “hedging my bets,” if you will, by obtaining an AS Visa prior to the merger (take over) between VX and AS being finalized, and a Marriott Rewards Visa prior to the finalization of the Marriott-Starwood merger — this BEFORE the CSR came into existence. Thus, I’ve “lost” half of my [potential] sign-up bonus, as it was cut from 100k points to 50k, as well as “x” number of points that would have been earned at a rate of 3x, versus the 2x with my CSP card, all because I have good credit?!?!? No, the Chase 5/24 rule SUCKS . . .

  31. Gary, the people impacted by 5/24 are you and your low value freeloading types that want everything for nothing, complain about airline service yet demand low fares for everything.

    Scott Kirby has forgotten more about the airline industry in the past week than you have ever known or ever will know. He has a legitimate and very successful career in the industry, you have ridden the social media wave and self-promotion.

    Face it you are upset if people do the onboard applications you don’t get the affiliate compensation. All the cheapstake FlyerTalk types that act like the credit card pitch onboard is tacky, but there are many LAA F/As that like the program and have earned solid bonuses while bringing the company and Citigroup new relationships.

  32. @Josh G – what planet are you on where you’d get some kind of criticism of Kirby out of this post? [While I do think United has alienated profitable customers, those decisions were made prior to Kirby’s arrival]

    There’s nothing wrong with demanding quality and low price — that’s something consumers demand in most every industry and it’s the long-run trend across the economy.

    I am not upset by onboard applications, but as one bank issuer VP told me yesterday THEY hate sitting through the announcements.

  33. If you don’t like the announcements tune them out with headphones. It’s a low cost and effective customer acquisition tool, and the passengers that fly occasionally and learn about the card and AAdvantage program onboard are more likely to direct a higher proportion of their spend on to the card and have lower expectations of AA and redemptions. Most of these people are looking to fly to MCO or maybe HNL/OGG, not costly parter F int’l awards.

  34. A good number of the benefits of the card I already get with status. Would be nice if they were alternate benefits for those with status.

  35. @Josh – so the airlines should be proud that they’re trying to alienate their savviest customers and retain only the chumps?

    Would you rush to defend Starbucks if they announced they were tossing most of their equipment and only making Frappuccinos from now on?

  36. @Josh G — I do think the manner in which these announcements are done matters quite a lot. Waking people up on a red eye shouldn’t be how this happens. And too often flight attendants make claims about the products which, if recorded and sent to the CFPB, would result in fines.

    But I don’t have a problem with the announcements overall, it was simply news that Kirby said this would be coming to United and also news for many passengers that this is an effective channel for signups (because people think that THEY wouldn’t sign up this way, they assume that others wouldn’t .. when in fact the people most likely to sign up for an airline card are those who actually travel the airline, and the prospect of not paying for a ticket in the future is at it’s more powerful when they’re either just paid or succeeded in booking an award).

Leave a Reply

Your email address will not be published. Required fields are marked *