Air Canada today made an announcement that it would bring in a new loyalty program in-house after spinning-off Aeroplan a decade ago and getting some cash in the process.
This leaves Aeroplan members three years to burn their miles on Air Canada and Star Alliance flights. Aeroplan (owned by Aimia) tried to reach an agreement so that their miles could be redeemed on Air Canada flights (likely dynamically priced) even after the “divorce”. Members cannot in the future, however, redeem for flights operated by Star Alliance partners of Air Canada.
Here’s the press release from Air Canada:
Air Canada to Launch Its Own Loyalty Program in 2020
Airline to end exclusive contract with Aeroplan provider Aimia
- Aeroplan members can continue to earn and redeem Aeroplan Miles
- Air Canada committed to business as usual through 2020, with smooth transition to new program
- Air Canada intends to continue to offer Aimia redemption seats post-2020
- Strengthening Air Canada customer relationships and service at core of decision
MONTREAL, May 11, 2017 /CNW Telbec/ – Air Canada today announced its decision to launch its own loyalty program in 2020 upon the expiry of its commercial agreement with Aimia, the operator of Aeroplan. Effective June 30, 2020, Aeroplan will no longer be the loyalty program for Air Canada. Aeroplan has been independently owned and operated by Aimia for almost a decade. By operating its own loyalty program, Air Canada will be better able to strengthen its customer relationships and deliver a more consistent end-to-end customer experience.
“Our relationship with our more than 45 million customers sits at the core of Air Canada’s ongoing transformation as we continue to grow our business beyond the 200 destinations that we already serve, and work to become a global champion,” said Calin Rovinescu, President and Chief Executive Officer. “This decision is the right one for our customers, our employees and our shareholders.”
Creating a more rewarding loyalty program for our customers
“The new program, launching in 2020, will offer additional earning and redemption opportunities, more personalized service and a better digital experience for Air Canada customers,” said Benjamin Smith, President, Passenger Airlines.
Over the past decade, Air Canada has invested $10 billion to renew its fleet with the most technologically-capable aircraft, and to elevate its product offering, including all-new seats, Wi-Fi connectivity, expanded and renovated Maple Leaf Lounges, increased digital capabilities and updated branding comprised of a new livery, new uniforms and much more to improve the travel experience.
“Similar to all of Air Canada’s North American peers, by managing our own loyalty program, we will be able to take better care of our customers by making decisions in real time that address specific needs,” added Mr. Smith. “We’re excited to take this next step that delivers on our promise for continued investments in the customer experience.”
The next three years
Air Canada’s exclusive contract with Aimia remains in effect until its June 29, 2020 expiration date. Until then, Air Canada is committed to business as usual by working closely with Aimia with the objective of providing consistent service for Aeroplan members.
During this period, Aeroplan members can continue to earn and redeem miles in accordance with the Aeroplan program:
- Before the new Air Canada program launches in June 2020, members will be able to earn and redeem Aeroplan Miles for Aeroplan Rewards, including flights with Air Canada and our Star Alliance partners in accordance with the Aeroplan program.
- After June 2020, miles earned from Air Canada and Star Alliance flights will be credited to the new program, with customers able to redeem those miles for rewards including Air Canada and Star Alliance partner flights.
- Aeroplan miles earned up to June 2020 will stay in Aeroplan members’ accounts, and will continue to be subject to the conditions of their program.
- Air Canada intends to continue to offer Aimia redemption seats for Aeroplan members after June 2020, with pricing competitive with other third-party rewards programs.
- The airline’s most frequent flyers will continue to enjoy Air Canada Altitude status recognition and its associated range of travel privileges, based on their annual flight activities with Air Canada and the Star Alliance member airlines. All Million Mile program qualification activity and status will also be honoured in the new program.
- Air Canada intends to implement near-term improvements to Air Canada Altitude and other elements of the customer experience.
“Doing the right thing for Air Canada’s customers throughout this transition period will be our guiding principle,” said Mr. Rovinescu.
The new program is good for the airline’s financial performance
The new Air Canada loyalty program will be focused on improved rewards and recognition for the airline’s customers, and will provide Air Canada and our business partners with significant growth opportunities.
Air Canada will provide greater detail at its Investor Day on September 19, 2017 concerning the financial benefits expected to be realized, as well as the transitional costs.
Air Canada expects the net present value of the program repatriation over a 15-year period to exceed $2 billion.
Full information on the announcement and additional information for our customers can be found at aircanada.com/loyalty.
