View Poll Results: No longer transfer Chase UR→UA @ 1:1 ratio (or at all)? What to do? What to do?
[NO] UA Card, [NO] Ultimate Rewards Card → [NO CHANGE] I still don't want any UA/UR Chase product
8.06%
[✓] UA Card, [NO] Ultimate Rewards Card → [NO CHANGE] I keep my UA card and [DO NOT] carry UR card.
9.48%
[✓] UA Card, [NO] Ultimate Rewards Card → [I KEEP] my UA card(s) and [ADD] UR Chase card(s).
3.79%
[✓] UA Card, [NO] Ultimate Rewards Card → [I CLOSE] Chase UA card and [DO NOT WANT] a UR Chase card.
1.90%
[NO] UA Card, [✓] Ultimate Rewards Card → [NO CHANGE] I dont carry a UA card and I [KEEP] my UR card
25.59%
[NO] UA Card, [✓] Ultimate Rewards Card → I [ADD] a UA card and I [CLOSE] my UR card.
0
0%
[NO] UA Card, [✓] Ultimate Rewards Card → I [ADD] a UA card and I [KEEP] my UR card.
0.95%
[✓] UA Card, [✓] Ultimate Rewards Card → [NO CHANGE], I keep [BOTH] my UA and UR Chase cards.
24.64%
[✓] UA Card, [✓] Ultimate Rewards Card → I [KEEP] my UA card(s) and [CLOSE] my UR card(s).
2.37%
[✓] UA Card, [✓] Ultimate Rewards Card → I [CLOSE] my UA card(s) and [KEEP] my UR card(s).
23.22%
Voters: 211. You may not vote on this poll

United pushes JPM on Sapphire Reserve

Old Jul 4, 19, 7:09 am
  #256  
 
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Originally Posted by jsloan View Post

I believe your swipe fee is a little high.

Iím certain that your mileage purchase fee is a lot high. The estimate Iíve seen is half a cent each. Iíd put an absolute cap at 1.5 cents each, because I donít see any way that they would pay UA a higher rate in transfers than they offer through the travel portal, but the .5 cent estimate feels like itís in the right ballpark to me.

Remember, Chase buys a lot of miles (literally, billions).
Taking your advice into consideration only proves that UA doesn't make as much off of Award trips generated exclusively from Chase Explorer generated points as it does from cash revenue, and that was basically the point of my simulation.

Of course we don't know what UA's true costs are and how low they can/are willing to go as far as their agreement with Chase before it becomes unprofitable. Also, as mentioned earlier, there are lots of miles that go unredeemed and I'm sure that UA factors that in as well.
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Old Jul 4, 19, 8:03 am
  #257  
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Originally Posted by phkc070408 View Post
Taking your advice into consideration only proves that UA doesn't make as much off of Award trips generated exclusively from Chase Explorer generated points as it does from cash revenue, and that was basically the point of my simulation.
UA wants its cakes and to eat them all too. Not an easy trick for UA to pull off forever even if UA were always able and effective to hoodwink its bank partner and mileage program customers.

UAís at a point too where its making money from one business activity runs up against its making money from another business activity. Thatís UA the cannibal today.
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Old Jul 4, 19, 12:08 pm
  #258  
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Originally Posted by phkc070408 View Post
...
1. Chase collects a 2% swipe fee from retailers, of which 1% goes to UA ...
Merchant fees are higher than 2%, even for major retailers. Serious doubt UA gets anyway near 1%, even 0.5% is probably on the high side.

Originally Posted by phkc070408 View Post
... 2. Chase purchases the miles from UA at a bulk discount of 50% off the price consumers would pay, 0.0175 per mile. ...
UA regularly sells miles at 2 cpm. Chase provides cardholders 1 cpm statement credit. So 0.5 cpm or less is probably closer to reality.
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Old Jul 4, 19, 12:55 pm
  #259  
 
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Originally Posted by WineCountryUA View Post
Merchant fees are higher than 2%, even for major retailers. Serious doubt UA gets anyway near 1%, even 0.5% is probably on the high side.
So while Merchant fees are higher than 2% for most retailers, the entire 2% does not go to Chase (even if the Merchant is using Chase as the processor). So using Chase as an example, when a Chase card is swiped Chase gets a fee, Visa gets a fee, then the Merchant's processor gets a cut (the largest are Worldpay and First Data, Chase also does Merchant processing). So for large retailers I doubt Chase is getting anywhere near 2% of the transaction volume.
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Old Jul 4, 19, 4:26 pm
  #260  
 
