To beef up revenue, United Airlines is becoming the latest airline to try to sign up their passengers for co-branded credit cards including the MileagePlus credit cards and the MileagePlus Business Credit Cards. As of Sept. 1, it will be mandatory for flight attendants to make a sales pitch for the credit card, according to the Los Angeles Times.
While flight attendants used to have the choice of whether they wanted to make a sales pitch for the cards and reaped rewards for any passengers who registered, they now don’t have a choice. They are required to try to sign up passengers for the United Explorer card.
How Much Revenue Can Airlines Earn from Credit Cards?
Credit card revenue offers big bucks for airlines. Collectively in 2017, the biggest airlines in the U.S. earned $24.6 billion from products other than airfares. That included selling rewards points to various credit card issuers. When airline credit card cardholders spend enough money to reach extra bonus point incentives from their credit card companies, those companies will purchase miles from the airlines.
Any extra perks those credit card companies offer their users also come with a price tag, and the airline is the one to benefit. Credit card companies spend a lot of money to line up those extra benefits like free checked luggage and early check-ins.
The money brought in by these credit card rewards is a major source of revenue for the airlines, according to Jay Sorensen, president of IdeaWorks Co., which consults with airlines on boosting revenues.
“It’s worth multiple billions of dollars for the big three major airlines,” he said, according to the Los Angeles Times.
With United Airlines’ net income trending upward, this credit card sales pitch should only help boost revenues even higher. In the first quarter of 2018, the airline posted a $147 million net income, which was $48 million more than the first quarter of 2017.
Reading the Fine Print on United Explorer Card Offer
It’s likely some passengers will be annoyed by the pitch, but some will also buy into it. For passengers who decide to sign up, it’s important for them to read the fine print before they apply.
The United Explorer card, offered by Chase, currently offers cardholders 40,000 bonus miles if they spend at least $2,000 on their cards in the first three months of membership. As an extra perk, they’ll receive a $100 statement credit after they make their first purchase on the card.
For every dollar that’s spent at restaurants, the card issues two times the miles. If hotel accommodations are made directly with a hotel, the card will also pay two times the miles. In addition to the double miles opportunities, the card offers a $100 global entry fee credit and 25 percent back on any food, drinks, or Wi-Fi purchases on United flights. They’ll also get a free checked bag and priority boarding.
When cardholders use their rewards points, there are no blackout dates. Plus, their points won’t expire (providing their account remains open).
Before consumers sign up for this card, however, they’ll need to assess whether they’ll use it enough to justify the annual fee. Although the fee is waived for the first year, every year after that, the annual fee is $95.
Furthermore, passengers should know that applying for a credit card – whether or not they get approved – can ding their credit score by a few points thanks to the credit inquiry. It’s also important to have a general idea of whether having multiple credit cards could hurt your credit score.
Author: Shannon Serpette
Your Guide to Financial Freedom
Money tips, advice, and news once a week
Join the LendEDU newsletter!Thanks for submitting!Please Enter a valid email
Credit Cards by Brand
Best Credit Cards by Type