United Airlines is set to increase fees for its annual airport lounge memberships and co-branded rewards credit cards. This decision, announced on Monday, poses a significant test of consumer willingness to invest in valued travel perks. The airline simultaneously unveiled attractive sign-up bonuses for its co-branded credit cards in partnership with JPMorgan Chase, alongside exciting new benefits for cardholders, such as ride-share credits and discounts on award flights.
Despite the fee increases, Richard Nunn, the chief executive of United's MileagePlus loyalty program, emphasized the airline's commitment to ensuring that the value of the benefits offered significantly outweighs the increased costs. "Yes, there are fee increases, but we were very, very cognizant of ensuring that the value increments and the benefits that are delivered outweigh any increase in the cost of those cards," he stated during a press briefing. Nunn also noted that these changes have been in the works for over a year, demonstrating careful consideration of customer needs and preferences.
As the travel industry evolves, airlines have consistently raised prices on various services, from checked baggage fees to seat assignments. Many perks that were once included in the initial cost of co-branded credit cards have now become additional charges. Over the past couple of years, United has welcomed approximately 17 million new MileagePlus members, and the airline views these new card perks as a strategic move to attract more customers to its co-branded credit cards.
In its recent annual filing, United Airlines reported a substantial increase in revenue, generating $3.49 billion from sources beyond passenger and cargo fees, marking a 10% rise from the previous year. This growth is largely attributed to increased spending on co-branded credit cards and other partnerships, as well as enhanced revenue from airport lounge memberships.
Starting Monday, United Airlines will introduce two tiers of memberships for its United Club airport lounge network. Individual memberships will now be priced at $750 a year or 94,000 United loyalty points, granting access solely for the passholder. For customers who wish to bring up to two guests into the lounge, the cost will rise to $1,400 or 175,000 miles, applicable to both United Clubs and partner lounges in the Star Alliance. Previously, lounge memberships that included guest access were priced at $650 a year, with discounts available for elite frequent flyer members. Existing members will retain their original membership terms until their current subscription expires.
The new credit card fees will take effect for new sign-ups starting Monday, although existing card members will enjoy the newly introduced benefits. The United Explorer card will see its annual fee increase from $95 to $150, now including a $60 rideshare credit. The United Quest card will rise from $250 to $350 annually, featuring $100 in rideshare credits, two upgrades to extra legroom seats, and $200 in United travel credits. The United Club Infinite Card will also see an increase, now priced at $695 per year, up from $525, and will include an annual lounge membership, $150 in rideshare credits, and the ability to earn Premier 1K elite status through card spending along with bonus qualifying points.
With these changes, United Airlines aims to enhance the value of its offerings while navigating the evolving landscape of consumer travel preferences and spending habits.
