Use ‘Em Or Lose ‘Em: Aeroplan Miles To ExpireAeroplan has issued an ultimatum to its members – use your points, or lose your points. Beginning in Jan., Aeroplan miles will carry a 7 yr. expiry date. As well, beginning Jul. ‘07, members will have to earn or redeem points at least once a year or lose all their miles. Expired miles will be able to be reinstated at a price – over $1,000 for 100,000 Miles. The move is to help Aeroplan shed the liability of unused miles. Toronto Star
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Air Canada's popular Aeroplan rewards program has delivered to its 5 million members a controversial ultimatum about their loyalty points: Use them or lose them.
Beginning Jan. 1, Aeroplan will begin date-stamping the program's coveted miles. Those that aren't used within seven years will be deducted from members' accounts. Also, starting July 1, Aeroplan said its members will be required to either add or redeem miles once in a 12-month period. If they don't, all of their miles will expire.
Expired miles can be redeemed, although the price may be as much or more than a comparable airline ticket in some instances. To restore 100,000 expired Aeroplan miles, for instance, would cost $1,030 (fuel surcharges and tax for prospective redemptions not included).
Aeroplan's watershed announcements met mixed reaction yesterday from customers and Bay Street analysts. While several analysts suggested the move would help Aeroplan by culling unused miles as a liability from its balance sheet, some customers decried the changes.
"It's ridiculous," said Greg Clerkson, a Canadian banker who moved overseas to London from Toronto a year ago. "It might not cause a real kafuffle right now, but a year from now when Aeroplan starts taking points away from people, it's going to cause problems." While Aeroplan customers would only have to make a minimal purchase at one of the program's partners — which could be as simple as buying gas from Esso — some customers such as Clerkson said they will still be alienated. "I can't just pop down to Esso or Future Shop to make some trivial purchase to keep my account active," Clerkson said.
Still, Wellington West Capital Markets analyst Wui-Seng Kon said that while some Aeroplan shareholders seem to be disenchanted with yesterday's news — Aeroplan units fell 11 cents to $15.64 — the changes may spur some of the program's casual members to become more active with the program. "They may say, `we better step up,'" said the analyst, who has a "buy" rating on Aeroplan units with a $17 price target. Aeroplan chief executive Rupert Duchesne said during a conference call with analysts that the company didn't expect "a great deal of resistance to these. These are prudent measures for us in terms of running the programs financially responsibly for everybody."
Aeroplan isn't the first airline to put an expiry date on miles, and another change announced yesterday by the Montreal company should make it less complicated for members to redeem flights.
Aeroplan, which a year ago was spun off as an income fund by Air Canada parent company ACE Aviation Holdings Inc., said it would allow customers to redeem their points for any seat on Air Canada flights. In recent years, just 15 per cent of seats on the carrier's planes have been reserved for Aeroplan users.
But since Aeroplan will have to buy seats directly from Air Canada, booking flights on popular routes may require more miles than customers might expect. That could be good news for Aeroplan rivals like the Royal Bank of Canada's Avion Visa card, which advertises "unrestricted access" on any airline to its users.
