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Thursday, June 27, 2013

BIG NEWS from Aeroplan! Seven Year Mileage Expiration being canceled, one way mileage awards being lowered, TD Bank to issue Aeroplan Credit Cards and more!

Huge news from Aeroplan today and it is good news!

Here are the highlights:
- 7 Year expiration policy being canceled
- One way flight awards will only cost 50% of round trip
- Distinction - a new tiered recognition program, that recognizes members based on how many miles they accumulate (separate from Air Canada Altitude)
- New Market Fare Flight Rewards to replace ClassicPlus flight rewards, reduced by up to 20% --- these are the any seat any time flight rewards that fluctuate in mileage requirements based upon how full a flight is, so these flight rewards will typically cost more than ClassicFlight rewards but not as much now.
- The only bad is news is that some long haul international flights will be increasing
- TD Bank to be new Aeroplan Credit Card Issuer


Once I have time to go through the information more I will provide an update or another post with more details

Here is the press release from Aeroplan:

Aeroplan Transforms Program to Deliver Outstanding Loyalty Experience

Aeroplan launches new member recognition program, significantly improves value with new Market Fare Flight Rewards and cancels policy that expires Aeroplan Miles older than 7 years

Montreal, June 27, 2013 – Aeroplan, Canada's premier coalition loyalty program, announced today groundbreaking enhancements to the program that will be implemented on January 1, 2014, including:

The launch of Distinction, a new tiered recognition program that rewards top accumulating members, based on total Aeroplan Miles earned across all coalition partners, with preferential mileage levels for redemption, bonus mile offers and exclusive privileges;
New Market Fare Flight Rewards to replace ClassicPlus Flight Rewards, offering significantly improved value, with all members having access to mileage levels reduced by up to 20%, and Distinction members enjoying reductions of up to 50%; and
The cancellation of the seven-year mileage redemption policy, with Aeroplan Miles no longer expiring for members active in the program each year.

“The enhancements we’re announcing today are the most significant changes we’ve made in the Aeroplan program’s history,” said Vince Timpano, President and Chief Executive Officer, Canada, Aimia.  “2014 will mark a new era for Aeroplan as we take the program to a whole new level, providing members with an unrivalled loyalty experience. We’re redesigning core The oparts of the program, delivering what is most important to our members, while reinforcing Aeroplan’s position as the leading premium coalition loyalty program in Canada for years to come.”

Aeroplan’s recognition program – Distinction

Benefits of Distinction:
Benefits begin as of January 1, 2014 and include:
·         Exclusive flight reward benefits with significantly better value on new Market Fare Flight Rewards;
·         Special flights to popular destinations during peak periods with 100% of the seats reserved for Distinction members and offered at ClassicFlight reward mileage levels;
·         Bonus mile offers on eligible Air Canada flights, with select hotel partners, and through Aeroplan’s eStore;
·         Preferential treatment, privileges and limited-time offers, special partner and reward offers and invitations to exclusive events.

Distinction Levels:
Distinction is a unique member recognition program independent from Air Canada’s Altitude program. Distinction levels are achieved based on miles earned across all coalition partners including airline, travel, retail and financial card partners.

Distinction includes three status levels based on a member’s total eligible1 mileage accumulation:
·         dSilver – 25,000  miles accumulated during the calendar year;
·         dBlack – 50,000 miles accumulated during the calendar year;
·         dDiamond – 100,000 miles accumulated during the calendar year.

The Distinction qualification period begins on January 1st of each calendar year and ends on December 31st of the same year. For this special launch year, if members reach Distinction status by December 31, 2013, their benefits will take effect on January 1, 2014 and last until December 31, 2014. After 2013, benefits will start as soon as a member successfully reaches a Distinction level, and will last until the end of the following calendar year.

