PointsNerd

Introducing Air Canada’s Reenvisioned Aeroplan Program

Jayce

Over three years in the making and quite possibly the most anticipated program revamp in recent memory, Air Canada is introducing the new Aeroplan program. There are many changes with almost all of them being very positive. You will see prices higher for redemptions but it comes with the positives of increased availability, flexibility, and great new program features.

There’s a lot to cover with this new announcement so I’ll cover the high points in this post and delve into details on specific areas in follow up posts.

This information is being provided a full 3 months prior to launch, which is scheduled for November 8th, 2020.

One point of interest is that Aeroplan Miles are now being referred to as Aeroplan Points because of Aeroplan’s move to awarding Aeroplan points based on spend rather than distance flown. I may make a mistake here or there but the new nomenclature is POINTS not miles.

What’s Changing for Flight Awards?

First, let me say that Air Canada spared no expense when it came to getting the bones of the program right. They consulted with over 35,000 Canadians through surveys and focus groups and engaged consultants the likes of Boston Consulting Group (BCG), McKinsey, Deloitte, Accenture, and BOND Loyalty. As a loyalty enthusiast and long-time frequent flyer, I very much appreciate that these decisions were not made in a vacuum.

The changes are numerous on the Award Redemptions side of things so here are the Coles notes with more details below:

A new policy that doesn’t quite deserve its own write-up but should be mentioned is that Aeroplan Points do not expire unless there is no activity in your account for a period of 18-months. This adds 6 months to the current 12-month expiry policy.

Goodbye Fuel Surcharge and Maximum Permitted Mileage

This is most likely the biggest piece of news coming out of the Aeroplan revamp and one that will be welcomed by all members of Aeroplan regardless of if you redeem for short-haul flights within Canada or if you are the majority of people reading this blog that are trying maximize the number of countries you visit and the airlines that you fly.

Aeroplan is now removing all fuel surcharges (YR and YQ) from their award tickets! This makes the program infinitely more usable for everyone. Gone are the stories of “I just redeemed 60,000 Aeroplan miles to fly to London and ended up paying more in taxes than what I would have paid for a regular ticket”. Now your flight redemption to anywhere in the world will not attract fuel surcharges (YQ)!!!

What does this mean for you? Well quite simply, it makes your Aeroplan points worth a LOT more and brings aspirational travel much more into reach.

The old way of getting to London from Canada with Aeroplan was to use partner airlines that didn’t charge a fuel surcharge to get to Europe and then route to London. These were the sacrifices one needed to make to avoid the ridiculous fees like the ones below.

Old Aeroplan Taxes and Fees

Now with the new Aeroplan, you remove the $470 Carrier Surcharge fee and are left with a much more reasonable amount due in taxes. While these taxes are unavoidable, Aeroplan is now going to allow the redemption of Aeroplan points to cover all taxes. They currently allow this but I’ve been told that the value per point will increase so you won’t need as many miles to cover your taxes as you did before.

Also gone in the new program is Maximum Permitted Mileage (MPM) as the award chart pricing is based on distance flown. While this didn’t affect many people outside the experts that really pushed for the maximum value of an Aeroplan flight award, it’s nice to know that the program becomes much more simplified for everyone.

Keep in mind that Air Canada and Aeroplan made a substantial amount of money collecting Fuel/Carrier Surcharge (YR/YQ) in the past and with that income disappearing, it has to be replaced with something. The result here is an increase in Aeroplan Points required for redemption. Some of these increases are small and some are large – there’s no rule of thumb because it varies between the charts but you do get something out of that increased cost – reduced out of pocket costs as well as a new ability to use Air Canada for your award redemptions!

Award Chart

The rewards chart is now much more simplified with 4 Travel Zones (North America, South America, Atlantic, and Pacific). Gone are the 16 different areas we were used to in the old Aeroplan redemption chart.

As you can see from the image above, the delineation between zones is pretty clear cut and easy to understand unless you are travelling to the middle of Russia, which spans the Pacific and Atlantic zones. All other zones are clearly defined, making it easy to understand redemptions. In addition to Travel Zones, there are 10 Travel Regions.

Think of Travel Regions as origin and destinations within the Travel Zones. Here is the list of Travel Regions:

Within certain Travel Regions (NA, NA-ALT, NA-PAC, NA-SA), there is a cost for partner bookings and a cost for Air Canada bookings. This can get a little bit complicated but once you understand the general concept it’s very easy to understand. Let’s take a look at the Between North America to Atlantic Zones Chart. I’ll provide an example so you can better understand how the chart works.

