STS-134

Presumably they do make money on the annual fee, even if you spend absolutely nothing on it. My total spend for all of 2018 was around $300 (mostly on Amex offers). I've actually already surpassed that this year, as I just spent $1500 on airfare on the card. I'll probably spend a couple thousand more on airfares this year as I've started to shift some spend over to Amex and MR (which is useful for transferring to Hilton whenever they have transfer bonuses) because I have an excess of UR points at Chase (around 500k) that I haven't been able to use. I still have around 250k UA RDM and I'd have to exhaust those first before I start dipping into my UR points, so it's probably going to be a while. In any case, Amex *does* have to be making some money even if you spend nothing on the card and only pay the AF.

Visconti

Personal Plat is $550 and Bus Plat will be $595? I suspect there will be some cardmember attrition, at least from the latter when the new fee scheme kicks in, which should help with the crowding.

NYC Flyer

Agreed, and they care more specifically about the number of Plat card members that use the card as their primary card without overthinking whether each incremental dollar of expenditure should go to Citi, Chase, Amex, etc. The cardmember that uses all the credits, and gets to airport 3 hours early for a business trip to make a meal out of a lounge visit to the Centurion or SkyClub, but allocates 95% of their everyday spend to Chase, is obviously not contributing to the bottom line. If these programs were tailored for this audience, all the issuers would go bankrupt (well, not really, they'd just "enhance" their way to profitability again).

STS-134

Of course. Amex cares about those people like the airlines care about the pax who spends $15k on a O/W F ticket 10 times a year. If they're going to fight to keep a customer, that's the one they're going to choose. That's just good business. At the same time, without the people who spent $250 to sit at the back of the plane, the entire flight wouldn't be economically viable, because there aren't enough people who spend $15k on O/W F tickets to fill the plane in the first place. So the airline really needs both to make the flight work. And there likely aren't enough cardmembers who put $1M+ of spend on the Plat card to make the Centurion lounges (or even the entire Platinum card program) economically viable. Part of the business model is getting people to pay for benefits that they feel good about, because they can use them as much as they want, but end up not actually using them enough to make up the fees that they paid. That's exactly how Priority Pass works How does Priority Pass stay profitable? Now I'm not sure what Amex pays them, but I went through around $120 worth of restaurant bills on my PP cards in 2 weeks last year. If every PP holder did this, PP would certainly go bankrupt. It's the many once a year travelers that hold AXP Plat and CSR cards that end up subsidizing everyone else. This actually extends to any all-you-can-use/eat business model.

SP03

After the fee credits, the Amex Platinum Consumer is basically (550-200 uber-200 airline-100 Saks) $50. So how many lounge visits can you get for $50 a year? A poster earlier mentioned that he barely spends anything on Amex other than to use the Amex Offers, so how would that cardmember ever be profitable?

Sure, not everyone maximizes the $500 fee credits, but those savvy enough to have a multi card strategy to maximize return on spending probably do.

STS-134

Sadly, we don't even know this. Because the agreements between Amex and all of these third party organizations (Uber, the airlines, Saks Fifth Avenue, Priority Pass, etc) are all secret, we have no idea if Amex actually pays the face value of what their cardholders are getting. For example, does Amex actually pay Uber $200 if a cardholder uses $200 in Uber credits, or has Uber agreed to take less than 100% of the face value of the benefit because they believe it will drive business growth? Only those inside Amex and Uber know. The same goes with the airlines and with Saks.

I would suspect that there was some discount compared to the face value, but this is only speculation on my part. Perhaps Amex was in discussion with both Uber and Lyft about this program, and Uber agreed to give Amex Platinum cardholders $200 worth of benefits in exchange for only $150, but Lyft wanted $175 for it, so Uber got the deal. Uber seems more focused on growth than profitability right now, and so maybe they were willing to take a 25% hit in order to do what they believe is necessary to prevent some customers from going to Lyft, by getting them in the habit of using Uber.

NYC Flyer

Agree. I'd say 80/20 applies here, and that $50k-$100K spend per year is still considered a valuable customer.

True. It's just the savvy ones that stop spending on the card after that, yet expect retention bonuses annually that are a drag on the system.

A safe bet that Amex is paying vendors for the amenities/credits at varying degrees of "wholesale" discounts, in part because the credit-related transactions allow an opportunity for the vendor to establish/grow their own relationship with the cardmember.

mia

I think it has been established that American Express does not pay for the Saks benefit, and I doubt that they pay for the Uber discounts. It would be interesting to know if American Express pays Priority Pass on a membership basis or by the visit, but either way it seems to safe to assume they pay a small fraction of the consumer prices.

Kacee

1. FHR.
2. 5x MR on airline tix. And Amex has more, better transfer partners than Chase.
3. IAP.
4. DL SkyClub Access.
5. Escape lounge OAK, MSP.
6. National Executive.
7. $200 Uber Credits.
8. $200 airline credits.
9. Global Entry.
10. Priority Pass (though I think I get that through other cards, too).

Centurion barely makes my top ten.

I believe the Plat benefit to me is worth well over $3000/year.

fliesdelta

I agree. Several of my usual destinations (and hubs where I tend to connect, I fly DL most of the time) don't have a Centurion club, but I do use most of the benefits listed on the post I just quoted. For example, I visit SJC at least 8-10 times a year, and the only lounge there is a PP lounge. I connect at ATL/DTW/MSP, all of which have decent Skyclubs but no Centurions.

Kacee

And DL SkyClub SFO is outstanding.

fliesdelta

It most certainly is, and much larger than the SFO Centurion club.

ESpen36

Also add the value of Emergency Medical Evacuation coverage. No stated limit, and you do not have to pay with the card for coverage to apply. (That makes it different from all other cards, that require you to pay at least some portion of the ticket with the card.) For me, that's worth $50/year once you subtract the credits from the annual fee (Uber, airline, Saks).

entropy

And no trip delay/cancellation coverage, which obviates the 5X on tickets, where you can get 3X on a chase card with those protections.

1. FHR. (fair enough)
2. 5x MR on airline tix. And Amex has more, better transfer partners than Chase. (see above)
3. IAP. (really?)
4. DL SkyClub Access.( now pretty restricted, esp with a SO)
5. Escape lounge OAK, MSP. (meh)
6. National Executive. (meh)
7. $200 Uber Credits. (sure)
8. $200 airline credits. (hard to use now)
9. Global Entry. (useless as a NEXUS member)
10. Priority Pass (though I think I get that through other cards, too).

SP03

That I agree and that's why I had not used Amex for my plane tix much.

Not to plant ideas in Amex's head, but one way to increase spending and decrease crowding is to require use of Amex card to purchase (or pay taxes on award tix) the plane ticket to access the Centurion Lounge. That would be way more effective than the 3 hour limit or no access arrival.