Wednesday, December 28, 2011

Air Miles adds expiry rule and instant redemption option

EXPIRING MILES
It was inevitable, one of the longest hold outs from the expiring miles/points camp has joined the party. Canada's largest loyalty program, Air Miles, has enacted an expiry rule of 5 years on their Reward Miles loyalty currency. Much like Aeroplan's expiry rule of 7 years, Air Miles members will have 5 years from the month they earn a Reward Mile to redeem it otherwise it will expire. This expiry rule is different than inactivity rules where you don't use your account at all (earn or burn miles) which is 24 months with Air Miles.

This change is really unfortunate as this was a key strength of the program but according to Air Miles, the majority of Reward Miles earned by its members are redeemed within that 5 year limit. The ones who may lose out here are the collectors looking to earn enough miles so their family can take a dream trip. Ultimately the landscape has changed for loyalty programs in Canada (and the world) and that has necessitated or accelerated the need for expiring miles. Loyalty programs need to show worth and profitability to their shareholders and carrying unused miles is a liability for the program. The term for having these miles removed without them being redeemed is called breakage and all programs count on a certain percentage of breakage. Knowing this, a loyalty program like Air Miles wants to create a healthy balance of breakage and keeping their customers engaged and happy. How can expiring miles keep a customer engaged? By having them redeem for rewards to use up miles that might otherwise expire. So while the member may not be getting the reward they initially wanted to get out of the program they are getting something. Typically these redemptions will be on merchandise or gift cards instead of travel and those catalog items tend to be have higher profit margins than travel so it is a win-win for the Loyalty company by keeping the customer engaged and making a healthy profit.

One question that does need an answer as I see it as a bit of a contradiction is that if the majority of miles that are earned are burned within the 5 year period than the amount of miles left on the books can't be worth that much. Is the value of writing off those miles more than the potential loss of profit  from collectors who are aspiring for a dream vacation that may switch to a program like Aeroplan because they will have 2 more years to earn miles? There will be other questions as well from our readers as I can guarantee most of you will not be happy with this rule based on the experiences with Aeroplan's announcement of their expiry rules back in 2006.

For more on Air Miles Expiry please see here

INSTANT REDEMPTION
Also in today's announcement from Air Miles on the changes of their program is the new Instant Redemption option called Cash Rewards. This option will effectively create a second account or an account within an account for Air Miles members to redeem instantly at Air Miles sponsors. This is key, you will only be able to instantly redeem at Air Miles sponsors and its makes total sense. Up to now, Air Miles members could collect at many sponsors but than redeem for items like Gift Cards for stores, restaurants etc that were not sponsors, so basically the non-sponsoring companies earned money from miles paid for by Air Miles sponsors and this practice had to be curbed by Air Miles to keep its sponsors happy (it may also explain the shrinking of the gift card rewards you can redeem for) Anyways, enough on that and more on how it works:

Essentially when the program launches, Air Miles members will have the option to run a 'cash account' in conjunction with their Air Miles Reward Miles account. When they open up this 'cash account' they will be able to choose what percentage of the Reward Miles earned will go into their 'Mileage Account' and what percentage will go into to their 'Cash Account'. The 'Mileage Account' will be the legacy account that is used to redeem for travel, merchandise, gift cards and more via the Air Miles program while the 'Cash Account' will allow the Air Miles members to instantly redeem against a charge at a participating Air Miles sponsor. So if you have $10 in your Air Miles cash account you can redeem that against any purchase of $10 or more at the participating sponsor.

Some things to note, you will not be able to transfer miles between the 'Mileage Account' and the 'Cash Account' nor will you be able to initially fund your 'Cash Account' with your existing miles. Instant redemption will not be available until March of 2012 but the accounts can be set up right away so that you can start building up a cash balance to use when participating sponsors begin accepting the instant redemption. You will be able to modify your percentages as you go along and learn what amounts to each account work for you and of course you have the choice of only sticking with one. Personally, I don't earn very many Air Miles to redeem for many things so I may move all my future earning to a 'cash account' for the instant redemption savings even though my rate of return will be lower than redeeming for travel, but like I said I don't earn very many Reward Miles so I would rather get something than nothing.

For more on Air Miles Cash Rewards please see here.

Please comment below to tell us what you think of today's announcement of the expiry rules and instant redemption options in the Air Miles program.