Remember – pricing in the chart is one-way – this is a departure from the previous Aeroplan chart that was quoted as a round-trip.

You can download the full award chart here and print it off if you want to use it to follow along instead of referring back in the article.

Let’s say, for example, you wanted to fly Business Class from Toronto (YYZ) to Instanbul (IST) and the routing you wanted to take went through London (LHR). In this example, you would fly from YYZ-LHR on Air Canada (AC) and then from LHR-IST on Turkish (TK).

First, we need to determine the distance flown so when we look at the award chart, we know how many Aeroplan Points it’s going to cost. Aeroplan will be releasing a tool to make it easier for you to know how many miles you will need but you can always turn to your trusty friend GCMap to get flight distances.

Award Inventory vs All Inventory

We have to take a slight detour here to explain a concept so that you can fully understand the chart and how the new program differs from the old Aeroplan.

In the old program, there was a set allocation of award seats per flight depending on demand. Some flights/routes would have very little to no availability while others were full of inventory. It was all a function of what people were redeeming for and demand for the flight by revenue paying passengers. In the old system, once those award seats were snapped up by other Aeroplan members, you were just plum out of luck.

The new Aeroplan has the same system of award seat allocation but you now have access to every other seat on the plane. The only catch is that if you don’t get the original allocation of award seats, you will pay more for the award.

The trade-off here is that you are almost always going to be able to find award availability on Air Canada flights, it’s just a question of what you will end up paying.

Now, keep in mind that Air Canada can do this with Air Canada inventory, but it has no control over partner award availability.

With that out of the way, we essentially have two possible scenarios:

  1. All your flights are available as Award Inventory (AC + Partners)
  2. Air Canada flights are not available as Award Inventory but are available for more points and the partner airline has award inventory.

YYZ-LHR-IST – All Award Inventory

Let’s assume you are in Scenario 1 where you had award inventory for both Air Canada (AC) and Turkish Airlines. We know that the total distance of the award is 5,106 miles (from GCMap) so we take a look at the award chart that matches that distance.

If we look under the Business column, we can see that the partner award chart shows 70,000 points. You will also notice that the Air Canada chart shows 70,000 – 180,000 points. If the YYZ-LHR-IST has award availability on both Air Canada and Turkish Airlines, the total would be 70,000 points for a one-way Business Class flight from YYZ-LHR-IST.

YYZ-LHR-IST – AC Award Not Available

The other situation that could arise is that the award seat on Air Canada from YYZ-LHR has been redeemed for by another Aeroplan member, leaving no award inventory. In the old Aeroplan, that would mean you would have to start back at square one and find another routing.

With the new Aeroplan, the rest of the seats are available for award redemption, just at a higher cost. Now the question becomes, how does it actually price. Well, it actually prices in the most logical way you can think of – it’s based on the miles flown on AC vs partners.

Let’s imagine that Air Canada has run out of award inventory for the YYZ-LHR leg but you really want this particular flight. This would mean that the award would cost more than the 70,000 points under the YYZ-LHR-IST – All Award Inventory example above.

Now, we don’t know how much exactly Air Canada will price their leg out at but we do know that it will be between 70,000 and 180,000 points. Let’s assume the cost is 100,000 points – but please remember, this number will be very much dependant on things like the cash price of the ticket, demand, and interestingly your status with Air Canada and whether or not you hold one of their credit cards (more on that in another post featuring the credit cards).

Now we do a little bit of math to figure out the total cost of the award:

The YYZ-LHR leg distance is 3,556 miles out of the total 5,106-mile total distance, which is ~70% (3,556/5,106) of the total distance travelled, which leaves ~30% for the LHR-IST leg.

Let’s assume the AC leg is priced out at 100,000 points. This means that you would pay 70,000 points for the AC leg (70% of 100,000 points) + 21,000 points for the TK leg (30% of 70,000 points). That means the total you would pay is 91,000 (70,000 + 21,000) points.

Obviously, this is more than the lowest possible rates, but what you have to keep in mind here is that you will almost always find what you are looking for … just possibly at a higher cost. For me, that’s a very fair trade-off because if you want to redeem for the lowest possible cost, you can just keep looking for award inventory like you do now.

We have been told by Aeroplan that even when the award inventory is diminished, they have taken steps to provide more seats towards the lower end of the range to allow for ease in redemption – which sounds very promising.

Fees and Self-Service

The $30 phone booking fee remains if you need assistance booking your redemption through the Aeroplan Call Centre but based on what we’ve been told, you should not need to call into Aeroplan to make your booking due to the robust nature of the booking engine.

