VFR

Correct, it is quite dependent on what travel purchase you redeem for. Flights are most likely the most expensive for Chase, since commissions are usually 3% - 4% of the airfare cost and Expedia takes a cut of that as well.

My takeaway from this is that Chase likely doesn't have to make that many tweaks to make this card profitable; since it's tough to know the spending breakdown, the ways points are redeemed, and the breakage rates, it is quite possible the card is already overall profitable as-is.

However, I still think that 3X points (potentially 4.5% back) on travel and dining + priority pass + marginally useful travel insurance is not competitive for an ultra-premium card any more, and to offer any additional benefits that are actually useful Chase will likely have to cut somewhere else. If they go to an Amex-style breakage-based model, they risk angering the folks who enjoy the simple rewards structure, but maintaining broad, applicable benefits hurts profitability.

Currently, I honestly think that the best course of action for Chase here is to raise the annual fee by $100 and add United Club access (contingent on their co-brand negotiations with UA). If they can pay a similar per-visit amount to UA as to Priority Pass, this will likely end up a wash, and it will make the card feel higher quality than every other card that offers a Priority Pass membership, since the value proposition of Priority Pass (and perception as a premium product) seems to have been severely diluted due to the number of cards that now offer it.