This is the Big Amex Response to the Chase Sapphire Reserve?

As I wrote about last week, the rumor mill has been busy with something big coming from American Express to fight back at the very popular Chase Sapphire Reserve. I put forth 6 things that I felt were necessary if Amex really wanted to be competitive. Well, they have made their move – and I don’t think it is enough.

American Express Platinum Response to the Chase Sapphire Reserve – 5X Points on Airfare

New Bonus of 5X Points on Airfare Is Great…

There has been a lot of speculation on what changes/additions might come to the American Express Platinum line to present a compelling reason to turn to it over the Chase Sapphire Reserve. According to their spokesperson yesterday (and following a too-soon Twitter response), that change (singular) is that the American Express Platinum card will now award 5 Membership Reward points per dollar on airfare.

That is certainly a huge improvement for a card that has only ever awarded a single point in all categories and also an industry-high on airline bonuses for spending. Membership Rewards has the largest pool of transfer partners and frequent transfer bonuses (like a 25% bonus on points transferred to Alitalia and 20% on points transferred to Etihad). If you spend a large amount of money on airfare, this could be a great place to start putting that spending.

…But, Only On Airline-Purchased Airfare

That was the good – now, let’s look at the bad. First of all, that 5X bonus is only on airfare bought directly through the airline’s website or through the Amex travel portal. While that is normally fine for a lot of traditional airfare purchases, there are times that it is not a good fit.

There are often great airfare sales that are only available through online travel agencies (OTAs) like Travelocity, Expedia, Orbitz, and others. Note: when purchasing tickets through the OTA, it will show on the bill as the ticket cost is billed by the airline. I am not sure if this will count as enough or if it has to be coded a certain way through the airline’s own website – anyone want to chime in here?

Also, that 5X bonus is only on airfare. The Chase Sapphire Reserve offers 3X bonus on all travel that is coded as travel. That includes such things as road tolls, subways, trains, and of course the other general methods of travel. Still, a 2X difference for airfare is nice.

Another bad with this change is that it is really not enough. It only addresses airfare as a bonus and does not change the archaic airline credit of the Platinum card, it does not offer other bonus categories, it does not increase the value of points when used with the Platinum card for travel – it really does not move the needle much at all.

Doing the Math

Let’s break it down. If you spend $10,000 on airfare in a single year, that is 50,000 Membership Reward points that you will earn with the American Express Platinum under this new bonus definition. That is huge! But, it is only an increase of 20,000 points over the Chase Sapphire Reserve’s bonus that you would earn. Yes, still a big difference but what if you spend another $5,000 per year on other forms of travel (probably a low number if you spend $10,000 on airfare alone)? You would earn 15,000 Ultimate Reward points to the 5,000 Membership Reward points if you use your American Express Platinum instead of the Chase Sapphire Reserve.

Use Both (if you have them)

Of course, if you have both the American Express Platinum and the Chase Sapphire Reserve, by all means, use the Amex Platinum for airfare spend and enjoy the extra bonus points. But, this is certainly not enough to get people to actually put the American Express Platinum card at the top of the wallet nor is it enough to get people to apply for the American Express Platinum card (especially since the current bonus is weak – 40,000 points – and you can only get the bonus once per lifetime).

Theory: American Express is Buying Time

Here is my theory – American Express was somewhat taken aback by the huge rush to the Chase Sapphire Reserve and how lucrative it ended up being for consumers (and Chase, as of right now). Of course, American Express is hurting with the loss of the Costco business and the JetBlue cards as well as the possible loss/transition from their SPG card. But, they would not likely want to rush to develop a new product or overhaul their big premium card with different perks/benefits overnight.

At the same time, they would want to take a bit of the attention away from the Chase Sapphire Reserve. What would be a good move for them? Exactly what they did. Introduce a single category bonus that is higher than any competitors and see what kind of use they begin to get on the card as a result. If things go well for them, it gives them some breathing room to do a proper product introduction with something that could gain them a long-term following and a rush of new customers.

I think it is good that Amex did something – it shows they are listening. I just feel it is too small and narrow to be a serious swipe at Chase but more a market-tester to see how consumers respond.

What do you think about this new American Express Platinum bonus? Would you apply for it with this in mind? Or, is it enough to move your airfare spending to it over another card?

HT: AP