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Air Miles has lowered the value of points for vacation packages.

When Heather Hartmann checked the value of her Air Miles last Friday, the number on the computer screen caught her off guard.

Using a calculator on the company's website, the Calgary-based collector of the popular loyalty points found that her 12,683 miles were worth $1,396 in travel rewards – a drop of more than $300 from their value when she checked just weeks earlier.

She's not alone. Air Miles members are discovering that the value of their miles has dropped by about 20 per cent when booking vacation packages and cruises.

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LoyaltyOne, the company that operates Air Miles in Canada, last month announced that it was abandoning a plan to let miles five years or older expire, following a backlash from consumers and political pressure. (A few days after the cancellation of the expiry policy, a bill passed in Ontario banning such policies going forward.) At the time of the decision, parent company Alliance Data Systems Corp. filed a financial disclosure saying that it would re-examine the "value" it delivers to Air Miles members, in order to compensate for a hit to its 2016 revenue as a result of the change. On Thursday, the company reported earnings with that one-time charge of $242-million (U.S.).

That change in value is now being seen, at least in one small part of the business. Air Miles said Thursday that the value of miles used for booking vacation packages and cruises has dropped. Miles used to book individual flights and other rewards have not been affected, the company said. The value of "cash" miles used for cash back at participating retailers has also not changed.

The company also said its move on vacation packages – a segment that represents about 1.6 per cent of redemptions under its "Dream" miles category (as opposed to the cash-back miles offered at retail) – is not an indication that similar changes will occur with other types of rewards in the future.

Still, collectors complained they had not been notified miles would soon be worth less.

Ms. Hartmann had planned to book her trip late last year, but when the expiry policy was cancelled, there was no longer a rush to redeem. She said she wishes she had received notice that she needed to book before the value of her miles dropped.

"[With expiry] I remember them giving notice. I understood that," she said. "… They should have reached out to collectors about this."

Another member, Lori Jamieson, said she was looking into booking a March Break trip for her family, and found that each mile was now worth 11 cents (Canadian) toward vacation packages, down from 13 cents in December. She said she will now need to spend 7,500 more miles to book the trip she wants compared with just a few weeks ago.

"They have to send out something saying the value is changing – that's what I assumed," said Ms. Jamieson, who has been an Air Miles member since 1997. "If I'd known, I would have booked last month. … I don't know how they can do this to people."

Members who were quoted a different price on a package before the change will have that price honoured, the company said Thursday.

The value change comes as Air Miles is re-evaluating the types of rewards it offers in the wake of its expiration decision.

"Historically, we did not make a [profit] margin, or much of a margin, when people redeemed [miles for rewards]. … We put all our margin into the assumption that X number of people would lose interest in the program and would not redeem," Alliance Data Systems CEO Edward Heffernan said on a conference call to discuss the company's earnings on Thursday. "We need to change that. … We are going to be trying to create a portfolio of rewards that collectors will be excited about … but drive them also into rewards that are not only of value to them, but that we can get expense leverage from, and that we can realize margin on those rewards that we never did before."

In an e-mailed statement, Bryan Pearson, CEO of Alliance Data Systems subsidiary LoyaltyOne, which operates Air Miles, said that the company is also considering whether to change its fee structure.

"We have not introduced any new fees; however, we are currently reviewing our fee structure and there may be changes in the future," Mr. Pearson said.

Customer complaints are also being heard by at least one of Air Miles' retail partners.

This week, Metro Inc. CEO Eric La Flèche told reporters at the company's annual general meeting that the supermarket chain has faced pressure from its shoppers who were unhappy about how Air Miles had dealt with the expiry policy. Metro uses the loyalty program in its Ontario stores and its own loyalty program, Metro et moi, in Quebec. On Tuesday, Mr. La Flèche said that the company will consider all its options the next time its contract with Air Miles is up for renegotiation – though the company would not confirm when that is. Metro subsequently sent out an e-mail to customers assuring them that Air Miles remains in place and saying the chain "will continue to offer this benefit for as long as it continues to meet the needs of our customers."

"It has been rocky this fall with Air Miles, no doubt about that," Mr. La Flèche said on Tuesday.

"Right now we believe our relationships with our sponsors are solid," Alliance's Mr. Heffernan said on the call on Thursday. "Obviously they would have preferred not to have gone through this with us. It's our job to make sure that they're comfortable with it going forward."

On Thursday, Alliance Data Systems reported that LoyaltyOne's revenue fell 32 per cent in three months ended Dec. 31 to $247-million (U.S.), a decline due to the $242-million charge resulting from the cancelled expiry plan. Before that change, as collectors cashed in their miles to avoid seeing them expire, Air Miles redeemed 2.7 billion reward miles in the fourth quarter, up from 990 million reward miles in the same period last year. For the full year 2016, LoyaltyOne's revenue was $1.34-billion, down 1 per cent compared with 2015.

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