By Callum Keown

Airline stocks jumped Monday as tariff fears eased and United Airlines hiked fees for its rewards credit card and annual lounge membership.

United and JPMorgan Chase said they were adding new benefits, including rideshare credits, car rental and hotel awards, that will increase the value of its co-branded credit cards. But it means consumers will be paying more annually -- for example the United Club card will now cost $695, up from $525.

The price of lounge memberships will rise for those who don't have the club card, The Wall Street Journal reported. United did not immediately respond to a request for comment Monday.

United stock climbed more than 6% in morning trading, while Delta Air Lines rose 4.6% and American Airlines was up 3.2%. The sector was also helped by broader market gains Monday amid reports that President Donald Trump's tariffs on April 2 may not be as severe as expected.

Travel stocks have been significantly exposed to trade developments in recent months as fears have mounted that consumers may be pulling back on spending.

With signs of demand softness, carriers are looking at alternative ways to boost revenue. Southwest Airlines said earlier this month that it plans to start charging for checked bags, bringing an end to its 'bags fly free' policy after 54 years. It's part of a range of measures designed to boost revenue growth.

United generated $3.5 billion from 'other' operating revenue in 2024, a 10% increase from the previous year. That was driven by an increase in mileage revenue from non-airline partners, including credit card spending with Chase, and a rise in United Club memberships, the carrier said in its recent annual report. Other operating revenue also includes that generated from lounge passes.

Chase buys miles from United and then loyalty program members can earn those miles by making purchases using a MileagePlus card or by buying goods and services from United's non-airline partners.

In times of weakening demand having a strong loyalty and credit card program can be a timely boost to revenue. With a number of recent warnings from the largest U.S. airlines, it looks like they might soon show their worth.

Write to Callum Keown at callum.keown@barrons.com

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March 24, 2025 11:06 ET (15:06 GMT)

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