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It was judgment day for travel credit card holders.
On June 17, Chase—the biggest American card-issuer—hiked the annual fee on the travel-friendly Sapphire Reserve card 45 percent, from $550 to $795. At almost the exact same time, American Express announced that it would take its rival Platinum card “to a new level” later this year, “not only in what they offer in travel, dining and lifestyle benefits, but also in how they look and feel.” The subtext was obvious: Amex is going to raise the Platinum card’s annual fee from $695 to something truly eye-watering.
The credit card blog and influencer spheres have been on fire for months about how big the increase will be. “Is the $1,000 annual fee upon us?” the Points Guy asked. Historical patterns suggest yes. The continual raising of these cards’ fees is not a reflection of travelers enjoying ever-escalating luxury experiences, but of something else. The cards instead offer a nebulous way to win, not just in travel but in acquiring some of the least luxurious, most massively marketed services out there. Travel is a mere entry point to what a lot of people now call “mass affluence,” an easily accessible status not quite of elegance but of being just a little bit better off than the people who pay retail prices for retail experiences. It turns out a lot of people—maybe a few too many for comfort—will pay a lot for that.
The Sapphire Reserve and Platinum are the most famous players in the bougie—but not that bougie—market for credit cards that appeal to frequent travelers who are sick of airport concourses. Though the cards carry many benefits that their issuers will be happy to tell you about, the headliner for many is access to airport lounges. These lounges, unlike the many other perks that come with these cards, are a finite resource. That has seemingly caused Chase and American Express to grapple with a couple of essential questions: If everyone has a luxury travel card, does anyone? And once you’ve convinced someone that they’re living in luxury by using your card, how much of a price increase does it take to chase them away?
In my endless quest to somehow optimize myself, I use the Platinum card and have offered myself many justifications for why. As a frequent flier, I eat 20 or 25 lounge meals per year, sitting in a more nicely appointed part of the airport than the rest of the terminal. That’s the luxury, but then there is the bargain-hunting that’s now just as much a part of these cards: I get $200 per year in airline fee rebates (but not ticket costs) from United. I get another $200 to spend on Ubers, and even more than that in statement credits for things like Disney+ and Hulu. I’d be losing money if I didn’t pay for the card, right?
That is all window dressing, though. For me, the card wouldn’t make sense without the lounge access and the accompanying feeling of somehow getting to float above the fray of the chaos of an airport. Here, the problem comes into play: The card issuers have simply gotten too good at marketing these products. American Express, Chase, and Capital One (which has a similar card, the Venture X) don’t say exactly how many people have lounge-accessing credit cards. I would not hazard a guess, other than to say that the growth of cardholders far outpaces the growth of space in the many lounges they can access.
People sign up for the cards to avoid the Lord of the Flies feeling of clawing through an airport. But in the most predictable turn ever, the cards have just relocated that sensation to the lounges. Extended waits—in my experience, anywhere between 15 and 45 minutes—are common, as are the deep sighs of travelers who emerge from an open elevator door to see a bunch of people sitting around waiting to get inside. (I estimate that I join a waitlist about 20 percent of the time. Some people have bad luck and insist they’re waiting most of the time.) Naturally, a lot of those people skip out altogether to catch their flights.
This tragedy of the cardholders has two remedies. One is to build more lounges, and to some extent, that’s happening. All of these card companies have additional lounges in construction at airports all around the country. Their members also get access to nearly 2,000 “Priority Pass” lounges under the administration of another company. But there’s only so much room in an airport for a new lounge. There is infinite room for hundreds of millions of people to watch influencers’ videos about strategies to hack their travel with the right credit cards, booking strategies, and points transfers.
Enter the second solution: Cull the herd with price increases big enough to drive some people away—but small enough that enough remain to improve margins. Though Chase is offering some new benefits along with its 45 percent fee hike, its strategy is easy to spot. To sell luxury in a space-limited enterprise, it needs to sell to fewer people, who are happy to pay more. They will do it and have a better time. Word will spread. More people will join. The lounges will crowd again. The cycle will repeat.
It is a good business because it taps into a truth about the Western traveler. Despite the genuine miracle of air travel, nobody likes it, and it feels like hacking the system to enjoy a slightly more pleasurable experience than the masses. The advent of TSA PreCheck, which began in 2013 and fast-tracks you through security for less than $100 every five years, was a gesture in this direction. The major travel cards have taken it to a new level, though. I get a statement credit that covers the $199 cost of a year of CLEAR, which allows me to cruise past the people who already paid to cruise past the rubes in the regular security line. In turn, I arrive sooner at the lounge, where I hope not to be forced to wait among the genpop. Once I get inside, I may struggle to find a seat, while a bunch of empty tables sit in a roped-off area. See, those tables are reserved for Centurion card members, a higher tier of cardholder than the upper-middle-class Platinum types. Somewhere in this nesting doll set of luxury, just about everyone winds up disappointed.
It is an ugly consumerist machine, exactly the kind of experience that huge numbers of travelers should want to ditch when the price goes up. If luxury is barely luxury, why pay out the nose?
I wonder if fewer people might actually leave than the card companies expect. Part of the cards’ genius is that luxury is now only part of what they sell. The majority of the American Express fee comes back to me in benefits that I really would pay for independently if I didn’t hold the card. (Uber Cash, streaming, and airline fee credits are my workhorses, with included rental car insurance also helping out.)
But those things don’t pay for the whole fee, and to justify the gap, the card companies rely on cardholders enjoying the idea of other benefits. Do I care a lot about a bunch of buffet meals? No. Do I really value $50 in statement credits from Saks Fifth Avenue every six months? No, although that’s enough for a cheap belt there. Would I even consider paying for Walmart+ if the card did not cover the subscription cost? No. But the travel card business works a lot like the streaming business. I don’t cancel Netflix, because its endless library creates the illusion that I might watch more than one six-hour miniseries every four months. I don’t cancel the expensive card, because look at all of the possibilities I’d be giving up. Most Sapphire Reserve cardholders will swallow the increase for that reason as much as the potential for less crowded lounges.
That people even make these calculations speaks to how mass affluence has changed travel. When the Platinum card launched way back in 1984, its pitch was just regular old affluence. It was a small club, and you could only join it with a hard-to-get invitation. Amex’s marketing pitch was most definitely not that if you used the card in a savvy enough way, you would get back what you put in. Instead, the company sold pure luxury, as best exemplified in Amex’s famous taglines over the decades: “Membership Has Its Privileges,” and later, “Are You a Cardmember?” Now there’s barely a whiff of that on Amex’s main marketing page for the Platinum card, which focuses much more on various statement credits. The most prominent copy for the Sapphire Reserve, launched in 2016, is similar. “Get more than $2,700 in annual value,” the nation’s largest bank tells potential cardholders. Luxury remains a small club, but mass influence is a big one, and soon enough, you’ll be in it too.
