United’s Relationship With Chase Bank Under Review?
 

https://www.flyertalk.com/articles/u...er-review.html

What's the skinny on this?

Note that the UA executive previously worked at AA. Further note that AA does not accept transfers from any USA-based consumer credit card program. (Starwood is a hotel program.) Recall also that UA only reluctantly agreed to participate in Ultimate Rewards, after the merger with CO. If one of UA's grievances is that Sapphire Reserve and other Ultimate Rewards cards are cannibalizing co-branded MileagePlus cards, we might see UA exit Ultimate Rewards, or some restriction on transfers.

History: When Ultimate Rewards launched in 2009 there were four transfer partners (BA, CO, IHG, Marriott). UA did not join until late 2011.

Just curious, what exactly does underperform mean in this context? Not enough charges on the CC, so Chase does not buy enough miles from United? And why would that be a problem, I always thought miles are a big liability on the books of airlines.

Unredeemed miles are a liability, but that's an accounting term. It doesn't have a negative connotation in this context. UA wants to sell as many miles as they can, at as high a price as they can -and- they want to maximize the bounty that Chase pays them for each new co-branded account. Mileage Plus also wants to maximize customer engagement, and they might conclude that a multi-partner transfer program doesn't achieve that objective.

I don't know this, but I'd expect that there is some form of revenue to United for spend on their co-branded cards while spend on the CSR, there wouldn't be any kickback for that. I'd be willing to bet that CC spend on the United co-brand cards is down, maybe a lot, since the CSR release, since if you hold both, there's no reason to spend on your United card when you earn more points on the CSR (unless it's a United flight and you need the checked bag waiver, or you're spending to meet the PQD waiver). Also with the United card being 5/24 restricted that must be limiting new sign ups at least a bit.

As a guy that just bought a UA ticket today using CSR, this is perfectly timed.

The UA Chase products are simply inferior. I'd suggest that UA use caution here - I'm already close to dumping my UA Chase card.

I have a feeling that UA's "enhancements" will backfire on them.

Here's some free advice for Kirby - make your card and FF programs more compelling and you will see your customers return.

Inferior to what though? Their competitor's cobrand cards? Or the premium cards, which is going to be true of basically all of the $95/yr airline cards?

UA's card isn't *that* different from the competing airlines. The main differences between the MileagePlus Explorer and say the Citi AA Platinum and Amex Delta Gold IMO are: 1) UA gives you 2 club passes a year, the other two don't give any. You can use these or resell them, I mean they're worth $15ish on ebay; 2) UA gives you access to better economy award availability on some flights, YMMV, if that's of any value; and 3) UA makes you buy your ticket with the card for a free checked bag, while AA/DL don't, so that's a bit of a ding for me.

The other competitive argument, who else would UA pair up with for a co-brand card? Every other major issuer already has an airline, or in Barclay's case they have like 4, so.... where would they go without DL or AA throwing a fit? I think UA and Chase, for better or worse, are kinda married to each other for the near/mid term.

Edit: now that I think about it, there really isn't much reason to spend on any of the normal airline cards, because if you're earning faster on other Amex/Chase products and can just transfer to Delta and United/SW, respectively, why use the airline card at all unless you're going for the PQD waiver? Chase/UA actually give you an incentive to spend because you get a 10k mile bonus if you spend $25k/yr on the card. Again, something the AA/DL cards don't have at the $95/AF level, but that's a lot of spend to put on 1 card that has no meaningful multipliers.

Chase buys miles from UA. If you use a MileagePlus co-branded card the rewards are automatically deposited in your UA account, and Chase pays for them. If you use a card that earns Ultimate Rewards, United isn't involved unless you convert points to UA miles, at which point Chase pays.

The price per mile may not be the same in these two contracts, but the big difference is engagement with MileagePlus. The customer earning UR isn't committed to UA.

Good post, krazykanuck.

I should have been more clear - I think CSR is superior to all of the airline branded cards.

In my experience, the UR portal is often competitive or better than (to me) the ever diminishing availability of flights via FF programs.

I have wondered what Chase's other co-branded card partners (UA, Marriott, etc) think about UR.

Here's my guess: They've lost material market share to UR cards and they aren't happy about it.

I'll be interested to see how this plays out.

Lots of reasons one might spend on UA cards. For example, many need to hit the PQD waiver, which means mine gets at least 25K, even if it means many restaurant purchases gets me 2x vs. 3x (I have a legacy UA card that doesn't exist anymore). Also get groceries, drug stores, gas stations at 2x, as well, while CSR only gives me 1x, so I use it there instead of CSR.

UA could pair with anyone they want. I doubt they will go away from Chase...too much $ for both, IME. And while there aren't a lot of huge, national banks left, there are lots of big regional banks that probably would jump at the chance to sign up with UA on co-branded cards. Thinking banks like Fifth Third, or even TD Bank. Not necessarily household names in certain parts of the country (doubt those in California knows TD, for example), but if UA co-branded, they'd market and folks would still get it. There are also other bigger banks - does Wells Fargo, for example, have a big airline partner (though I would be very hesitant to get anything from WF with their reputation, but it could be an option).