Comparison of Canada's Three Main Travel Loyalty Programs Expiry & Inactivity Rules
Air Miles:
5 Years Expiry
2 Years Inactivity

Aeroplan
7 Years Expiry
1 Year Inactivity

WestJet
5 Years Expiry
No Inactivity rule (although WestJet does state that it can be 12 months at their discretion)

41 comments:

  1. Cash Rewards: $10 off/95 miles = ~10.5 cents/mile

    Dream Rewards: Empire Theatres movie ticket ($12.75 value)/75 miles = 17 cents/mile

    The announcement doesn't affect me at all (yet). I'm saving up for a flight and will have enough before 5 years expiry. If some disaster happens and I can't earn any more miles, I'll just redeem them for movie tickets at a better return than cash.

    The only way I'll switch to cash is if they add sponsors I actually shop at or reduce the amount of miles needed for the $10 off.

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  2. Biggest rip off! It used to cost me 175 air miles to buy a $20 Shell gift card. But now if I use this new cash thing, it will cst 190 points for $20 of gas. Just a new wayto cahrge customers more!

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  3. I feel the same way about these changes as I feel about gift cards....they should never expire. The participating merchants may pay 15-20 cents per Air Mile, but ultimately it is the customer who pays this cost, the business is going to make sure of that. When you buy a gift card, you are lending your money to that business at 0% interest until redemption. For the merchant to be allowed to let that card become worthless, that is nothing less than theft. Same with Air Miles. Your decision to deal with specific merchants, to use a certain credit card was likely influenced by the fact that they were part of the Air Miles program. I have a gold Air Miles card. That means I am paying a premium for (basically, I am buying)some of my Air Miles. To allow them to be taken away, I feel that is theft ...... without recourse, unfortunately. Whether I use my Air Miles within 6 months, or 10 years, the liability to the company is the same over the long run (unless they can render some of them valueless).

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  4. I have always felt that the Air Miles program was bad; it took me 10 years to earn enough Air Miles for a short haul trip! Since my Air Miles will now expire in 5 years, I can now say that the Air Miles proram is REALLY bad! And Air Miles cash? That is nothing but an attempt to get people to use more miles for less rewards. My math: If you earn 1 Air Mile for every $20 (that seems to be the average earning amount), you need you spend $1900 to save $10. Rather underwhelming, wouldn't you say?

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  5. Now, we have to think seriously about switching to the Westjet program.
    Air Miles have just pissed off a lot of loyal clients.

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  6. I got an AVION card today and as of now, I'm switching programs. I will use up my existing airmiles and be done with the program. It takes too long to get enough airmiles for a trip so the program will turn into a base to get low value gift cards and cheap merchandise. A lot of people are going to lose a lot of miles and airmiles will make a larger profit but NOT from me. I'm out of the program as of today.

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  7. To take a trip to Europe at peak times now requires about 9000 Air Miles after the required air mile increase a few years ago. If you were awarded 1 mile for every 15.00 spent you would have to purchase over $135,000.00 in goods/services for a trip you are still required to pay fees and taxes on. Today, taxes are almost as much as the actual air fare. I just recently attempted to book a short haul flight and there were no seats available. A typical response from Loyalty Customer Service. I was also advised that my air miles were no longer accepted by the carrier at the airport that I wanted to fly out of (Abbotsford B.C. which is not an international airport). Air Miles was a good program when it was first introduced, but as with many other programs, Air Miles has just become another victim of numerous pathetic policy decisions that benefits and feeds corporate greed and shafts members or the consumer. Goodbye BOM Air Miles Mastercard and my Air Miles Account. In the long run this is going to hurt the both of you, more than it does me.

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  8. Airmiles was good when it was one airmile to fly one mile, but then they started adding all sorts of bonus airmiles if you bought lots of stuff. Great for big families, but not so much for singles or couples. Since they were now giving away so many more airmiles, they had to change the flight rules and set out zones. No more cheap short flights, such as Vancouver to Victoria, as now All of BC is one zone, and a flight to Prince George or further is the same number of airmiles as Victoria. How many times have they upped the number of points needed in each zone?
    We hoped to use points to fly to Europe. We almost had enough and then the number needed increased, and again. Still no trip several years later. How are they going to wipe your points? All of them in five years? Just the ones you have now? Will ones you earn 4years and 9 months from now be wiped also when they are just a few months old.

    I agree with Terry Thomas. We pay for those airmiles in the prices of purchases, and to wipe them is THEFT!!!!

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  9. Too bad there are so many illiterate comments here. OK to bash the true negatives but bashing because of lack of reading comprehension is silly.