And here’s what Aeroplan has communicated to its members:
After recent discussions with Air Canada, we do not believe that they currently intend to renew our partnership agreement. Unless an alternative agreement can be reached, the existing contract will expire in June 2020.
Nothing has changed for Aeroplan members. The partnership is still in place for three more years. You can continue earning miles on Air Canada eligible flights and redeeming for flights on Air Canada and Star Alliance partners.
We are currently exploring a range of options beyond 2020 if our contract with Air Canada is not renewed. Our members will continue to be at the centre of our program.
Our goal is to continue to provide the best value for our five million members across Canada, along with the availability and flexibility you have come to expect.
We are proud of the value that Canadians earn from the Aeroplan program. Last year, Aeroplan members redeemed for 1.9 million flight rewards, enough to fill 11 Boeing 777s (the biggest plane in Air Canada’s fleet) every single day of the year.
In addition to flights, Aeroplan members redeemed more than 700,000 non-air rewards last year, through more than 1,000 specialty, merchandise, hotel, car rental and experiential rewards. Since launching the merchandise, hotel, car rental and experiential rewards in 2004, more than 144 billion Aeroplan Miles have been redeemed for non-air rewards.
Q & A
1. What does this mean to me as an Aeroplan member?
Nothing has changed for Aeroplan members. You can keep on earning miles on Air Canada eligible flights and redeeming for flights on Air Canada and Star Alliance partners as you normally would while we continue our discussions with Air Canada and in any event, until June 2020.
Our members will continue to be at the centre of our program. We’ll continue to provide updates as soon as information becomes available.
2. Should I keep collecting?
Yes. The partnership is still in place for three more years. You can keep on earning Aeroplan miles at any Aeroplan partner, including Air Canada and book flights up to one year in advance.
3. What’s the impact on my current flight rewards bookings?
There’s no impact on current flight rewards.
4. What will happen to my miles if the contract is not renewed?
While Aimia remains open to further discussions with Air Canada, the company’s strategic planning had already contemplated other post-2020 alternatives in parallel to ensure Aeroplan members retain access to a strong redemption offering around air rewards.
5. Will you stop offering flight rewards before 2020?
6. What will happen to my TD /CIBC/AMEX Aeroplan affiliated card? Should I cancel my card
Nothing has changed for Aeroplan members, including Aeroplan financial cardholders. You can absolutely keep on earning Aeroplan miles and redeeming rewards as you normally do with your financial card and at our other partners.
The contract is in place for three more years. You can keep on earning Aeroplan miles on Air Canada eligible flights and redeeming for flights on Air Canada and Star Alliance partners for up to a year in advance as you would normally do.
We are currently exploring a range of options beyond 2020 if our contract with Air Canada is not renewed. Our members will continue to be at the centre of our program. We’ll continue to provide updates as soon as information becomes available.
7. I thought Aeroplan was owned by Air Canada, who is Aimia?
Aeroplan has been owned and operated by Aimia since 2002. With about 2,300 employees across 15 countries, Aimia partners with groups of companies (coalitions) and individual companies to offer best-in-class loyalty programs to consumers around the world. Aimia’s coalition loyalty programs include Aeroplan in Canada, Nectar in the U.K.
8. What happens to my Altitude status with Air Canada / Star Alliance?
We invite you to contact Air Canada directly for questions related to Air Canada Altitude.
We understand you likely have more questions. We will be updating as new information becomes available.
This may not be positive development in the long term regardless how much people tend to hate Aeroplan/Aimia. Air Canada could make the program entirely revenue based like American, Delta and United have done in the States and could start pricing flight awards dynamically too. Only time will tell.
Unless Aimia is able to come up with some sort of agreement with Air Canada, it is difficult to see why anyone would bother with Errorplan… sorry Aeroplan anymore. Even if they are able to come up with some sort of agreement with Air Canada for AC flights, they won’t have access to Star Alliance flights such as United and Singapore Airlines.
There has been discussion that airlines should spin off their loyalty programs as supposedly they are sometimes more valuable than the airlines itself. None of these “airline miles programs” would work without airline backing, however.
Why would you collect Aeroplan miles when you could only redeem them for a toaster or economy flights that are priced dynamically? If these loyalty programs would need to pay market price for the flights (economy, business and first) or don’t have access to alliance wide flights, they just wouldn’t work and the profitability would disappear (or they could go under).
Now everyone will be trying to burn their Aeroplan miles before the 2020 change and I would assume that award space closer to the partnership end date will simply dry up.
I am not sure how Aimia will survive this. If you look at their financials, 73% of the company’s assets are intangible and goodwill. Their stock was down more than 63% in the early trading.