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Originally Posted by N104UA View Post
So while Merchant fees are higher than 2% for most retailers, the entire 2% does not go to Chase (even if the Merchant is using Chase as the processor). So using Chase as an example, when a Chase card is swiped Chase gets a fee, Visa gets a fee, then the Merchant's processor gets a cut (the largest are Worldpay and First Data, Chase also does Merchant processing). So for large retailers I doubt Chase is getting anywhere near 2% of the transaction volume.
For co-branded credit cards, the c0-brand also gets a cut. So AA, DL and UA all get a percentage of the spend made on all purchases on their cards.
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Old Jul 4, 19, 4:53 pm
  #261  
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Originally Posted by uanj View Post
For co-branded credit cards, the c0-brand also gets a cut.
Yes, but the formula probably isnít the same between all given banks and their respective bank card affinity partners.

I wouldnít rule out that the inside knowledge of some other companyís/companiesí formula arrangements in this market may be what is part of the driver behind UAís complaining about Chase UR cards.

Chaseís UR is costing UA a substantial enough chunk of its UA card business that UA management wants a change.
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Old Jul 4, 19, 5:32 pm
  #262  
 
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UA Retaliates Against Chase

Will that be the headline...when UA no longer participates in UR? Or, creates a redemption rate that makes using UR-cards a less attractive alternative than UA cards (say 4 UR--> 1 UA).

Someone posted that Chase and UA have a six year agreement on their co-branded cards (IIRC). That agreement does not necessarily have anything to do with their UR agreement.

Stay tuned, the other shoe may drop sooner, if not later.
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Old Jul 4, 19, 5:37 pm
  #263  
 
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No business leaves money on the table, they make a profit...

over the years I have taken many trip that I never would have taken

Love the FA Card pushers been a good ride,,
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Old Jul 4, 19, 6:14 pm
  #264  
 
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Originally Posted by 747FC View Post
Will that be the headline...when UA no longer participates in UR? Or, creates a redemption rate that makes using UR-cards a less attractive alternative than UA cards (say 4 UR--> 1 UA).

Someone posted that Chase and UA have a six year agreement on their co-branded cards (IIRC). That agreement does not necessarily have anything to do with their UR agreement.

Stay tuned, the other shoe may drop sooner, if not later.
Sure, if UA wants to be the man that bites the dog (or if Scott Kirby feels like trying). Lowering UA redemption rates from UR would be the single-fastest way to kill that relationship.
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Old Jul 4, 19, 6:15 pm
  #265  
 
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Originally Posted by GUWonder View Post


Yes, but the formula probably isnít the same between all given banks and their respective bank card affinity partners.

I wouldnít rule out that the inside knowledge of some other companyís/companiesí formula arrangements in this market may be what is part of the driver behind UAís complaining about Chase UR cards.

Chaseís UR is costing UA a substantial enough chunk of its UA card business that UA management wants a change.
Yes. UA has two problems, the first is their deal is not as good as their two main competitors. The second is the UA card portfolio is declining in value and revenue generation because Chase is directly competing with the UA cards with their new travel cards. UA has a big challenge here. Who negotiated the current Chase UA deal? Was it the CFO who went to PayPal (the one who publicly stated certain UA frequent travelers were over-entitled)? Chase did provide some of the bankruptcy financing so maybe the deal goes back even further.
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Old Jul 4, 19, 6:19 pm
  #266  
 
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Originally Posted by 747FC View Post
Will that be the headline...when UA no longer participates in UR? Or, creates a redemption rate that makes using UR-cards a less attractive alternative than UA cards (say 4 UR--> 1 UA).
Does it work that way? I would have guessed that Chase sets the exchange ratio. They pay a certain negotiated price for UA miles (and buy them en bulk by the billions). Then they decide how many miles they are willing to give me for each UR point. Can UA simply and overnight raise the price? I assume Chase has a long term contract for that, too. Maybe tied to the purchase of UA miles for UA cards. Maybe separately.