    Please read:
    "Air Miles members will have 5 years from the month they earn a Reward Mile to redeem it otherwise it will expire"

    So, no, all your points don't expire as soon as the oldest points are 5 years old. Additionally, all points earned as of the date of this change going into effect will be given the same 5-year time-stamp, so your existing points stash won't expire for at least 5 more years.

    The "cash" thing is optional, so don't use it if you don't like the higher redemption rate.

    Like any program, if you don't like the terms - quit.

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  10. I you don't like what others are saying abut the changes, don't read it. Unless you are illiterate and can not comprehend what I am saying.

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  11. I collected over 5,000 Air Miles last year, largely from Safeway and my American Express and Master Card credit cards. If you know how to use things properly, there can be great advantages. In the last three years, I've flown to Vancouver twice, London, England and Veradero, Cuba, using Air Miles in each case. I also buy gift cards as Christmas and birthday gifts.

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  12. What date are they using as the official start of the 5 year cut off? Just so I know when my existing points stash will expire.

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  13. We collect airmiles and believe if you do it right it is the best program out there. Not one at a time at Shell or other retailers, but 300 or 500 a time at Safeway. We work our miles so that they are worth between 30 and 40 cents each for flights - you just have to plan ahead.

    Nothing else compares if this is how you use the system.

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  14. All miles earned up to Dec 31, 2011 will expire on Dec 31, 2016.

    @KD
    Absolutely agree, all programs have their advantages if you use them properly, I rarely walk out of Sobeys without earning 500-1000 Aeroplan miles plus the double points for putting it on my American Express Gold Card. We are lucky out West to have places like Safeway and Sobeys who just dole out the points!

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  15. Pathetic how so many people have the mindset that they expect to fly for free just because they went shopping somewhere. They complain about greedy corporations but they are greedy too - wanting something for nothing.

    Well, in reality, when you shop at places like Safeway, you're paying 10 or 20% more than you would at a local independent grocer. So the air miles that you think you "earn" are actually paid for upfront when you go pay at the cash register. So you think you're getting something for free, but you're not.

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  16. how is this theft? how do we pay for those miles in the price of a purchase? do we pay more than we would normally? has the incentive of miles changed our behaviour in anyway? if not than it seems to me that it isn't costing us anything to collect miles and get free stuff, regardless of the value of a mile or it's lifespan.

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  17. This is one thing I have stressed to many people and in the interviews I have done, do your research into the pricing on items, the extra miles/points you earn may not be worth the cash difference if you shop somewhere else. I shopped at Sobeys before they had Club Sobeys so it is a no-brainer for me to earn the points there but will not buy something for extra points if I don't think the price is right or competitive.

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  18. Considering that a shopping cart of groceries cost $100 at Safeway, that same cart of groceries would cost $70 at SuperStore. Imagine the amount of money saved by shopping at someplace cheaper, you would have saved enough for that dream holiday that you want, but can't go now because you spent all your money at a more expensive place buying stuff just to get that extra Mile. Why someone would shop specifically at Safeway just for Air Miles is beyond me.

    Air Miles is one of the worst programs out there because you are not rewarded on every dollar you spend. Unlike many other programs which offer one point per dollar, with Air Miles, you have to spend on average, a minimum of $20 just to get that one mile. A spend of one dollar less than the increment yields nothing. And don't forget, virtually all sponsors charge considerably more for a good than a competitor that doesn't offer any frills.

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  19. But if you earned 300 Air Miles on that $100 Safeway spend (using KD's example above)then you are a third of the way to a short haul flight and most short haul flights within Canada run $200-$300 before taxes so you have in fact saved $66 to $100 (or $36 to $70 if you take in account the opportunity cost of not shopping at the cheaper place).

    It is all about the research and knowing the value of the miles you are earning. Like I said in an above comment, do the math if you come out ahead shopping somewhere cheaper then do it.

    For me, Sobeys is cheaper than Safeway and I earn Aeroplan miles for shopping there, is it the cheapest place? No, Superstore is probably cheaper (not always on all the items I buy) but it is also 15 minutes further each way so I have to factor in gas and time and as we all know time is money.

    As to sponsors charging more than other places, this is not always true as competition sets prices, I never see Shell charging more then other gas stations as price is king for gas purchases and this holds true in certain other markets as well.

    Finally, in terms of other programs giving out 1 mile per $ versus Air Miles 1 per 20, that is simply an earn ratio and it has to be compared to the redemption ratio. Sure you may earn 1 Aeroplan Mile per $ but you need 15,000 for a short haul flight whereas Air Miles is around 900-1100 miles for a short haul flight, so you cannot compare on the earn ratio alone as you are not comparing apples to apples.

