Friday, March 30, 2012

Air Miles raises Gift Card redemption rates

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.


  1. Empire Theatres movie ticket single admission hasn't changed. It's worth $12.75 and costs 75 miles (17 cents/mile). It's a better value than the cash option (10.5 cents/mile).

    This will continue to be my backup if I don't end up with enough miles for the flight I want.

  2. I have made Air Miles my loyalty program of choice, so I do everything I can (within reason) to ccumulate Air Miles. By achieving Gold Status every year, I get 25% off of the normal amount of Air Miles required for a flight. I would never redeem for merchandise because you are paying out 4 to 8 times the retail value of the merchandise, or gift certificate. I only redeem my Air Miles for flighjts, but I always check for seat sales first. If anyone can present an argument for a better loyalty program, I would really like to hear it. I have been to St. John's 3 times, Toronto 3 times, and Fort Lauderdale once, and still have 7,000 Air Miles. My wife has about 20,000. And yes we are aware of the 5 year expiry policy. Hoping to get to Hawaii in the next couple of years.

  3. Glad to hear that you have had success with Air Miles! It can be a good program when utilized correctly (well any program for that matter could be) but you are in the minority. The last stat I saw from Air Miles was that less than 10% of all redemptions were for flights, which means over 90% were for other item including gift cards.

  4. Back in January, I redeemed 1125 Air miles for a $150 Best Western gift card, which represented 7.5 miles per $1 value.

    Today, the only Best Western travel card available is $100 for 900 miles, which represents 9 miles per $1 value.

    Yes, redemption rates are going up and for this collector, after 19 years of collecting, the focus has shifted to other loyalty programs.

  5. I am a high pint collector when it comes to air miles and when they raised the redemption levels WITHOUT NOTICE I lost about $2,000.00 in value on the gift cards I redeem for. I feel royally screwed. Is there any recourse for me?

  6. air miles sux for flight redemptions...i can get two flights to hawaii by signing up to a RBC BA Visa!!! Have fun saving up for two more years!