First off I want to thank one of our readers who commented on our popular “Air Miles adds expiry rule and instant redemption option” post for alerting us about this latest change.
Sometime earlier this month Air Miles raised the redemption rates for their gift card reward options. It wasn’t too long ago that the rates for the gift cards were increased and the majority of the catalog gutted to remove primarily non-sponsor gift cards (the sponsors pay Air Miles a lot of money to give out Reward Miles only to have their members redeem for gift cards to the sponsor’s competition is main argument for that change). It was inevitable however that this increase would come along because of the new Air Miles cash option otherwise known as instant redemption. The new Air Miles cash option values 95 Air Miles Rewards Miles at $10 where as most gift cards were around 85 Air Miles for $10 (well 170 for $20 but I divided that by 2 to make the comparison equal). As you can see the better deal was to redeem for Gift Cards rather than use the Air Miles cash option and based on the responses to our post and other online forums many of the savvy collectors realized this. So to make the Air Miles Cash option more appealing it is obvious Air Miles had to raise the Gift Card rate to match. This is an unfortunate aspect of the loyalty business in that the programs have free reign to steer you towards options you may not like but will utilize because of the lack of other reward options. This happened early on when Air Miles moved from primarily offering travel rewards to adding tons of merchandise rewards which afforded a healthier profit margin over the original Air Miles reward: Flights. And they drove customers to the merchandise catalogs by raising redemption rates for the flight rewards. Now we see it again in this case as it appears the push may be on to move redemptions to the Air Miles cash option by limiting the Gift Card catalog and removing the redemption advantage the gift cards had over the cash option. Why would they do this? To push the consumer to their sponsors to spend even more money, with the Air Miles Cash option you are actually completing a purchase and chances are you are going to spend more than the amount of miles you are redeeming for (or you will end up buying more items than you originally planned thereby increasing you spend)
Looking at it from the loyalty industry side, this move will appear good on paper as it is a way for the loyalty program and its sponsors to make more money but from the consumer side they will take it as being screwed over again and they may actually walk away from using that program as much as they did in the past. For Air Miles I would assume they are hoping for a healthy balance of the two but with the many changes that have occurred with Air Miles over the past 24 months it may lean more towards the consumers side. I have to admit after my last Air Miles flight redemption in mid-2011 I barely use Air Miles anymore and only collect miles if I happen to be using a sponsor I had to shop at and didn’t go out of my way to go to. My total for the past 12 months would have be at or below 100 Air Miles Reward miles earned.
Overall only time will tell what these changes mean to Air Miles. I would like to hear what you think! Please feel free to comment below on this newest change or any of the other Air Miles changes that have happened over the past 2 years.