It depends what you are looking for - CSR works better for a lot of people, but not everyone can afford or even want a card with a $450 AF.

The other issue is that no matter what, CSR (and Amex Plat...and Citi Prestige, etc.) are still out there and are competing. If Chase and UA were to end their agreement, UA would find another bank and have them offer their cards. And they'd still have the same issues of competing...doesn't matter which bank is issuing it. UA could, i suppose, pull out of UR, hoping that there would be many that switch back to a UA card (whether they are issued by Chase or someone else). But I'm not sure that would work out so well. CSR and similar are always going to offer more flexibility than single-airline branded cards. UA could try to add new features to help make up for that, but reality is, they will never be as flexible.

I think Kir Baby doesn't like a couple of things:

• Chase's self-serving 5/24 rule stymies issuance of UA-branded cards to otherwise perfectly qualified applicants. He wants his cards in lots of wallets and couldn't care less how many other cards we've applied for in the last two years.
• As others have mentioned, the ability to convert UR points into UA miles disincentives use of UA-branded cards. For example: I book all UA travel on my CSR card rather than my Explorer card because I'd rather get 3 URs than 2 MPs. I'm elite, so I don't need to worry about free bags.

Hopefully, Kir Baby's gambit will release UA-branded cards from the yoke of 5/24. Or, even better, if a new bank begins issuing UA-branded cards we can all have a field day applying willy-nilly.

This. Its whats preventing me from getting an united card. Will fall below 5/24 in a few months and will be applying for the marriott card (replace spg) and maybe save a pull in case the 100k reserve bonus comes back. Would like an united card, but thats just not going to happen.

Solely for the bonus points or something else?

Bonus mostly. And on the off chance a new card gets issued due to the merger.

Have Presidential Plus Card but likely not much longer. Received "offer" yesterday: spend 49K by the end of the year and get 5000 miles- not a misprint. I know someone else with same card: spend 20K and get 7500 miles. Really?

For economy tickets—which are nearly all I purchase—the UR cards are better than United’s offerings. I can simply buy the cheapest ticket available at 1.5cpp with UR rather than try to find a 25000 point domestic saver or 60000 Europe saver. Sure those redemptions might technically give me more than 1.5cpp vs United’s cash price but that only counts if United is the cheapest offering to a location. Many times it isn’t.

Be careful for what you wish for, it might come true!

What if UA switches to Amex the bank? Amex has a "once in a lifetime" rule per card type! How would that be better for "applying willy-nilly" than 5/24? :confused:

Or what if it switches to a smaller bank with no transferrable points, and yet still tough on churners?

Point taken. But I'll take my chances.

RNE, sick of Chase.

While I think Chase is ripe to lose one airline and one hotel partner, I did not interpret the original story to mean that UA was shopping their co-brand card business around, but rather that they wanted to renegotiate the terms of the existing agreement.

Your interpretation is fair, but it would be at a minimum. Outside that—but not as far as shopping around—UA could be angling to drop out as a UR transfer partner. That would end UR-branded cards' directly competing with UA-branded cards' MP-earning ability. And even that half-step would be momentous. More so would be UA switching banks.

While we don't know how far the renegotiation may go (and perhaps UA and Chase don't either) this matter is potentially explosive for The Hobby.

HA. UA has made it very, very clear to me (and many others) over the last few years that is does not care at all about how engaged I am with them.

That's all the more reason for UA to seek new, unsuspecting cardholders. It's gotta be sticking in Kir Baby's craw that Chase is capriciously denying applicants. Accordingly, there's a possibility UA will negotiate its cards out from under Chase's draconian 5/24 umbrella. We'll see.

RNE, predicting something significant affecting credit card holders will come out of this renegotiation. Not sure what, but not nothing.

I got a survey about my MP card asking about what would make me use it more. It presented a number of different options related to promotions and card benefits. I made it clear that the Chase Sapphire Reserve is my go to card and really doesn't leave any reason the use the MP card.

At one time I had the United MP Select Card which gave me EQMs which I found helpful in achieving status but with PQDs now the main driver of status, the card became useless to me. Now I don't even fly United.

Basically, the the CSR card around, any brand card is going to have to really step it up.

Thanks all for the thoughtful responses.

Personally, I don't think 5/24 is huge issue other than to those of us that are playing the game.

The thing that is an issue is that for those that have both UR (especially CSR) and UA cards is that there's simply no incentive to use UA since the marginal value per dollar spent is higher for CSR.

This leaves UA with two choices - try to get Chase to lower the value of CSR or raise the value of the UA card.

Translated, that means that UA has to pay to make their card more valuable or lose market share to the UR cards.

I'd love to know if Marriott is seeing the same problem. I don't use my Marriott for much incidental spend, but I do use it for actual Marriott expenses.