Market Fare Flight Rewards
In addition to Aeroplan’s ClassicFlight Rewards, which remain the most competitive in Canada, offering extraordinary value with Air Canada and any one of the 27 Star Alliance member airlines at low fixed mileage levels, members will also benefit from better flight reward value in 2014. As of January 1, 2014, new Market Fare Flight Rewards will replace ClassicPlus Flight Rewards, offering members significantly improved value, starting at up to 20% fewer miles required for redemption, with Distinction members enjoying reductions of up to 50%.   Market Fare Flight Rewards’ access to every available seat on flights operated by Air Canada, at variable mileage levels derived from fares at time of booking, will be unrivalled in the industry and will offer fantastic value to members.

"Air Canada welcomes the significant program improvements Aeroplan is announcing today. Enjoying travel is the most popular use for Aeroplan Miles and these enhancements will benefit all members by making redemptions more attractive while recognizing our shared best customers. With these changes, Canada’s leading loyalty program becomes even more appealing and the partnership of Air Canada and Aeroplan stronger," said Craig Landry, Vice President of Marketing at Air Canada.

Cancellation of the seven-year mileage redemption policy
As part of its commitment to improve member satisfaction, Aeroplan is pleased to announce the cancellation of its seven-year mileage redemption policy. Prior to this announcement, miles unredeemed seven years following their accumulation date would have been removed from member accounts starting January 1, 2014.  As a result, miles will not expire as long as members stay active in the program by having at least one accumulation or redemption activity every 12 months. To find out more, please visit: www.aeroplan.com/7year or www.aeroplan.com/FAQ.

“Member feedback has inspired these major enhancements and significantly improved benefits that we’re bringing to the program,” said Kevin O’Brien, Chief Commercial Officer, Aeroplan.  “We’re proud to be raising the bar in loyalty, giving Aeroplan Members better flight reward value, more time to redeem and the greater recognition they deserve.”


Additional changes to mileage levels for flight rewards
As of January 1, 2014, mileage levels for one-way flight rewards will decrease and require only 50%of the miles needed for a round-trip flight. For example, North American one way long haul fares in economy will be reduced from 17,000 miles to 12,500 miles and European one way fares will go from 40,000 miles to 30,000 miles starting January 1st.

In addition, mileage levels for certain international routes (to/from North America to Australia, New Zealand & South Pacific; Middle East and North Africa; and Asia) for business and first class ClassicFlight Rewards will increase as of January 1, 2014.  For more information, please review the details of the ClassicFlight Rewards mileage level changes here: www.aeroplan.com/changes.
FROM/TO FROM/TO CURRENT REQUIRED MILES
Business/First Class
REQUIRED MILES AS OF JANUARY 1, 2014
Business/First Class
Canada/
Continental US
Asia 1 125,000/175,000 150,000/210,000
Canada/
Continental US
Asia 2 130,000/180,000 155,000/215,000
Canada/
Continental US
Middle East/
North Africa
135,000/190,000 165,000/230,000
Canada/
Continental US
Australia/
New Zealand/
South Pacific
135,000/185,000 160,000/220,000
 OUCH! (that is my comment)

To spread the word, Aeroplan will be communicating directly to members through its own communication channels, in addition to reaching a wider audience via a mass advertising campaign that includes print, digital, radio, billboards, and airport advertising.

For more information on Distinction and its privileges, please visit: www.aeroplan.com/distinction.

Note:
1. Eligible Miles for the purposes of Distinction include most miles earned across Aeroplan coalition partners including airline, travel, retail and financial card partners but may not include certain bonus miles, miles accumulated through conversion programs, and certain other forms of accumulation.  For a full list of terms and conditions, please see http://distinction.aeroplan.com/assets/files/terms-and-conditions.pdf.

