What We Know About The New Aeroplan Program Launching This Fall

Air Canada’s Aeroplan rewards points program is the most vital one for Canadians and it will be entirely revamped soon, something pretty exciting since it’s very rare for a program to start over from scratch. After meeting Mark Nasr, VP of Loyalty with Air Canada, I now have a few useful details to share for those who want a preview of what is to come.

I had the chance to have this interesting talk during Air Canada’s unveiling of its A220 (the former Bombardier CSeries) and as the person in charge of the upcoming program, he went on the record with new information about some key elements.

So I am resharing this complete guide to the Aeroplan changes for an update based on the most recent developments, notably due to the pandemic.

 

Bullet-point overview of the new Aeroplan

I’ll detail each of these below, but for those who want just the essential:

  • what: Air Canada is revamping its rewards program entirely
  • when: Q4 2020 launch date (pushed back from Q3 due to pandemic)
  • best news: expect attractive new credit card offers
  • more options: not only new cards but a wider variety of new features
  • financial partners: AMEX, TD, and CIBC will all remain
  • airline partners: AC is staying in Star Alliance and also adding non-alliance partners
  • current Aeroplan miles: will transfer 1:1 to the new program
  • AMEX MR points: will continue to transfer 1:1 to the new program
  • no surprises: all program details will be announced “months” before launch
  • award chart: no more fixed-prices across the board, new hybrid model (variable and fixed)
  • North America flights: negative change towards dynamic pricing, but simpler & more seats
  • partner/long-haul flights: some form of fixed-price award chart will “probably” remain
  • second free stopover: will become available once again
  • surcharges: nothing official, but there are reasons for optimism for their disappearance
  • current rules: you can book almost a year ahead, so for summer 2021 in September
  • our perspective: we are cautiously optimistic, at least a lot more optimistic than before
  • detailed unveiling: date unknown as of now, but we expect it to be in the coming weeks
  • action required: once the new rules are revealed, you will need to maximize the transition
  • more info: sign up for free to get our detailed analysis and our action plan

 

The basics of Aeroplan

Those who know Aeroplan and the context well can skip to the next section. For those who do not know Aeroplan, it’s by far the most important travel rewards program in Canada on the airline side.

 

The current Aeroplan program

The existing program is not perfect obviously, but considering how easy it is to earn many Aeroplan miles with credit cards in Canada, it’s really the key program for Canadians who want to earn free travel.

Aeroplan offers many possibilities to save a lot of money.

In short, these are points (airline points are often called “miles”; it’s the same thing) that you can use to get nearly-free flights on over 30 different airlines from all around the world (not just Air Canada, contrary to the widespread myth).

They are variable-value points, so for those just getting started, that means that not all uses are good. Some are even terrible. But some are absolutely excellent, and this type of point is the only one that can give you outsized value.

They’re more complicated than fixed-value points, but the potential value is infinitely higher. If you use them well. I won’t explain it all, you can read our introductory guide to Aeroplan to understand the current program.

 

Aeroplan’s history

Aeroplan was initially Air Canada’s in-house loyalty program, a run-of-the-mill standard setup. They then did a spinoff and gave away some equity in the program.

In 2008, to raise cash during the crisis, Air Canada sold its remaining stake in Aeroplan so the program became entirely independent (with a very intimate partnership deal of course).

But the reality is that for years now, in the US, airline rewards programs have actually been worth more than the airlines themselves. Air Canada was at a disadvantage as everyone else controlled their loyalty program.

So in 2017, they announced the end of their partnership with Aeroplan to create their own brand-new program. That had the effect of drastically reducing the value of Aeroplan: the parent company (Aimia) saw its market capitalization go from 1.3 billion to just 225 million in under two months.

That allowed Air Canada to buy back Aeroplan at a much lower price and also:

  • eliminate a competitor
  • acquire plenty of data
  • keep human expertise
  • facilitate the transition
  • just avoid having to start everything 100% from scratch

The new program has been in the works for years (this is a major undertaking, to say the least) and was supposed to launch this summer. But with the pandemic and its devastating effects on aviation and travel in general, it was pushed back to Q4 of 2020. That’s where we currently stand.

 

What we already knew about the new Aeroplan

Since the beginning of this saga, a few announcements were made so I’ll summarize them here.

 

The future of miles already earned

All current Aeroplan miles will convert into the new program. Before you celebrate the fact that it will be a 1:1 transfer ratio, ask yourself if it is a good deal if I give you my leftover Zimbabwean dollars from my recent trip and you give me your Canadian dollars at a 1:1 ratio.

Short version: a “point” is just like a “dollar”, it’s just the name of a currency, and that’s it… all points have different values. And in the case of variable-value points like Aeroplan, the only thing that determines the value of the points is what the program rules are. And we don’t know them yet. So 1:1 means nothing.

But of course, it is great news to not have any uncertainty related to your current Aeroplan miles. They will simply follow you into the new program.

 

The financial partners

The current airline partners will remain, at least the majority of them that are part of Star Alliance (airline alliances are key to maximizing points).

