Workers install an Air Canada sign on Aug. 11, 2020, on a downtown Montreal building formerly occupied by Aimia Inc., which sold its Aeroplan travel rewards program to the airline in 2019.Andrej Ivanov/The Globe and Mail
Air Canada is gearing up to relaunch the Aeroplan rewards program in November even as members are still grounded by public-health restrictions halting most travel.
Starting Nov. 8, the program will allow members to use Aeroplan points to book any seat on an Air Canada flight, doing away with the current limited inventory of seats. The same day, Toronto-Dominion Bank and Canadian Imperial Bank of Commerce will introduce revamped Aeroplan Visa credit cards after spending a combined $1.3-billion to secure their places as key partners.
The overhaul of Aeroplan started after Air Canada bought the program from Aimia Inc. in 2019. It was originally intended to launch this month but that timeline was bumped back amid a surge in novel coronavirus cases this year.
Even now, the retooled program arrives at a highly tumultuous and uncertain moment for the global travel industry, as many countries keep their borders closed, business travellers meet virtually, and vacationers opt for local getaways.
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The new program was mostly ready when Canada’s economy went into lockdown in mid-March, but Air Canada and its banking partners delayed it to make tweaks, train a combined 100,000 people in call centres, branches and offices virtually, and spread the word about changes to members.
As travel to visit friends and relatives has begun to rebound more quickly than business travel, Air Canada has put greater emphasis on benefits “enabling the family dynamic,” said Mark Nasr, the airline’s vice-president of loyalty and e-commerce. “We didn’t want to give up on the goodness for frequent travellers, but we wanted to expand the appeal to families and folks that might travel once or twice a year.”
The new program is designed to be less rigid and, in some areas, more generous, based on feedback from 36,000 consumers and comparisons with other leading travel rewards programs. Aeroplan’s five million existing members will keep their membership numbers, and miles will be transferred on a one-to-one basis, with no expiry date.
It will eliminate fuel surcharges that members had to pay in cash, allow families to share points and calculate the number of points earned based on actual ticket prices, rather than flight distance under the current system. Purchases made on partners’ Aeroplan credit cards will now count toward frequent-flier status, and the ability to use points to buy merchandise is also expanding, giving members who aren’t travelling an alternate way to use points.
Air Canada and its partners have made expensive bets on the new-look Aeroplan as a way to stay competitive in the crowded travel loyalty market. In mid-2017, Aeroplan was upended when Air Canada announced it would end its contract with the loyalty program in 2020 and build its own in-house rewards. A year later, Air Canada circled back and bought the program for $497-million, assuming $1.9-billion in liabilities for unredeemed miles.
That was before a global pandemic battered the airline industry, however, and Air Canada is counting on loyalty to help it recover as travel resumes. The airline lost $1.7-billion in the second quarter of 2020, slashed passenger capacity by 92 per cent and laid off thousands of staff. Chief executive officer Calin Rovinescu has been pressing the federal government to either loosen travel restrictions or provide more financial aid to struggling airlines.
To secure its status as the lead credit card partner until 2030, TD paid $1-billion in fees, prepayments for loyalty points and costs to accommodate the new program. CIBC, which has invested in its proprietary Aventura line of cards, took a secondary role, paying $292-million to participate and prepay for future miles. American Express will also launch a suite of redesigned Aeroplan credit cards, and promised further details soon.
Amid job losses and economic uncertainty, some consumers have cut spending and paid down balances on credit cards, which could eat into the fees and interest banks earn from Aeroplan cards in the near term. But bankers said they see the Aeroplan partnership as a longer-term strategy, and are confident customers are eager to travel again.
“While COVID-19 has certainly impacted all of us in profound ways, including our ability to travel, we have to continue to look ahead and make those thoughtful decisions that reflect evolving customer preferences,” said Katy Boshart, TD’s senior vice-president of Canadian credit cards.
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