Photo (cc) by BriYYZ
This post is from partner site LowCards.com.
Continental and United announced their merger on Monday. Reward card and frequent flyer members should prepare for changes.
Both companies are describing this merger as good for members of their frequent flyer programs. According to their official announcement, “the merger will create the industry’s leading frequent flyer program, providing more opportunities for more customers to earn and redeem more miles in more places worldwide with more partners.”
“It is too soon to predict if frequent flyer members will benefit from this merger. Combining the two airlines will cut costs for airlines but it will likely reduce the number of routes and seats for travelers. This could lead to higher prices for tickets and less availability,” says Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook. “Obviously, the seats go to the paying flyers first, so it is going to be even more difficult to use your miles to book the flight that you want. You may also have to earn and redeem more miles as the ticket prices increase.”
Related Story: United/Continental Merger: Good for Airlines, Not Consumers
Possible Changes for Airline Reward Cards:
Both airlines have their own credit card rewards program (the Continental World MasterCard and the United Mileage Plus Signature Visa) and cardholders will continue to receive mileage credit when using them. After the merger goes into effect, some cardholders will have to get a replacement for the new airlines. After Northwest Airlines merged with Delta, the Delta Skymiles card replaced the Northwest Airlines Worldperks Visa.
It is probable that the new reward card will cost more for some customers than current card because the two current cards are different.
The Continental World MasterCard offers 25,000 bonus miles after the first purchase. It offers 2 miles per $1 spent when you purchases tickets from Continental using the card. It offers 1 mile per $1 spent on all other purchases. The annual fee is $85. Additional miles cost $32 per 1,000 miles.
The Mileage Plus Signature offers 30,000 bonus miles after you spend $250. It offers 1 mile per $1 spent. The annual fee is $65. Additional miles cost $67.25 per 1,000 miles with a $35 processing fee.
“Switching to the replacement card may be relatively easy for most cardholders because both cards are issued by Chase,” says Hardekopf.
“However, this is a good time to re-evaluate your reward cards. Do you use the points? Have they been accumulating for years and you still aren’t close to a free ticket. For the average consumer, it takes several years to accumulate enough points for a free ticket and this could possibly get more difficult with the merger. If it takes over two years to earn a ticket, consider switching to another card that allows you to use points for cash, hotels, or retail purchases. You can redeem at much smaller increments and use the points faster.”
The Merging of Frequent Flyer Programs:
The OnePass and Mileage Plus programs will continue to operate independently until the merger is completed. Miles in both programs are still valid and able to be used according to existing program rules. Eventually, a new frequent flyer program will blend both programs together.
Miles held in both programs will be combined together, more than likely on a 1:1 basis. If you participate in both programs, this merger could allow you to combine points from both programs and accelerate your path to a ticket.
“Pay attention to the the notices you receive that describe the changes. It is possible that the new terms could change your frequent flyer points. If you have enough points for a free ticket, the best idea may be to protect yourself and use them now,” says Hardekopf.