TD Bank to issue the new Aeroplan Cards


A Framework for a Financial Credit Card Partner for the Next Decade 

Over the last 18 months, Aimia has run a renewal process for Aeroplan’s financial card portfolio to define an enhanced partnership aimed at delivering growth over the next decade.
The agreement announced today sets out a framework for an enhanced financial credit card relationship. The provisions of the new agreement will help fund the enhancements to the Aeroplan program being announced today.
TD Bank Group (“TD”) will become Aeroplan’s new financial credit card partner for the 10-year period effective from January 1, 2014, replacing CIBC, unless CIBC chooses to exercise its contractual right to match the terms of the agreement which expires on or before August 9, 2013.
Aeroplan’s current agreement with CIBC will continue until December 31, 2013. Members can continue to earn miles as usual on their CIBC Aerogold co-branded credit cards and take advantage of any Aeroplan promotions related to these cards for the remainder of 2013.
Negotiations with American Express are proceeding in parallel and are ongoing.
“We entered into this process with a clear objective - to grow the portfolio with a bank who is committed to building the Aeroplan program with us. The process we have run has confirmed the attractiveness of the Aeroplan portfolio. Under the terms of the new agreement, our financial card partner will contribute to the funding and support required to transform the program and drive increased engagement among premium Canadian consumers,” added Duchesne. “Recognizing that more than half of Aeroplan Miles accumulated in 2012 were earned through financial card spend, a successful credit card partnership is an important element of our longer term evolution.” 

Features of New Credit Card Offerings
New Aeroplan co-branded financial credit cards, to be launched in 2014, will provide cardholders with more flexible options, better earn rates and new recognition features; all of which is in addition to the benefits to be added under the Distinction program.
A new enhanced premium card targeted at high net worth Canadian households, with a higher earn rate, will be offered, in addition to premium and mid-market credit cards.
The launch of two additional co-branded targeted credit cards is expected to include:
2
  • one aimed at customers travelling frequently between Canada and the United States; and
  • a second specifically for Canadian small business owners, which will allow small business owners to choose additional features and benefits specifically designed to their needs.
    Both the enhanced premium and premium cards will include a suite of unique Air Canada features and benefits.
    In a number of instances during 2014, annual fees will be waived and bonus miles awarded to welcome members to the new cards.

    Terms of a New Financial Credit Card Agreement
    The terms of a new 10-year financial credit card framework agreement will include:
  • a more than 15% increase in price per mile to align to market levels;
  • a commitment to minimum miles purchases for the first three years;
  • a joint marketing spend of around $140 million over four years to support new cards and
    new program features;
  • use of Aeroplan bonus miles to drive future member acquisition and longer term growth
    in Gross Billings; and
  • more comprehensive collaboration around data and customer insight analytics.
    In addition, the agreement provides for
  • a $100 million upfront contribution payable in 2014 to Aimia to help fund program
    enhancements; and
  • an $80 million contractual break fee payable in 2013 by Aimia to TD in the event CIBC
    exercises its contractual right to match on or before August 9, 2013.
    Should the agreement with TD become effective, Gross Billings growth could be dampened through the transition period to a new bank, however the miles purchase commitment would guarantee a value equivalent to the Gross Margin that would have been generated on approximately 65% of CIBC’s 2012 Gross Billings in 2014, increasing to a value equivalent to over 90% in 2015 and 2016. When combined with the upfront program contribution of $100 million and tax benefits to be realized, this should also ensure solid cash flow generation to maintain the dividend through any transition in 2014.
    Higher Gross Billings, combined with new contract economics, are expected to offset increased program costs, and generate improving cash flow returns post-transition.

5 comments:

  1. I need an assitant just to manage the Loyalty Programs ,,whew,,,at least they dropped that 7 year policy !!!

    ReplyDelete
  2. What a joke Distinction is...another devaluation of awards is a major kick in the teeth.

    ReplyDelete
  3. The distinction program is great for the frequently flyer. I personally will benefit for it unless my status drops so best take advantage of the situation for now. I am a bit concerned as to the 7 year policy taking effect on Jan. 1st 2014 as one of my son's account was going to expire Dec. 2013. I best looking into this matter for him and make sure his miles do not expire. Does anyone know for sure how the transition will be.

    ReplyDelete
    Replies
    1. Your son's miles will be fine. No miles are going to expire despite the wording that changes take place in January 1st, it is more for some of the other changes, in particular the increase in miles required for certain redemptions.

      Delete
    2. Thank you so much for the information.

      Delete