Something will change, eventually. I am not going to worry now about what I can’t control. I haven’t shopped recently for UA award flights, but I suspect that I will simply have less desire to get UA miles by any means given the dynamic pricing devaluation 4:1 or 1:1 makes zero difference to me if the price for an award is 200k-300k miles.

and then there is the impact of the next recession
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Old Jul 4, 19, 6:56 pm
  #267  
 
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Originally Posted by PsiFighter37 View Post


Sure, if UA wants to be the man that bites the dog (or if Scott Kirby feels like trying). Lowering UA redemption rates from UR would be the single-fastest way to kill that relationship.



It is a transactional relationship. UA already appears to assert that Chase has negatively impacted the value of their cards (and profit). How to regain that value: Make Chase UR cards a less attractive alternative in the only way they can, by changing the negotiated redemption rate.

Originally Posted by notquiteaff View Post

Does it work that way? I would have guessed that Chase sets the exchange ratio.
...
Something will change, eventually. I am not going to worry now about what I can’t control. I haven’t shopped recently for UA award flights, but I suspect that I will simply have less desire to get UA miles by any means given the dynamic pricing devaluation 4:1 or 1:1 makes zero difference to me if the price for an award is 200k-300k miles.








I can't imagine anyone on this board knows how it really works, but with two parties involved, certainly it is not Chase that sets the exchange ratio. After all, Chase is purchasing UA miles, so UA has some say in how much they charge for their miles. Like any economy, there is a degree of inelasticity. Set the price too high and the purchaser (Chase or its frequent flyer clientele) find another alternatives.

Last edited by 747FC; Jul 4, 19 at 6:58 pm Reason: grammar
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Old Jul 4, 19, 7:15 pm
  #268  
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We would almost certainly get some advance notice before a UR to UA exchange rate adjustment.

I do have to wonder if UA management is complaining about Chase UR because UA management is struggling to try to live up to investor expectations and trying to fill the gap with a desperate earnings management tool or strategy built upon assistance from Chase.

UA should know better than to try to beat up its domestic partner.
Originally Posted by 747FC View Post
It is a transactional relationship. UA already appears to assert that Chase has negatively impacted the value of their cards (and profit). How to regain that value: Make Chase UR cards a less attractive alternative in the only way they can, by changing the negotiated redemption rate.



I can't imagine anyone on this board knows how it really works, but with two parties involved, certainly it is not Chase that sets the exchange ratio. After all, Chase is purchasing UA miles, so UA has some say in how much they charge for their miles. Like any economy, there is a degree of inelasticity. Set the price too high and the purchaser (Chase or its frequent flyer clientele) find another alternatives.
I am pretty certain that UA canít change mileage prices so quickly and easily when it comes to its contractual counter-party with whom itís in a massively material value, long-term contract for selling huge numbers of miles. And that would mean the price change would have to be agreed by both sides prior to becoming effective.

The biggest bank card issuers have had lawyers tighten up these agreements over the years and I doubt that theyíve gotten so sloppy as to make exiting or breach ó or a contrived exit to veil intent to breach ó any easier for the airlines than before. Speaking of the airlines for whom the banks have affinity bank cards.
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Last edited by WineCountryUA; Jul 5, 19 at 12:00 am Reason: merging consecutive posts by same member
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Old Jul 4, 19, 7:17 pm
  #269  
 
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Something I learned when using my MileagePlus Explorer miles is that you of course don't get reward miles on reward tickets...whereas if you book through the CUR portal you get miles.

I don't have a CSR or CSP but I'm thinking of opening it and cancelling my MileagePlus card before next year's annual fee. Or maybe I'll keep it. I dunno, the 2 lounge passes is kinda nice. I'm *A Gold but it's nice to have lounge access for domestic flights for one trip at Terminal C in EWR. Lol.
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Old Jul 4, 19, 7:26 pm
  #270  
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Originally Posted by kac2138 View Post
Something I learned when using my MileagePlus Explorer miles is that you of course don't get reward miles on reward tickets...whereas if you book through the CUR portal you get miles.

I don't have a CSR or CSP but I'm thinking of opening it and cancelling my MileagePlus card before next year's annual fee. Or maybe I'll keep it. I dunno, the 2 lounge passes is kinda nice. I'm *A Gold but it's nice to have lounge access for domestic flights for one trip at Terminal C in EWR. Lol.
If UA somehow allowed earning elite status miles on UA-issued award tickets using UA miles earned-and-redeemed from UA card spending and did so where I would earn 200% of distance flown, I would consider getting and using a UA bank card. But UA elite status is already of questionable worth for me; and status miles inflation presents its own risks longer term.
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