United’s Credit Card Performance is Still Lagging, According to the Airline’s Chief Commercial Officer

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There may be a very good reason that the UnitedSM Explorer Card has its best-ever public signup offer, a $0 annual fee the first year (then $95) and the ability to earn 65,000 miles: 40,000 bonus miles after you spend $2,000 on purchases in the first 3 months your account is open. Plus earn an additional 25,000 bonus miles after you spend $10,000 total on purchases in the first 6 months your account is open. (Earning the full bonus requires just an average of $1667 per month in spend.)

I’ve argued for a long time that as profitable as airline frequent flyer programs are the era of 50% or better margins is coming to an end.

  • Eventually we’ll see interchange rates fall, the fees merchants pay for accepting cards. Maybe we won’t see regulation like Europe or Australia, but we’ll see competition from new payment technologies competing down cost. Indeed we’re seeing interchange falling from American Express which is fighting to get small merchants to sign up. That will mean lower revenue for frequent flyer programs.

  • Airlines need to spend more money to satisfy customers. In order to defend their credit card revenue stream customers need to value the miles they’re earning. In an era where planes are full airlines either raise mileage prices or tell customers nothing is available. That’s not how you keep customers on the treadmill. So they need to improve availability, even trading off with revenue seats. That erodes margins.

United’s President said their credit card program was lagging. United and Chase made improvements this year to both benefits and points-earning of the UnitedSM Explorer Card.

That’s their attempt to ‘keep up with the Joneses’ of other credit cards becoming ever more rewarding.

The airline’s financials suggest stagnation in MileagePlus’ growth. I believe they’ve largely been flat outside of revenue from Chase for Ultimate Rewards points transfers.

Apparently United’s efforts aren’t working here, according to United Chief Commercial Officer Andrew Nocella (who came with Kirby over from American) reports Brian Sumers at Skift. Speaking at the Credit Suisse 6th Annual Industrials Conference in Palm Beach, Florida he said,

[T]he program has not be as successful as United has hoped. Jose Caiado, the Credit Suisse analyst questioning Nocella, said he understood card acquisitions were “solid” in the first half of the year, but spending lagged, an assertion Nocella did not dispute.

“We haven’t seeing that same momentum at the level that some of our competitors are talking about in this space,” Nocella said. “And so that is a conversation we are having with Chase. We’d like to see it better. They’re committed to making it better.”

He was vague on the problems, calling it a “a structural issue that can be fixed.”

It does not, therefore, surprise me to see them now offering to let you earn 65,000 miles as an initial bonus on the UnitedSM Explorer Card. You should get the card (if you haven’t had 5 or more new credit cards in the last 24 months). You should keep the card for its travel benefits. But put your everyday spend on more lucrative cards.

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 »

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Comments

  1. Now that you mention that, in addition to a high bonus, they’ve been sending out several additional spending bonuses. I’ve received two separate offers to spend $3K and earn 5K additional bonus miles.

  2. They have to eliminate Chase as a partner. Chase 5/24 is killing them. I would get the card if it weren’t for that.
    Another thing with Chase is that Chase has plenty of competing products, competing directly with United’s credit card and also Chase’s cards are much better. Every blogger pushes Chase’s cards earning UR but rarely does anyone mention anything about United explorer card.
    Neither American Airlines nor Alaska have credit cards that directly compete with their credit card issuers Citi and BofA.

  3. @ Gary — Maybe United should add a full or partial waiver of PQM requirements for the 1K level Then, I would dust off my Explorer card.

  4. Get rid of 5/24 and I’ll sign up for the United card. Add more benefits that aren’t made redundant by lowly silver status and maybe I’ll keep the card. The United Club passes are a joke and a waste of time. I haven’t used one ever.

  5. When I can use my CSR and convert those points to United and Hyatt, why on earth would I use the United card? United having to compete with multiple cards with better earning from their own card issuer – who came up with that idea?

    Someone above mentioned a PQM waiver… now that would be a reason for me to actually use the United card.

  6. The benefits on these cards are just not good enough to entice spend. I’m just not spending that much to be locked into a devaluing currency. I would rather just keep most of spend on my Platinum Amex, at 5 points per dollar it’s a better return than 2 points per dollar on a United card.

