A row of United Airlines passenger planes parked at gates at Denver International Airport in Denver, Colorado.
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United Airlines is raising fees for annual airport lounge membership and its rewards credit cards, a test of how much consumers will shell out for popular travel perks.
The carrier announced the changes Monday alongside sign-up bonuses for its co-branded cards from JPMorgan Chase, as well as new cardholder benefits including rideshare credits and award flight discounts.
“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,” Richard Nunn, chief executive of United’s MileagePlus loyalty program, told reporters. United had been working on the changes to its card portfolio for the past year or so, Nunn said.
Airlines have steadily increased the prices of everything from checked bags to seat assignments and offered perks that used to come for free as part of a package when customers sign up for co-branded credit cards.
They have also raised the price and tightened entry requirements to get into popular airport lounges as the number of premium-credit-card holders and travelers with elite status grows and has led to crowding at some facilities. American, United and most recently Delta Air Lines, operate separate tiers of lounges for customers traveling in long-haul business class, and they’ve all opened larger lounges in recent years.
United added about 17 million Mileage Plus members over the past “couple of years” Nunn said, and views the new card perks as a way to encourage more United flyers to sign up for the co-branded cards.
Loyalty revenue, including from popular rewards credit cards, has given airlines a windfall. Aside from passenger and cargo revenue, United brought in $3.49 billion in “other” revenue last year, up 10% from the year before, mostly due to an increase in co-branded card spending and other nonairline partners, as well as airport lounge memberships, it said in its annual filing last month.
Here’s what’s changing with lounges:
Starting Monday, United will offer two tiers of memberships to its United Club airport lounge network.Individual memberships will go for $750 a year or 94,000 United loyalty points, with access for the passholder only.For customers looking to take up to two guests into the lounge, it will cost $1,400 or 175,000 miles, for United Clubs and Star Alliance partner lounges.Lounge memberships, including two guests, previously cost $650 a year, though there were discounts for customers with elite frequent flyer status.Customers with an existing membership will keep the terms that they signed up for until their membership expires.
Here are the credit card fees that are changing and some of the new benefits:
The new fees go into effect with new sign-ups starting Monday, but benefits will be active for existing card members.The United Explorer card goes to $150 a year from $95, and additional benefits include a $60 rideshare credit.The United Quest card goes to $350 a year from $250 and includes $100 of rideshare credits, two upgrades to extra legroom seats and $200 in United travel credits.The United Club Infinite Card goes to $695 a year from $525, which also includes an annual lounge membership, $150 in rideshare credits and the ability to earn Premier 1K elite status through card spending and bonus qualifying points.
Correction: United brought in $3.49 billion in “other” revenue last year, up 10% from the year before. An earlier version misstated the timing.