    In this case Aeroplan would still come out ahead if you compared the 1:1 and 1:20 ratios of the two programs as you would have to spend $15,000 to get the Aeroplan ticket and at least $18,000 with Air Miles. Of course this is just a simple comparison as many other factors also come into play like Bonus Offers, discounts (ie BMO Gold Air Miles Cardholders getting a 25% redemption discount), and miles earned through other methods especially with Aeroplan (you can earn lots of miles on Hotel stays, car rentals etc.)

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  20. I have no problems with the changes. All companies have to move with the times. Aeroplan already made this move so it was inevitable that Air Miles would FOLLOW. If you study the system, you can get a lot out of it. The timing of the announcement - Dec 31, during the holidays...come on!?! Could Air Miles have tried harder to bury the story?

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  21. There are so many lovers and haters out there!i totally agree with kd. I actually have redeemed airmiles for over 52 cents when I flew at christmas time (booked in april btw) but normally get a value of 30 to 40 cents per mile. At 1 mile per 15$ on my card and 25% discount on flight redemptions that works out to about 2.5% CASH BACK ON ALL MY PURCHASES EVERYWHERE.

    In addition, at Safeway when I buy 5 boxes of cereal and earn 100 airmiles it usually works out to 35$ which is the value of the airmiles when I redeem them.

    Take it all into account and I get one hell of a deal. I know some things are cheaper elsewhere and I don't buy all my groceries at safeway.

    As long as you know how to use the system it is probably the best one. I will never be affected by 5 years expiry but I think it is a dirty evil change. It is ROBBING THE POOR TO PAY,THE RICH!!! The only people affected are the ones who've been saving their whole life for a flight and according to airmiles this is a small percentage of their card holders.

    WTF Airmiles?

    Here are 5 tips to make the most of airmiles:
    1. Get BMO Gold card (1 mile / 15$; 25% less miles to book flights)
    2. Add the travel insurance option to your card (60$/year, covers any flight you book using the card)
    3. only redeem miles for domestic flights
    4. NEVER REDEEM FOR MERCHANDISE!!!
    5. When you book flight with airmiles, always price out the flight if you were paying $$ for it and calculate your savings. Divide $ saved by # airmiles to get the value of each mile redeemed.
    6. When you see any airmiles bonus offers, convert miles to $$$ to assess if the deal is worth it or not.

    By the way I have a year's supply of free toilet paper in my basement.

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  22. BMO and Safeway customer - former to both beJanuary 4, 2012 at 10:48 PM

    The Air Miles have been accumulating in my account for about 20 years. I have to travel a lot for my work. I cannot use my points to buy a ticket for a family member to join me without high fees, so easier to buy a ticket. Each rare occasion when I have found a bit of holiday time to use Airmiles, I get a message either that there is no service to my destination, no seats available, or there always seems to be high season. So I have kept hoping for the past 20 years that someday maybe when retired I could use these miles, but of course not for family. So I wouldn't recommend Airmiles any more for professionals who have to travel a lot for their work. And the cost of redeeming keep rising so it can cost more to use your miles than just to buy a ticket, and a lot simpler to just buy what you need.

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  23. Just to be clear and fair on my last post.
    BMO gold card is 100$ per year but it is a great card for the airmiles alone but for it other features to (check it out.) I also think their customer service is awesome.

    The travel insurance wouldnt cover your spent miles should you need to cancel a flight. It is just a lot cheaper thAn adding travel insurance each time you book a flight and is good for peace of mind.

    So in conclusion airmiles is bad for low spenders. There are probably better credit cards or rewards for people who do not spend in the tens of thousands annually on your plastic.

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  24. Just to be clear and fair on my last post.
    BMO gold card is 100$ per year but it is a great card for the airmiles alone but for it other features to (check it out.) I also think their customer service is awesome.

    The travel insurance wouldnt cover your spent miles should you need to cancel a flight. It is just a lot cheaper thAn adding travel insurance each time you book a flight and is good for peace of mind.

    So in conclusion airmiles is bad for low spenders. There are probably better credit cards or rewards for people who do not spend in the tens of thousands annually on your plastic.

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  25. I believe Bank of Montreal are washing their hands of this issue.My contract was with Bank of Montreal and they broke this contract.
    Bank of Montreal has the strength to influence Air MIles to at least grandfather the existing air miles without an expiry.The sense I am getting is many many BMO Clients are very upset with this change.

