Tuesday, January 5, 2016

The upcoming year in travel rewards for Canadians: current state and predictions for 2016!

Call this our start of the year update for you and also our prediction post on what is going to happen in 2016 in the world of loyalty programs for Canadians!

Airline Programs

What's happening:
Air Canada Altitude - We already know some of the changes for AC Altitude. We detailed them in this post but a quick overview: Gone is the Air Canada metal requirement, rather you have to earn Altitude Qualifying Dollars now along with your Qualifying Miles and/or Segments. This move should thin out the ranks of the Altitude program, especially SE100K

WestJet Rewards - Big growth with the airline over the past year means you have more flights to earn WestJet Dollars on and to redeem for. The big one is London-Gatwick. They have also completed their first year with an elite tier program which many of you should have now thanks to their status match and fast track offers.

Other programs - Both American AAdvantage and British Airways Executive Club have changes that are coming in the next few months. Of course the one that affects us the most is the major increase in Avios required for BAEC short haul North America redemptions. Used to be 9,000 Avios for a round trip, now it's 15,000. Still a good deal but a major devaluation nonetheless. With American we see them moving to a revenue based earning model like Delta and United and updates to their new award charts sees Canada being lumped in with Alaska rather than the lower 48 U.S. states which means it will take more AAdvantage miles to redeem for most award flights. See more at British Airways does away with the 4,500 Avios Short Haul Award in North America
and American AAdvantage changes coming in 2016 - Most of it isn't good news and its worse for Canadians than our US counterparts.
There is also news that Air France KLM Flying Blue will be moving to a revenue based system sometime between now and 2018 (Source: View from the Wing). 

Air Canada Altitude - All the details of the 2016/2017 program haven't been released, we should see it sometime soon however including what you get to pick as your bonuses/benefits. I'm guessing it won't be too different from last year as the new requirement of Altitude Qualifying Dollars is a major change and they won't want to change too much else to further infuriate their current membership base.

WestJet Rewards - Now that they have their elite tier levels set in place I believe that we'll see WestJet Rewards finally add more partners. Currently on the airline side they have American and Delta so I wouldn't be surprised if we see at least one more airline join as a Rewards partner in 2016. On the non-airline side I keep asking and telling WestJet at our lunch meetings about non-airline partners and I truly believe this will be the year that we see the addition of at least one hotel or car rental partner where you will be able to earn WestJet Dollars (and not have to book via WestJet.com) My bets would be on IHG.

Alaska Airlines Mileage Plan - This is one program I hope remains untouched as is. This is the hidden (well not really hidden anymore) gem of frequent flyer programs. While all programs around Alaska are changing, they really haven't and that has been their strength. However with more and more people utilizing Mileage Plan for great rewards like one way business and first class on Emirates we will probably see that great value change in 2016. I really hope I'm wrong but their is only so long that Alaska can hold out as more and more people become aware of this program. In reality you should even be looking at this program, just because they only fly to B.C. and Alberta doesn't mean you should pass it by. They have great airline partnerships with American, Delta, Cathay Pacific, Emirates, Air France KLM and more where their miles can be used on flights out of Canada. Just be forewarned to use your miles up sooner than later and not hold on to them just in case that devaluation comes later this year.

Coalition Programs

What's happening: In 2015 we saw strong growth from AIR MILES in terms of what they offer for credit card and general bonus offers. The program was hurting for a few years in our opinion but seems to be on a come back with new partners such as Lowes and a big push to fight against other coalition programs like Aeroplan and up and comer SCENE. Aeroplan seemed to put their focus back on the travel side as there weren't many additions to their non-partner portfolio. Most attention was paid to TD, hotel partners and advertising the program as the one for making travel dreams come true.

Predictions: I believe we'll continue to see strong growth from AIR MILES this year in the non-travel segment while Aeroplan will continue its focus on the travel segment, paying homage to its roots as a frequent flyer program. Aeroplan will no doubt remain a coalition program but it does seem that AIR MILES is winning the coalition war between the two in terms of places that you can earn miles. I think Aeroplan will put a big focus on fulfilling those travel dreams and push things like Air Canada's new Premium Economy seats as a great redemption option for those who won't get up to business class award but don't want to travel in economy. Finally we'll continue to see SCENE grow from its humble yet large domination as a movie based program into a full fledged coalition program by adding even more partners that you can earn and redeem points at. Will it ever become a travel reward program, not likely this year but I wouldn't be surprised if they team up with a third party travel provided similar to Petro-Points' relationship with iTravel2000.

