Is Air Canada Altitude descending?

First time Rewards Canada contributor Sol Zia gives us his perspective on the recent Air Canada Altitude changes that we mentioned back on August 21 (click the link for complete details on the changes if you are not aware of them yet)

Recently, and rather unceremoniously, Air Canada (AC) announced a number or changes to miles accumulation and upgrade benefits at various tier levels in their fledgling Altitude program. Those changes were summarized in an email dated August 19th and more details could be found on the Air Canada Altitude website. Reading the email sounded like a doctor telling you a good news, bad news prognosis and starting with the good news without even asking.

The good news, and it’s been a long time coming, is the ability to earn status miles (Altitude Qualifying Miles if you will) for Tango fares that previously did not qualify for status miles. And now for the bad news, and there’s lot of bad news, starting next year, upgrading will be a costly affair and upgrading companions will be more challenging (not that it started out easy). Unless you are Super Elite (Super Elite 100K to be precise) you will be required to pay an add-on, on top of surrendering those hard earned e-upgrade credits on AC long haul. Further bad news came in the body of reduced ability to upgrade those traveling with elite tier travelers. This will be most felt by Super Elite 100Ks with family who were looking to upgrade their loved ones on  paid or award tickets to that far off vacation destination. It has only been a year that Super Elites have had the feature of upgrading on award tickets and next year it will be gone.

“What’s the big deal?” you say, “Many US carriers are already doing this!” True, but Air Canada has started out with add-on price points between $500 and $750 CAD well above where US competitors started. AC has chosen to price the add-ons competitively to the marketplace versus a more gradual approach or more discreet add-on levels by distance traveled. By taking such a sweeping approach to 25, 35, 50 and 75K level members one might predict that further changes to each sub-Super Elite level are coming. The trend for US carriers has been to widen the gulf between tiers so with so many tiers AC may rapidly follow suit and eliminate benefits for the “lower” tiers. With so much profit concentrated with 50, 75 and 100K members AC could, arguably, reduce benefits at the 25 and 35K level without much economic impact. At the 25 and 35K level members are clearly doing fewer long hauls so the knee-jerk compulsion to switch to United or other Star Alliance members makes only emotional sense as United would offer no greater benefit to a 25 or 35K member.

At the 50, 75 and 100K level things are a bit more interesting as switching earning designation could yield improved benefits on, for example, United while retaining Star Alliance Gold status giving you access to elite check-in counters, no fee and prioritized baggage, domestic lounges and advance boarding. It will be interesting to see if defection becomes measurable and AC has to examine some of its recent changes to Altitude.

At the end of the day these changes make a great deal of economic sense to Air Canada and devaluing 25 and 35K members may prove a winning bet. Let’s see if the bet pays off for the 50, 75 and 100K members.

Sol Zia, a loyalty consultant, has been an Air Canada Super Elite (100K) member since he first fast-tracked out of Elite in 2003.