But we also know a bit about financial partners.

Related to the previous point, as per a major 10-year deal between AMEX and Air Canada, American Express Membership Rewards points (“AMEX MR points” or “AMEX points”) will continue to transfer 1:1 to the new program, which again means nothing until we know more about the value of the new points.

But at least this great transfer option remains.

We also know that in terms of co-branded Aeroplan cards (cards that earn Aeroplan miles directly), all 3 current partners will remain: AMEX, TD, and CIBC. All 3 will have new offers, see below.

 

New information about the revamped program

Here are the details shared by Mark Nasr.

 

Transparent transition to the new program

The great news is that the transition will be entirely transparent. All the details of the new program will be announced publicly “months” before they take effect.

That’s very positive: he said that Air Canada does not want any member to have any “surprises”. Some programs play tricks on us and implement major changes with no advance warning, which means you are faced with a fait accompli. You can’t adapt your strategy or act accordingly, because it’s too late.

That won’t be the case with Aeroplan and by having the details before the launch, Flytrippers will be able to analyze every aspect and advise you on the best actions to take in the timespan afforded to us all for the transition.

 

Award chart

Here is the vital part for the value of miles. The price of any flight is currently fixed, costing an amount of Aeroplan miles set by the award chart. Regardless of the cash price. That’s great for those who want to maximize the value of miles (the value of a point = how much money you save—that’s always the simple math).

Unfortunately, that era is about to end. At least partially, as he indicated that the model would in fact likely be hybrid. That was to be expected. After Delta’s “SkyPesos” led the way a few years ago, United has now also moved to a similar model. It’s a heavy trend.

 

Dynamic pricing in North America

North American flights will be priced dynamically (variable prices). What does that mean? Unfortunately, the cost in miles will depend on the cash price.

As for anything in the world of travel, there is always a very clear dichotomy: either it’s simpler, either it’s cheaper. So the upside of dynamic pricing for some is that it is a lot simpler for the average person who doesn’t want to rack their brains and wonder whether a use is good. To the detriment of eliminating the great uses for everyone else sadly.

In other words, instead of like right now, where there are:

  • well-informed travelers who maximize their miles and get amazing value
  • less-informed travelers who use their miles badly and get terrible value

Those two extremes will be averaged out by dynamic pricing and then:

  • all travelers will get an average value (not terrible, but not amazing)

We’ll explain in greater detail once we know the official details, but in short… the price of a flight will simply be whatever they decide it will be, without any way of planning ahead or knowing exactly how many miles you’ll need. It will, therefore, be even more important to have a great earning strategy to have plenty of miles handy.

That said, it also means that some flights that are cheap in cash could also require fewer miles than currently.

Another impact they are spinning as an “advantage” (like every other programs) is that there will be more seats available. And that’s true. But they’ll be available at prices that are necessarily much higher.

So it depends on your philosophy. If you love maximizing, this is undeniably negative. If you just want to always use your miles—even for bad uses—well then this could be positive as you’ll have more options and uses will be less terrible than the terrible ones now.

 

Pricing for partner airlines and/or long-haul flights

This is where he did want to give us too many details, so we’ll have to wait and see.

But he said they were strongly considering keeping a certain form of fixed prices set by a published award chart (as there is now) for long-haul flights and/or Star Alliance partner airlines.

Air Canada is well aware that the transparency of having an award chart is something many travelers consider a positive (especially those who maximize with luxurious premium cabin travel) so that’s why we’ll “probably” have a hybrid model. So it could be a lot worse: the pricing could be entirely dynamic.

 

Second free stopover returning

One of Aeroplan’s best benefits has long been the option to add 2 free stopovers (of any duration) to all international roundtrips. It’s what we called the “mini-RTW” (mini round-the-world) in the world of travel rewards points.

I gave you an example of my own trip with 13 flights and 6 destinations for the same price as a simple roundtrip with just one destination.

That said, it is now only possible to add one free stopover (still pretty cool to add an extra destination for free).

The feature was temporarily removed to transition to the new Amadeus PSS IT system, the one that caused major technical issues in late 2019 (on the plus side, that IT system will improve the partner airline searches).

Anyway, he confirmed that the second free stopover will be back in the new program (at launch or shortly after). Of course, the price of these flights remains to be seen.

 

Credit card offers

The best news. Credit cards are obviously the best way to earn a lot of travel rewards points (if you are still skeptical, you really should read our 25 myths about travel rewards points).

And Mr. Nasr really insisted on the fact that we’ll be seeing exciting new products and new offers to coincide with the program launch, from all 3 issuers (AMEX, TD, and CIBC).

That is really encouraging! Not only can we expect vastly-improved sign-up bonuses (which are really the key in the world of travel rewards), he also mentioned a wide variety of new features that will come with the different cards.

We certainly won’t see all of these elements, but co-branded airline cards in the US have many cool benefits:

  • earn rates up to 3X
  • no foreign transaction fees (2.5% on almost all cards here)
  • free “companion” tickets (a kind of 2-for-1 deal)
  • access to more reward space availability (at lower prices)
  • shortcuts towards elite status
  • credits for upgrades and more
  • access to high-end airline lounges
  • elite-like benefits on all flights (not just those paid with points)
  • etc.

