June 27, 2013 3:03 pm
Updated: June 27, 2013 3:49 pm

Aeroplan scraps one rewards expiry policy, but keeps another

Aeroplan, the country's largest flight rewards program, is slashing the number of miles required to gain free flights.

Canadian Press
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The country’s largest flight rewards program, Aeroplan, is sweetening the deal for its more than 4.6 million active members in a bid to “rejuvenate” the brand and make Aeroplan more competitive with rivals.

Unfortunately for 900,000 or so inactive members – those who haven’t used the plan to redeem or add miles in the last year or longer – the better deals announced Thursday are off limits until they pay up to reinstate “expired” miles.

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The Air Canada spin-off announced it is slashing the number of reward miles required for some flights while introducing new frills for frequent flyers. Aeroplan is also phasing out a seven-year ‘use it or lose it’ policy – a long-held gripe of members since the contentious rule was introduced in 2007.

“Everybody in the program will benefit,” Kevin O’Brien, Aeroplan’s chief commercial officer said in an interview.

That is every member with an active account. Members whose accounts have been inactive for a year or longer still face paying a $30 charge to reinstate the miles as well as a penny per mile. The company has faced backlash over the policy in recent years, as well as legal action by some members.

Still, Aeroplan isn’t alone in the practice. Chief competitor Air Miles mothballs inactive accounts after 24 months and charges 15 cents to have miles reinstated. “These practices are put in place to provide accounting certainty and are an accepted industry practice,” Air Miles’ Canadian website said.

“Expiry policies are very common in the loyalty and frequent flyer industries, as they play a big role in reminding members to stay active,” Aeroplan spokeswoman Christa Poole said in an email message.

Ending the seven year use-it-or-lose-it limitation does give Aeroplan an edge over Air Miles, which introduced its own five-year cancellation policy on December 31, 2011. Aeroplan implemented its cancellation policy on January 1, 2007 meaning miles collected by members were set to expire at the beginning of 2014.

The Air Canada spin-off was launched in 1984 chiefly as a frequent flyers reward program but has since broadened out include retail partners like Home Hardware and grocery chain Sobeys. It’s core business though remains providing reward miles redeemed for flights – an area piled into in recent years by competitors like Capital One’s Aspire program and the Avion program from Royal Bank of Canada.

Most new entrants offer fewer restrictions on eligible flights and seats, experts say. The new changes will see the number of miles needed for many flights slashed by between 20 per cent and 50 per cent, O’Brien said, and more seats become eligible for use. A new Distinction tier for the program’s heaviest users is also being introduced to supply other frills, such as exclusive events and deals on hotels.

“This is huge news for members, and really at the core of it is a real rejuvenation and enhancement to the Aeroplan program overall,” O’Brien said.

“It is a good move for Aeroplan. It basically makes their plan more comparable with their competitors,” Andrew Ching, an associate professor of marketing at the University of Toronto’s Rotman School of Management, said.

The plan changes were announced at the same time as a new agreement between Aeroplan’s parent, Aimia and TD Bank, which Aeroplan is partnering with as its chief credit-card issuer – a move that potentially ends Aeroplan’s long relationship with Canadian Imperial Bank of Commerce.

“We’ve got an agreement with TD that we feel delivers on the overall program requirements that we need. We went into this process knowing we wanted [to] advance the relationships with the credit-card partner to allow us to reinvest in the program,” O’Brien said. “We feel we’ve got that with TD.”

CIBC has the right to match TD’s offer but is speculated to be preparing to launch its own travel rewards program akin to RBC’s Avion card.

David Barnes, vice-president of American Express Canada, Aeroplan’s other main credit-card partner, said regardless of which bank ultimately begins offering the revamped Aeroplan program, the changes are better for all members.

“We see that being positive, it adds to the appeal and value of the Aeroplan program,” Barnes said. “For our affiliated card-members, it’s good news.”

© 2013 Shaw Media

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