Currently, Aeroplan shows ~20 results for any award origin/destination pair you search for. With the new system, this will increase to 150 results! This is fantastic news which should translate into finding exactly what you need without having to do a segment-by-segment search.

The only additional fee that you will need to consider is that if your itinerary includes a partner airline in any segment, you will pay a $39 fee per passenger. To be clear, this is the total for the itinerary/award, not a $39 fee per segment with a partner. This means that you are better off booking a round trip rather than a one-way as either attract the $39 fee.

If you would like to add a stopover into your itinerary, you can do so for 5,000 Aeroplan points. You can add one stopover per one-way award and this is valid for every itinerary except for domestic travel and transborder travel to the US. This means routings like YYC-IAH (STOP) – JFK (DESTINATION) – YYC are no longer allowed as a single booking.

Routing Rules

The Routing Rules for the new Aeroplan redemption are pretty easy to understand. Here’s what you are allowed to do:

World of Possibilities But At A Cost

Considering that the price of a stopover on a one-way itinerary is only 5,000 points regardless of class of service, and the fact that you are allowed up to 6 flights as long as you aren’t more than 100% over the direct routing mileage, you can start to see how you can build some very interesting itineraries.

In general, those that like to book things like mini-round-the-world (mRTW) excursions can expect to pay more in comparison to the old Aeroplan. In a previous mRTW redemption, I flew from Calgary to Istanbul, Cape Town, Rio de Janeiro and back in Business Class for 150,000 Aeroplan miles.

That redemption with the new system would cost me 210,000 Aeroplan points.

As each segment is over 8,001 miles, I would be on the hook for 100,000 miles plus 5,000 for the stop in each direction (100,000 + 5,000 + 100,000 + 5,000 = 210,000).

In general, most of what you will see with the new chart will tend to be somewhat more expensive – but with that being said, we need to keep in mind that all fuel/carrier surcharges are now gone, opening up more of the world through Air Canada’s flight network.

Award Tiers

Aeroplan is also introducing Award Tiers – which are different levels of awards to allow for things like reduced cancellation fees, reduced redeposit fees, access to preferred seats, increased access to checked bags, and more.

The tiers are similar to the fare structure of Air Canada in that they are called Standard, Flex, and Latitude awards.

The idea with these different tiers is that they allow for more flexibility if you need to change or cancel your flight. For example, you may book a flight to Orlando to go to Disney World in March but you are unsure if COVID will allow for such a trip. You can either book the Standard (cheapest) award ticket and potentially face up to a $175 cancellation fee or you could pay a bit more in Aeroplan points, book into the Latitude Fare, and give yourself more flexibility in the event you need to cancel.

It is unclear what the pricing structure will be for the Standard, Flex, and Latitude fares but it’s safe to assume that they will vary depending on a multitude of factors.

Awards Are eUpgrade Eligible

Those that have status or are familiar with Air Canada’s old Altitude program know that eUpgrades were what you used to get upgraded into a higher class of service with Air Canada revenue flights. If you purchased an Economy ticket, you could use your eUpgrades to bump up into Premium Economy or Business Class. The amounts varied depending on the route, demand, status, etc.

We are being told that eUpgrades can now be used on award tickets. This means that those that obtained status with Air Canada have an additional way of saving their Aeroplan points. We don’t have the full details on how this will work but I would imagine you would book an Economy Class ticket, and then use your eUpgrade credits to bump yourself up to either Premium Economy or Business Class. The challenge with this, like all other eUpgrades, is when the upgrade will “clear”, meaning – when will I get confirmation that my upgrade is finalized.

I will have another post covering off the new Aeroplan Status that replaces the Altitude program.

Family Sharing

Aeroplan has now made sharing your Aeroplan points dead simple. Gone are the days where you would have to pay to transfer your points to your family member or friend.

With Family Sharing you are able to easily pool your Aeroplan points together so you can speed up how quickly you can redeem your points. Family Sharing has some simple rules that you must follow:

Let’s look at the last point in more detail. Let’s say you have a family of 4. Person A has 50,000 Aeroplan Points and creates the Family Pool. Person A is now the administrator of the pool. Person B joins and brings in 30,000 Aeroplan Points. Person C and D both join and bring in 10,000 Aeroplan Points each.

The Family Pool sits at 100,000 Aeroplan Points but proportionally, the breakdown is:

Person A – 50,000 Aeroplan Points – 50% of Total
Person B – 30,000 Aeroplan Points – 30% of Total
Person C – 10,000 Aeroplan Points – 10% of Total
Person D – 10,000 Aeroplan Points – 10% of Total

Let’s say Person D wants to travel from Vancouver (YVR) to New York (JFK) and back in Business Class and finds an Air Canada Redemption for 50,000 Aeroplan Points. Assuming Person A has given permissions to Person D to book the travel on the Family Portal, the 50,000 Aeroplan Points are taken from the Family Pool.