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  26. Has anyone else noticed that Airmiles has considerably less gift cards available? I always used my points for gift cards, as I figured that it would take a lifetime for me to accumulate enough for a trip, and I thought it was a good deal. This Christmas I wanted to purchase a bunch of cards for gifts, and there was hardly any available - no more Chapter, Starbucks, HBC. What gives? It's making me think twice about keeping my Amex Airmiles card.

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  27. Sorry, just saw that HBC is back on there, maybe they ran out due to the Christmas rush. There's still a lot that have disappeared, though.

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  28. Jan 5/12 I agree with Grubby,I've been trying to compare plans,but its dificult, what with all the extras.I have gold mc,spend alot on farm inputs, collect alot of airmiles &use them on longhaul flites in winter. I hate to see any miles expire,but as long as the oldest go first,I think we'l be ok I would strongly recomend the MC Gold travel&medical ins. it'only $99. per year for total travel&med ins for the whole family out of Canada(12x30day trips/yr) much cheaper than the induvidual trav&med offered tru airmiles ins. also had an issue with airmiles over bagage damage, took some time, but did get it resolved fairly in the end. hope you people @ airmiles also get this message.

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  29. Airmiles spouted the mantra airmiles never expire that is why people save them for a long period. They up the miles for everything . Check the retail prices for their items most are last years stock.What they offer now is not what I signed up for. Tried to get flights many times no availibity.

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  30. JP
    Just tried to book an Air Miles flight from Detroit to Florida (small airport - not a large city). Did the same trip last year using Air Miles. This year was told by Air Miles that the flight had to originate in Canada so there was a policy change we were not made aware of. Found a flight (with 4 plane changes enroute) leaving from our local airport with a U.S. carrier that met the new criteria of a flight originating in Canada. This carrier, United, was listed in the Air Miles partners list but I was then told that they had no contract with United to fly to that Florida airport. So although we were able to use Air Miles last year for this trip, policy changes that we were not made aware of have altered how we can use those Air Miles before they expire. We will be investigating other travel loyalty program options and will no longer be going out of our way to patronize the merchants who offer Air Miles.

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  31. I thought we had a contract with Airmiles. They give us points and in turn they get to track consumer spending.
    It's time for a class action suit since they are breaking (modifying) the contract without our consent. Perhaps it's time for a class action suit against thes rip-off artists.

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  32. It's the beginning of the end of the last decent customer loyalty points program.

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  33. News flash - effective mid-March 2012 - Air Miles/Loyalty Group just devalued all Air Miles by 20 to 30% without sending out so much as a press release. For example, the $100 Best Western Travel Card that was 675 AM a few years ago, and 750 Air Miles last week is now 950 Air Miles. They have adjusted everything to fit the 95 AM = $10 value that they have set for the Cash program. There really should be a Class Action. How can a "loyal" customer plan something like a family trip when Air Miles can suck back 20-30% of the value of Miles overnight? Very disappointing, but I believe Loyalty Group terms stipulate that they can do pretty well anything they like, without warning. So who are the suckers?

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  34. GOOD BYE AIRMILES!

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  36. Air Miles is a total scam! The new policies are unfair and could very well be illegal in Ontario….. I wish someone would sue Air Miles and teach them a lesson! Why are they permitted to slap an expiry date on my Air Miles without government approval and they also came up with this retarded “Air Miles Cash” scam, which is just a way to steal from people. I have a Platinum Air Miles AMEX and now I have to cut it up so as not to support the Air Miles Thief’s! Also, I can’t get any Shell gift certificates because they moved them over to Air Miles Cash but, all my miles are Dream Miles! What is the name of the person that came up with these terrible new ideas for Air Miles Scam Miles Program?

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  37. what does dream rewards miles mean? amd ive had my air miles since 97 so is it expired?

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    Replies
    1. They won't expire yet but those earned up until the end of 2011 will expire in 4 years.

      Dream Reward Miles are for flight rewards and any rewards from their catalog.

      Delete
  38. The worst "reward" programme I know of. After thousands of dollars spent, I have enought points for... a Patsy Cline CD. Getting that and getting out. It's really not worth carrying the stupid plastic on me.

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  39. Tried to change a reservation from August 1, 2013 to anytime in 2014(Aircanada flight Dublin/Toronto) no vacancy available according to airmiles.ca until May 5, 2014! Change in a reservation must be made within a year of the booking date(note not the travel date) Since the booking was done in March, it seems I'm out of luck, no seat available within that time framework, so much for the added advantages of a "Gold" card member.

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  40. It used to cost 125 air miles to buy a $20 grocery voucher. Air Miles lost me at 140 for $20. Guess I better use my 200 or 300 miles before I lose them.

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