It will be interesting to see what will be offered and we’ll be here to recommend the best cards to have based on your situation.

Personally, I planned my credit card application cycle strategy to make sure I can apply for at least two at the same time around October when these offers will likely be available. And we recommend doing the same if you follow all credit rules (applying for two cards the same day doubles your sign-up bonuses with just one credit pull).

If I have bigger expenses, I’ll push them back to October as much as possible to be able to unlock the sign-up bonuses more easily. Because I am under the impression these could really be some of the best offers we’ve had in Canada in a while.

 

Coronavirus update

Here’s a section I’m adding based on the most recent developments since that conversation in January, notably during the pandemic.

 

Surcharges

Surcharges are Aeroplan’s biggest current flaw, even if they are easily avoidable by choosing airlines other than Air Canada, as most don’t have surcharges (you can read all about Aeroplan surcharges here if you don’t know).

But maybe we’ll soon be able to stop avoiding Air Canada. Recently, Aeroplan has added two new non-alliance airline partners (Etihad and Azul) and in both cases, no surcharges are applied.

One alone was just a data point. Two is still not much, but it’s already more of a trend. There’s nothing official at all, but in the new program, in the spirit of making things simpler as mentioned above, maybe surcharges will be eliminated entirely.

That would be pretty amazing. And if not, we’ll keep helping you learn how to use your miles without paying surcharges, as you can currently do pretty easily with the existing program.

 

Future value of Aeroplan miles

Our current Flytrippers valuation of Aeroplan miles is ≈ 1.5¢ per point. That’s obviously subjective (like for all variable-value points) but like all our valuations, it’s a fair number that is as close as possible as what an average traveler can get.

It’s obvious that the program will be devalued. Despite my optimism, I have no doubt about that. It’s a given since the start of the process, we have to be realistic. The question is how much will the devaluation be.

Fixed-value points are generally worth 1¢ per point, which is why we recommend variable-value points for those who want to maximize: often 50% more value right off the bat.

Aeroplan miles cannot go lower than that, it would be insane. So the worst-case scenario would be a new valuation of 1¢ per point. So it will likely be somewhere between that 1¢ and the current 1.5¢.

If it’s closer to 1.5¢, it will be a win. If it’s closer to 1¢, it will be more disappointing. We’ll only know once we know the program rules and details.

But we already know that there will be a big devaluation for North American sweet spots, so we’ll tell you more about those soon. As mentioned, in late September, it will be possible to book all the way until August 2021 with the current rules to take advantage of what is currently more beneficial.

 

Why I am even more optimistic

I was already a lot more optimistic in January after talking to Mark Nasr, who by the way is a huge points enthusiast himself (and he really seemed like he wanted to keep in mind the members’ perspective).

Considering how Aeroplan innovated and offered unique promotions while we were stuck at home during the early stage of the pandemic, I am even more optimistic now.

I’ve come a long way: at the very beginning when the new program was announced, I honestly had very little hope. Considering how little competition there is in Canada, I feared there would be little incentive to create a top-notch program.

Anyway, it seems like Aeroplan’s team believes that a rewards program can actually create value for the airline by offering value. That’s promising. At the very least, they might think outside the box and be more creative than what we’re used to and therefore differentiate in new ways.

The next few years will be tough for the industry and who knows, maybe the new Aeroplan program will attempt to truly be a competitive advantage to generate more business and motivate us to engage with the program.

Air Canada’s growth was fueled in part by increasing the number of international passengers connecting through Canada and their rewards program targets Americans as well. The fierce rewards landscape there leads me to believe that the program will have to be pretty competitive.

It’s obvious that not all elements will be positive (as is already the case actually) and the program’s economics have to work for them too. I certainly don’t want to celebrate too quickly, as there are still many unknowns.

But I was confident enough to take advantage of the (now-expired) elite status promo we told you about and invest 50,000 of my AMEX points into Aeroplan even though we normally always tell you to never transfer points without a specific use in mind.

I hope I won’t regret it and I am genuinely excited to learn more about this program… and most importantly help you make the most of it.

 

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Summary

The new Aeroplan program is exciting. Especially knowing that amazing credit card offers are coming. We are relatively optimistic about the program and hope to be able to get a lot of value out of it… and most importantly help you do the same!

What do you think of the new Aeroplan program? Tell us in the comments below.

 

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Featured image: stream on Vancouver Island (photo credit: Mathisj Deerenberg)

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Andrew D'Amours

Andrew is the co-founder of Flytrippers. He is passionate about traveling the world but also, as a former management consultant, about the travel industry itself. He shares his experiences to help you save money on travel. As a very cost-conscious traveler, he loves finding deals and getting free travel thanks to travel rewards points... to help him visit every country in the world (current count: 61/193 Countries, 46/50 US States & 9/10 Canadian Provinces).

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