The days of the classic Checker Cab and the Black London Taxi are over. Today’s New York Times indicates that the cab business is down 75 percent in less than a decade. In Los Angeles, taxi rides only accounted for 22 percent of airport pickups during 2019.
It felt the same in New York, on two business trips there during December, where travelers queued up at the Lyft or Uber lines. Cost is an issue, for sure. My experience is that the ride services are roughly half the price of a city cab. The ride is usually better because the driver is using their vehicle, and they tend to take good care of the car.
But the shift from taxis to the gig economy plays into a much broader scheme than mere transportation. Alliances with Lyft and Uber now link to two of the largest credit card issuers in the U.S.
Amex was first-to-market with an association, where the Platinum card provides $200 for Uber rides. The benefit offers $15 per month in free rides, plus a $20 December bonus. Cardholder/riders automatically become Uber VIPs that garner perks and discounts.
American Express certainly takes the sting out of the $550 annual fee, and when you consider the 5 point Uber reward kicker, complimentary Centurion Lounge access, a $120 airline credit with free baggage checks, and a hotel comp, cardholders can generate a positive return on the annual fee. And, by the way, with a 60,000 first year Membership Rewards Point bonus, the first year is virtually free. The other rewards are there to ensure you stick with the card in ensuing years.
Uptown from Amex in Manhattan, at 270 Park, comes Chase with their counterpunch, and an attritrion management strategy for the famed Sapphire card. Chase’s Sapphire faces off with Amex’ Platinum. With a fee increase from $450 to $550 in 2020, Chase offers a priority pass at airport lounges, a $300 annual travel bonus and bonus multipliers on travel and dining.
Now, with the Lyft relationship, all Sapphire cards, including the low budget Sapphire Preferred, receive reward kickers of 5x and 10x. Sapphire Reserve members also receive one year of Lyft Pink, which provides a no-cap 15% discount for every ride.
Rich rewards have tempered since Mercator reviewed the market in 2017. Chase’s move with Lyft looks like an excellent way to help curtail attrition, but the taxi is now as irrelevant as the magnetic credit card swipe.
Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group