Proprietary Sapphire Reserve directly competes with United Cards
Jun 27, 2019, 7:58 am
#1
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Proprietary Sapphire Reserve directly competes with United Cards
“Sapphire Reserve Strains JPMorgan’s Ties With United Airlines
Bank faces tough balancing act: promoting its own card while keeping happy airline partner that wants more money for miles”
https://www.wsj.com/articles/sapphire-reserve-strains-jpmorgans-ties-with-united-airlines-11561627802
I have both cards and heading favorably in the CSR direction due to the considerable perks. I may keep the United card though given the paid bags outweighing the annual fee.
Last edited by vanillabean; Jun 27, 2019 at 9:39 am Reason: Title clarification
Jun 27, 2019, 9:12 am
#2
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True, this! Unfortunately I can't access the article because I'm not a subscriber, but I get the gist. The writing was on the wall 2 years ago, when consumers massively KEPT their CSR's at renewal time. Our household downgraded 3 United cards to the fee free version, and kept the CSRs. It doesn't help that United award flights got so tremendously expensive to redeem. I like long haul business class, and its become a slow trek to get enough points to find a motivating redemption. By leaving the points parked at Chase as UR's, I'm not locked in.
Jun 27, 2019, 10:02 am
#3
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The solution seems simple - allow credit card holders to earn PQM at various spending thresholds like Delta/AMEX do
Jun 27, 2019, 10:30 am
#4
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United executives have told JPMorgan they believe the Sapphire Reserve card is competing directly with the airline’s cards and siphoning off customer spending, according to people familiar with the matter
- withdraw from Ultimate Rewards
- cap annual transfers from UR to UA
- change the UR to UA transfer ratio
Any one of these changes would encourage people who want to accumulate UA miles to use a UA co-branded card.
Jun 27, 2019, 10:44 am
#5
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UA is OK with Chase issuing cards for other airlines, but not with Chase promoting its own rewards program? Simple enough to fix. UA can:
- withdraw from Ultimate Rewards
- cap annual transfers from UR to UA
- change the UR to UA transfer ratio
Jun 27, 2019, 11:04 am
#6
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And/or increase earn rate on UA card spending.
Jun 27, 2019, 1:17 pm
#7
Join Date: Aug 2016
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I don't know exactly how these co-branded cards work, but somebody nerfed the 40% points bonus for spending at least $25K / year on the Explorer card. That was a nice incentive to keep the card in one's wallet (Guess they thought the 2x for dining was a suitable replacement). The Amex/Delta and Citi/Barclays/American cards, as weak as they are, offer incentives for actually using their cards. What did UA expect? Were we supposed to use their cards out of the kindness of our hearts?
Jun 27, 2019, 2:11 pm
#8
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At least CSR holders have an idea of what their TYPs are worth. UA miles are black-boxed value; you have no real incentive to compile them. That is purely United's fault. As ye sow, so shall ye reap.
Jun 27, 2019, 6:17 pm
#9
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I think Bear is correct, big picture. The reason transferable points are gaining value so rapidly (and thus tilting the balance of value between bank cards and co-branded cards) is the rapid devaluation of individual award currencies. UA will push that for themselves even further with dynamic pricing, and have to use band-aids like pulling away from UR as a transfer partner. IMHO it's undoubtedly the right idea, if you're thinking short-term solutions to issues caused by your overall strategy, just like cutting benefits for CC users cuts costs. But that's all based on a strategy of minimizing the liabilities for point spend instead of incentivizing incremental revenue from increased CC or flight revenue.
I'm sure for us as consumers it will get worse (at least with the oligopoly airlines; smaller carriers may still sell loyalty value) before it gets better.
Jun 27, 2019, 11:24 pm
#10
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And yet somehow Delta seems to be making it work with Amex, despite Skymiles being even more devalued than MP and MR being at least comparable to UR. Maybe United should try copying Delta and add some benefits to their cobrand cards that are actually valuable to frequent flyers. Or does the “Copy Delta” chapter in the management handbook only cover devaluations?
Jun 28, 2019, 6:09 am
#11
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And yet somehow Delta seems to be making it work with Amex, despite Skymiles being even more devalued than MP and MR being at least comparable to UR. Maybe United should try copying Delta and add some benefits to their cobrand cards that are actually valuable to frequent flyers. Or does the “Copy Delta” chapter in the management handbook only cover devaluations?
Jun 28, 2019, 5:13 pm
#12
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I haven't read the WSJ article since it's behind a pay wall.
But supposedly a lot of this discontent is coming from Kirby, who supposedly is the one who negotiated the current deal in 2015 with Chase which runs to 2025.
But supposedly a lot of this discontent is coming from Kirby, who supposedly is the one who negotiated the current deal in 2015 with Chase which runs to 2025.
Jun 28, 2019, 10:27 pm
#13
Join Date: Apr 2003
Location: Scottsdale AZ
Posts: 727
Great article. United supposedly has asked chase to pay more for its miles. When the sapphire reserve came out, United cards dropped. Mileage plus was 55% of carrier revenue.
For me the chase United is a keeper. Two lounge passes worth $10 each, can use card to defeat basic economy- three one way segment per year pays for itself. Used to use the primary car rental insurance but duplicated with chase sapphire and us bank altitude reserve.
Once I’m under 5/24 will get business version and drop personal explorer card. Business version is tax deductible, so effective $60 annual fee- two one way segments in basic economy to come out ahead.
For me the chase United is a keeper. Two lounge passes worth $10 each, can use card to defeat basic economy- three one way segment per year pays for itself. Used to use the primary car rental insurance but duplicated with chase sapphire and us bank altitude reserve.
Once I’m under 5/24 will get business version and drop personal explorer card. Business version is tax deductible, so effective $60 annual fee- two one way segments in basic economy to come out ahead.
Jun 28, 2019, 10:27 pm
#14
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Jun 29, 2019, 3:22 am
#15
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