  7. 1. 5/24 rule is killing them
    2. United has suffered from terrible publicity the past couple years. Why would I fly with them when I can fly American or Delta and not worry about being dragged off a plane unconscious?
    3. United even makes their benefits hard to use. I only get a free checked bag IF I pay for the flight with my credit card? Why make it tough on your “valued customers”?
    4. It is so much easier to get Delta and AA cards from Amex and Citi/Barclays, respectively. Even if I am eligible to get a United credit card, I am not going to waste one of my 5/24 spots on a United card with crappy benefits. I would rather get CSP/CSR, BA, Hyatt, Southwest, or IHG.

  8. “tell customers nothing is available.”

    What an understatement. We finally cancelled our UA cards, after years of holding the Continental cards. Once UA and CO merged, availability became nil. After the merger, not once, not once, were we able to find usable availability.

    Eventually we cancelled the credit cards, moved on from UACO, and never looked back.

  9. I got two United mailers today. One for the Explorer and another for the business card with a 75k mile bonus. Thanks to Chase they go straight to recycling.

  10. 5/24 is a major culprit. I would get the card, and actually would now keep it for the other benefits, but there is no point in applying.

  11. Let’s not forget the card is pretty much trash compared to other cards in the market:

    1) You have to pay with the card to get your free checked bags.
    2) The free checked bags are you and one more person, families are screwed.
    3) No companion certificate.

  12. 1K here. Can’t get the card because of 5/24.

    Same for all the high spenders I know – since they all have Amex Plat, Prestige, and more.

  13. As posted multiple times above (hmm, I see patterns/repetition)…
    1. Chase 5/24 disqualifies lots of potential cardholders
    2. No reason to get United card when Chase UR points are more valuable and flexible

    United would be better off moving their credit cards to Citi. Given that American took exclusivity away from Citi and moved some of their AAdvantage credit cards to Barclay, this might present an opportunity for United to usurp AA as Citi’s biggest airline card.

  14. I am keeping my personal Explorer card for the extra award space, though dropping the 10k bonus miles after $25k annual spend has me going from $25k+ annual spend now to $0. Because of 5/24 I can’t swap out for the business version, even if willing to forgo a bonus. The flaw in 5/24 I feel is that they should offer to approve certain cards without the bonus or with reduced bonus, such as other banks have done in the past.

  15. It couldn’t possibly be because the average flyer is less engaged by United’s revenue based program? What they need is a good old recession and fares to drop to see how little their precious revenue based program really moves the dial for the average consumer.

  16. While 5 /24 is one reason to avoid the card so is award availability both UA metal and partners
    Then there is United’s awful customer service horrible boarding process and lousy
    First class food

  17. Nick – Delta has a revenue based program that is even more derided by bloggers, yet Amex Delta cards are very popular.

    What people seem to value most out of airline cards are elite qualification bonuses, companion passes, free baggage and priority boarding. Delta, Southwest, and others offer this

  18. It’s not only the 5/24 it’s Chases own products that are killing them. That’s not a partnership, they need to switch Bank affiliations.

  19. Not surprising, really, come to think of Chase tightening the 5/24 noose, as others have already remarked.
    Taking into account, also, the probably half-billion $ investment in the Sapphire Reserve, Chase is realizing that things don’t quite add up.
    Now, with Amex doing better, Chase is trying to get back on track.
    Wrong strategy, though … It never works by keeping people out, tightening restrictions etc. …

  20. Chase wants nothing to do with me, hence I will continue to happily use AMEX for Delta SkyMiles and MR points that I can convert as needed. I have no beef with United, just no burning need or desire to fly with them or use their CC.

  21. Problems with the card & airline:
    1. Chase 5/24 rule. keeps people from trying/coming back to the card.
    2. must buy with card for checked bags. Limits the value I can get with the card. checked bags limited for families.
    3. Worst basic economy out there with ULCC style restrictions on carryons, seating with family, etc.
    4. Overall bad press makes me not want to fly on them, no customer focus–even polaris is being cut back.

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