Air Canada’s Aeroplan frequent flyer program was spun off from the airline 14 years ago. They had a 15 year exclusive agreement, and couldn’t come to terms to extend it. In the intervening years,
- Credit card deals became more lucrative, so Air Canada was leaving money on the table not owning their own program. While they needed the cash selling the program back in 2005, they sold too early to maximize revenue.
- It became difficult to market to program members through a third party (Air Canada didn’t even have contact information for customers who weren’t flying) and to deliver elite benefits customers were expecting (there was no benefit to the loyalty program to waiving fees for 100,000 mile flyers).
Copyright: ronniechua / 123RF Stock Photo
Talks broke down. Air Canada decided to go it alone and launch a new program. The share price of Aeroplan’s parent company plummeted. Air Canada bought the company back at a discount, funded by co-brand credit card partners. Now they’re building a new program for launch next year. (Incidentally, I’ll be debating Stifel’s Joe DeNardi on whether spinning off airline frequent flyer programs is a good idea at this year’s Airline Information MEGA event in the fall.)
As Air Canada gears up to launch a new program, there are some changes they’re making now — easy changes that reduce program frictions for members on the one hand, and also changes that reduce complication for their system migration on the other. They’ll be migrating to Amadeus for the back end later in the year, and that means programming in rules to the new system.
- Free cancel and refund of awards within 24 hours of booking. Starting immediately they’ll refund redemption trips booked within 24 hours for free. (Telephone bookings will not receive a refund of the phone booking fee, however.)
- Cancel and refund up to 2 hours prior to departure. This is huge. Aeroplan didn’t allow cancellation and refund within 21 days of departure so you’d first have to pay to change your itinerary to travel in the future and the pay to cancel and refund an award.
- Lower refund fee online. Instead of being charged C$200 to refund online, that fee drops to C$125 for general members. (Aeroplan Diamonds can cancel for C$30 online or C$100 by phone, Air Canada’s Super Elites will now get free cancellation.)
- Super Elite complimentary changes and refunds. This is a no brainer for the airline, and a top tier benefit offered by other airlines. It’s something Air Canada couldn’t easily accomplish when they didn’t own the frequent flyer program, Aeroplan would have wanted the airline to reimburse the fees.
Two ‘temporary’negative changes to award redemption:
- Effective September 1 redemptions will allow a maximum of one stopover or open jaw rather than two stopovers or a stopover and an open jaw.
- Effective September 1 Round the World awards will be discontinued. Already these awards didn’t represent a great value since at 200,000 miles (coach), 300,000 miles (business), and 400,000 miles (first) you’d only get up to 5 stopovers.
See If You Can Spot the Easter Egg
These two changes are described as temporary and related to transitioning to their new system while will allow “more flexible stopover options” going forward (language that usually presages negative changes from a loyalty program, my guess is that more stopovers, including building a round the world with stopovers, will become possible but will be pricier). Fewer than “0.3% of all Flight Rewards booked each year” involve two stopovers or round the world awards.
Ultimately the changes to cancelling and refunding awards make the program easier to deal with. Giving change and redeposit fee waivers to top tier Air Canada elites solves a pain point but I think is symbolically important as well. It was something they couldn’t accomplish when the program was separate for the airline, as much as a no brainer as it seems like to take care of customers spending at least C$20,000 a year in a way that other airlines do. Bringing the program back into the airline lets them solve issues like that.
I’m waiting with baited breath to see what the new program’s award chart and routing rules will look like. Highly underrated as news by U.S. frequent flyers, the new Air Canada frequent flyer program could be the most significant development of 2020, given bank transfer partnerships and the airline’s desire to grow its appeal to U.S. flyers connecting to Europe and Asia.