Let’s say that Person B decides later on that he wants to leave the Family Pool. When Person B leaves, he will leave with 15,000 Aeroplan Points because he held 30% of the total pool and 30% of the 50,000 Aeroplan Point redemption equal 15,000 points. You take the original contribution (30,000 Aeroplan Points) and subtract the proportional responsibility of the redemption (15,000 Aeroplan Points).

New Credit Cards

To help people earn Aeroplan Points, TD, CIBC, and American Express will all launch credit cards for the new program. I will cover these cards in more detail in a separate post but the highlights include:

For more details on the Aeroplan co-branded credit card suite, please refer to my dedicated post.

Flexible Points Usage

Aeroplan Points will now become even easier to use with what Aeroplan is calling “micro-redemptions”. You will now be able to use your Aeroplan Points to bid for an upgrade on revenue tickets. Right now, you can put in a dollar amount that you are willing to pay to upgrade and if you are the highest bidder, you get the upgrade. With micro-upgrades, you can use points instead of cash. You will also be able to use your points for Air Canada ancillaries such as onboard wifi purchases, seat fees, lounge access, baggage frees, buy-on-board food, and everyday purchases (more on this in the section below).

Why Do This?

Think about this from a business perspective. If you, as Aeroplan, make your program attractive by making it easy to book award ticket and eliminate fuel surcharges (YQ), you now drive demand for your product. Normal Canadians now start bragging about how easy it was to redeem Aeroplan Points for a trip to Cancun and how they only paid $80 in taxes. This now drives demand for more Aeroplan Points and the demand is only quenched by more and more people signing up for your credit card or shopping at retailers that provide Aeroplan Points as a way to entice consumers. Well, now you have income coming in from your financial partners (TD, CIBC, American Express) as well as retailers that are buying your points in bulk and it becomes dead simple to attract more/different retailers to purchase even more of your points. Now you have a pile of cash from the sale of Aeroplan Points that you can reinvest into the program with new features and/or more airline partners and/or more award availability.

Essentially, what you have created is a virtuous cycle – a self-propagating way for the program to be great, remain great and even improve.

I’m going to call it now – Aeroplan Points will become Canada’s quasi-currency. Sometime in the near future, you will be able to redeem Aeroplan Points for coffee at your local cafe or to pay your cable bill. I have to believe that this is the ultimate goal for Air Canada/Aeroplan – a currency so widely loved and ubiquitous that all retailers will buy Aeroplan Points to earn loyalty and accept Aeroplan Points as currency. I called this in 2018 and I’m doubling down on it with what I am seeing from Aeroplan.

New Mindset

I’ll be honest, when I was first told about the new Aeroplan program, I was very excited and now as I sit here digesting and analyzing the new program, I am even more excited. What some may key in on is the increased cost for redemptions but what I am focused on is the new ease of use of your Aeroplan Points. The playing field is now much more even for the common person to effectively use their Aeroplan Points.

This level playing field makes the program less scary to get into and easier to fully embrace, which is ultimately Aeroplan’s goal.

Experts in the Travel Hacking game will need to change their mindset and start thinking about using Air Canada as your primary airline for award redemptions, or at least for a portion of your award itinerary. Given that there are no fuel surcharges AND Air Canada was awarded SkyTrax’s Best Airline in North America, you start to see how easy it will be to get to your destination using Aeroplan Points.

Also – Air Canada’s route network is among the strongest in the world so you can truly get to wherever you want to go with Air Canada.

Conclusion

This new program is a breath of fresh air and something that other loyalty programs should try to emulate. Of all the different programs out there that have “program enhancements” (read: devaluations), Aeroplan has struck a very nice balance of strong additional benefits in trade for increased redemption costs.

If you think about the new program features, they borrow the best from other programs:

With that being said, Aeroplan is pioneering some new ideas that I haven’t seen before like the combinability of award space and revenue space for an award as well as returning 150 results per origin/destination query.

Aeroplan has gone all-in on this new program, investing millions of dollar in a new GDS (Amadeus) that allows for this flexibility and pushing their GDS partner to stretch beyond what they are comfortable with.

I applaud Aeroplan for their audaciousness and willingness to break the mold. It makes me wish that the 1.5 years I spent at WestJet was at Air Canada.

Congratulations to Air Canada and Aeroplan for what will prove to be Canada’s de facto #1 Loyalty Program.