I do believe however with the strong re-growth of AIR MILES there will be another flight mileage devaluation towards the end of the year. The big credit card bonuses, bonuses for shopping are boosting balances which means demand gets higher and to combat this as we see from most programs are award price increases. I hope this prediction is wrong but the fact that Aeroplan just had their award chart changes in December, AIR MILES won't be too far behind, even though most of Aeroplan's changes were on the business class and first class side, which of course, AIR MILES doesn't offer to most of their members.

Hotel Programs

What's happening: Two big mergers announced in 2015 will affect some of you this year. The first was Marriott purchasing Starwood. Starwood's Preferred Guest program is no doubt the best hotel program out there and some of you may be worried that it is on it's last legs. I would say you don't have to worry this year. Given how long it took Marriott to integrate South Africa's Protea Hotels and our own Delta Hotels (still not complete) the Marriott Rewards program and the Starwood Preferred Guest program will remain separate in 2016. The other major acquisition was France's Accor Hotels purchase of our Fairmont Hotels. Seeing that Fairmont Hotels President's Club is a much smaller brand compared to SPG, this is the one to be worried about in 2016.

After Marriott announced the Starwood purchase, Hyatt Hotels began offering status matches to try to attract SPG members who may have been displeased with the news and Hilton followed suit. In fact the Hilton status match is still going on so you should jump on that before Jan 11 (find out more here) Then you should take that status and get it matched with Best Western  (find out more here)

Predictions: As I mentioned above, I don't think we'll see any movement to have SPG integrate in Marriott Rewards this year. That will happen in late 2017 so don't worry yet. Fairmont President's Club may disappear towards the end of the year. This great program is an easy integration into Le Club accorhotels as it isn't points based. Elite members will be matched to the equivalent Le Club accorhotels status level albeit with less benefits than they currently enjoy.

We'll see the usual hotel category award night changes from Marriott, SPG, IHG Rewards Club and others later this winter or early spring. We may see more hotels in Canada move to lower categories as our economy continues to struggle especially in Alberta. Hopefully this also means that we'll see more hotels in the coveted IHG PointBreaks 5,000 points per night offer. Usually we only see 5-6 Canadian locations, I predict we may see that jump to 10-12. As we already know, Hilton's changes occur year round and we will continually update you on those changes as well.

Credit Cards

What's happening: The good news is that we were wrong at the start of 2015 with the new interchange rate agreement. We predicted that credit card rewards would be cut back to make up for the short coming in revenue and while it seemed to come true for select cards many came back to their pre-agreement offers realizing they could not compete with those issuers who chose to keep their card offerings the same.

Predictions: 2016 will continue to see strong credit card sign up offers and rewards due to the current economic conditions that Canada is seeing. With tens of thousands of lay offs alone in Alberta due to the struggling oil industry issuers will have to be on the ball to get new applications. Unfortunately for the issuers it doesn't appear that will be for high end cards but for cards that may offer lower interest rates as the amount debt being held on credit cards in Canada jumping over $500 million over the past year. This is not a good sign for consumers, it looks like a lot of you are holding debt on your cards which of course is something you don't do when it comes to rewards credit cards! Overall the offers on credit cards will fluctuate slightly but should be in line with those we've seen over the past few years like First Year Free, sign up bonuses increased by 5 or 10,000 miles/points etc. With the Canadian dollar continuing to be extremely weak against the U.S. dollar we will likely see one or two new cards come out with no foreign exchange fees. They won't be major cards like the TD Aeroplan, CIBC Aventura or RBC Avion cards rather it will be new issues looking to take a slice of the pie. Such has been the case with Chase's Marriott and Amazon cards and the recently released Rogers card.

Despite Marriott buying Starwood we'll see the Starwood Preferred Guest Credit Card from American Express continue on throughout this year and into early 2017. At that time Chase will see some major increases to people applying for their Marriott Rewards Premier Visa card! We would all love to see some other hotel chains start issuing cards in Canada but given our over saturation of card choices here it is a tough market to break into. Seeing that we lost two hotel co-brand cards over the past year from two very large chains I unfortunately don't see another hotel program coming in anytime soon.

What are your thoughts on 2016? Do you agree or disagree with some of the predictions? What do you think will happen this year?

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