Aeroplan, the frequent flyer program associated with Air Canada, told everyone to expect a devaluation next year.
The program is an independent separately traded company. Air Canada spun it off to raise cash and at the time locked in a 15 year agreement for an exclusive partnership. Aeroplan expected to renew this deal on less favorable terms, and planned to squeeze customers as a result.
But Air Canada is launching a new frequent flyer program in 2020 instead. They’re going to start anew, because the spun off program is difficult to work with and they think they can turn their own effort into a profit center thanks to sweet, sweet bank co-brand credit card revenue.
Copyright: ronniechua / 123RF Stock Photo
As a result Aimia, the parent company of Aeroplan, is in a pickle and has been selling off assets to raise cash while planning for a program where they don’t have access to Air Canada saver award space, or to the Star Alliance (since Air Canada is the member of Star, not Aeroplan).
Aeroplan is a transfer partner of American Express Membership Rewards, and now of Barclays as well. They have reasonably priced business class awards to Europe, among other sweet spots, although they do add fuel surcharges to some partners. My view has been that it’s best to burn Aeroplan miles before 2020 comes, despite promises from the program to be even more relevant to members.
At least it does seem like they’re working to get super creative: Aeroplan will charter flights that members can redeem miles for and they plan to offer points transfers to a large group of airline partners.
- They haven’t revealed the destinations. They’ll likely be popular leisure cities and especially in the Caribbean, and it’s not clear whether these flights will offer premium seating.
“We have routes where we have enough redemption demand today that we can fly a daily charter throughout the year on some particular routes,” Jeremy Rabe said in his first media interview since taking over in May as CEO of parent company Aimia Inc.
“Those will be dedicated Aeroplan aircraft that are flying just for Aeroplan.”
- They haven’t revealed the rate at which Aeroplan miles will transfer to other airlines.
Perhaps just as importantly, Aeroplan is only intending to devalue their award chart for about 5% of routes although no doubt the math to get there will be creative (or perhaps they’ll say they were really talking about Canadian routes) and the focus of higher points costs will be on the most valuable redemptions.
Aeroplan plans to maintain the current mileage grid required for about 95 per cent of its network of flights.
Nonetheless, it’s a great hint that they don’t plan to ‘just be’ a clone of Air Miles, earning points for retail and redeeming them at a penny apiece at best for dishwashers, toasters, or flights.
Air Canada itself ran charter flights to Hawaii many years ago for members. Cathay Pacific is doing this now. And it can make economic sense under the right circumstances, too.
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