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Aeroplan cards over the years.
Aeroplan cards over the years.

Prepare for all-out war among loyalty programs for your business Add to ...

Fresh off the Air Miles debacle of last year comes a new shock to reward program enthusiasts.

Air Canada says it will start its own customer loyalty program in 2020 rather than using Aeroplan. Many details about the new program and Aeroplan’s future remains up in the air, so to speak. What we do know is that the golden era of loyalty programs is just about over.

One last all-out war for market share is coming as we approach 2020. Be ready to scoop up the deals. “It’s going to be very competitive and a very good situation in the loyalty card space for Canadians,” said Patrick Sojka, founder of the RewardsCanada.ca website.

Aeroplan began life as Air Canada’s frequent flyer program and then evolved into more broad-based loyalty plan connected with retail partners like Esso and Home Hardware. Air Canada’s move to go it alone suggests Aeroplan has lost its lustre as a frequent flyer program that adds value for the airline’s most loyal and active customers.

Ironically, Mr. Sojka said he’s noticed a recent uptick in the level of customer satisfaction with Aeroplan. He thinks it’s likely a reaction to the problems last year at Air Miles, which reversed a much-loathed decision to start having points older than five years expire. Air Miles indicated at the time that the cost of the reversal would be adjustmentsto make its rewards a little less generous.

Neither Aeroplan nor Air Miles has had much success attracting new partners in the retail world lately, Mr. Sojka said. More retailers are choosing to forego the cost of participating in these programs, or starting their own. Long term, the outlook for Air Miles and Aeroplan suggests they’ll become less appealing than they are now.

They won’t lose relevance without a fight, though. Mr. Sojka believes we’re going to see a battle for market share in the loyalty world starting just ahead of the debut of Air Canada’s new program and lasting for a while after that.

Air Canada is going to want to make a big impression with its new program, partly by signing up a credit card partner, Mr. Sojka said. “There’s probably going to be a really rich credit card offer to start with and, of course, Aeroplan, Air Miles and all of the other programs will want to match that.”

Let this all play out if you’re an Aeroplan member, an Air Canada frequent flyer or a member of any particular loyalty program who is looking for a better deal. This group has to include the people who carry the Aeroplan credit cards issued by Toronto-Dominion Bank, which snatched the portfolio away from Canadian Imperial Bank of Commerce a few years ago. TD says there are no changes to its Aeroplan cards right now.

Travel on Air Canada will earn Aeroplan points until June 30, 2020, and then move over to the new Air Canada plan. It’s expected that Aeroplan points will be redeemable for Air Canada travel after the change, but Mr. Sojka says this may not satisfy Aeroplan members who use their points to book on airlines that are part of the Star Alliance. Air Canada is in this group, and so are more than two dozen other global airlines. Mr. Sojka said that booking on some other Star Alliance airlines allows you to avoid fuel surcharges on your ticket cost.

Air Canada’s decision to leave Aeroplan is a reminder of one more reality in loyalty programs. This is a business that has a definite life cycle. Programs emerge with a splash, and then gradually have their benefits pared in one way or another to boost profitability. You see this when you strike out trying to book reward flights and find nothing of interest when redeeming for merchandise.

The lesson here is to grab up the deals to come in the reward card world. Earn your points, and redeem them in the short to medium term. If you hoard, you run the risk of having your rewards program changed for the worse. Remember, the golden era of reward programs is just about over.

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Follow on Twitter: @rcarrick

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