As I noted previously, I don't use the UA card even to buy UA tickets.

I think not. Chase will have to pay more, or risk losing the United co-brand card contract.

Agreed. So long as URs can be converted to MR points and MP miles 1-for-1, I don't see any reason to use either my Explorer Card or Marriott Card after getting the sign-up bonusses.

Spot on!

I agree, all that would be bad. I really like the ability to combine UR points with UA miles to get J class TATL redemptions. Last summer, wife and I flew the LH 747 upper deck for 70K miles and points each. Those tickets would have cost $3K or more each using cash.

Perhaps, but just how much leverage does UA have? Remember the whole issue is that UR cards are gaining share at UA's expense.

The real question is whether UR cards are more profitable than UA cards to Chase. Frankly, I have doubts about CSR, though I love the card. It seems too good to last.

If CSR gets cutbacks then UA would look better on a relative basis.

Could UA get a better deal from Chase? I guess, but that does nothing to address lost market share.

I doubt that this just a UA thing; I suspect UR cards are taking market share from all of the airline cards.

Anyway, lots of good posts here and we'll see soon enough.

Chase would suffer in other ways if they lost UA. I think an intrinsic value of UR points is the ability to transfer to United. Secondarily, Southwest. If they lose United, they lose a key UR partner, if not THE key UR airline partner. If that happened, the value of the UR earning family would erode. One backlash of that might be less people holding a high cost card like the CSR. The average person just wants to go online and book a ticket, without a big research project on award charts and sweet spots. They want to take their spouse or family somewhere and just go online and get a ticket. United is easy to book. You can generally get an award seat on the date you want, and it's straightforward. So keeping United and UR transferability to United may be as important to Chase as keeping the co-branded card.

Alaska Air Visa for me (3 cards). Companion pass and more valuable miles. But most spend goes elsewhere (AmEx Plat, CSR, Prestige) for transferable points and multipliers. Ymmv. Cheers.

Indubitably. But transferability—the lifeblood of UR—is a thorn in United's side, given Chase's CSR/CSP cards competing—and winning!—against United's. This begs the question, Would United suffer if it found another bank to issue its credit cards? Methinks not.

How did the SPG:UA 2:1 exception come about (when most other airlines are SPG:airline 1:1)?

Could something like that (a "recalibration") happen with UR:UA in a renegotiation?

The "right" (from UA's perspective) transfer ratio "recalibration" would take care of any concern UA has about UR transfers without actually ending the ability to transfer.

Of course, such "recalibration" wouldn't be called that by FTers, they would use the word "devaluation" in that case. :eek:

IMHO all UA needs is to negotiate a way to make it harder to earn 1 UA miles with UR cards than with UA cards, and then their problem is solved. I don't see why it has to be all or nothing? :confused:

I would also like to know.
Just curious...My Marriott card is in the drawer now, since CSR gives me more value even for Marriott stays (3x URs vs. 5x MRs). What is your rationale for using Marriott card, if you don’t mind sharing? Cheers.

Yes, but would Chase suffer if it lost UA, one of it's most valuable transfer partners, for those undeniably successful UR earning cards? Methinks so. I think Chase has a huge incentive not to cut themselves off at the knees here. They developed a terrific and valuable program with resounding success. But they need those partners. If UA left, and left the UR program, than Southwest would be the next most valuable airline partner (IMO), and that would leave most of the Eastern, Midwest and Southern part of the country finding those "valuable" Ultimate Reward points not quite so valuable.

As long as they keep KE and SQ i'm happy :D

I'm a UA 1K and its getting harder and harder to find saver space (albeit better than AA/DL). However, anytime I search dates I want on KE they have first/business saver space. With SQ, I may need to adjust a day or two, but its there.

Really good question and the answer (for me) is simple: I'm within striking distance of Lifetime Platinum with Marriott and I want to hit it before any potential change to eligibility requirements.

Otherwise, I'm generally with you on CSR vs. Marriott.

Another possible reason for Marriott are travel package redemptions, I guess.

For FTers, transfer partners are key when evaluating a rewards credit card. But the vast majority of the credit card-using population has no idea what a transfer partner is, or how to use them, or why doing so it a good idea. Which is why Chase would probably cut UA in a heartbeat if UA insisted on charging too much more for its miles. Chase is already trying to cut costs with the CSR program. Saying sayonara to UA is one way to do that.

This is on Monday's (23OCT2017) Wall Street Journal. Headline:

J.P. Morgan, United Renegotiating Card Partnership
United said they are focusing on terms of the partnership as a way to try to increase profitability

Would AMEX be able to take United while keeps partnership with Delta?

A very poorly written article with not much detail.

An article in Fortune, which is based on the WSJ piece, includes this observation:

...in other words, there could be a change in the financial terms (e.g. Chase could pay UA more for each new card account opened, or more per mile), but we would see no difference in the Chase products.