Aeroplan & Air Canada Contract Ending in 2020

Last night Aeroplan came out with a preliminary assessment of current negotiations of their longstanding agreement with Air Canada to serve as the airline’s exclusive rewards program, saying that “unless an alternative agreement can be reached, the existing contract will expire in June 2020.”

This morning, Air Canada confirmed the news with a press release of their own, in which they confirmed they would be launching their own in-house frequent flyer program as of June 30, 2020.

We have precious little information besides the press releases to go on as of right now. Air Canada hasn’t even confirmed the name of their new frequent flyer program and whether or not it’ll be a continuation of their current Altitude status program or a new one altogether. They have launched a webpage for their new program though.

The big takeaway we have is that on June 30, 2020, your existing Aeroplan miles will not be transferred into miles in the new Air Canada frequent flyer program:

Instead, starting on that date, in order to redeem points for Air Canada and Star Alliance flights, you’ll have to begin collecting miles in the new program from scratch.

What Does This Mean?

Although currently we have few concrete facts about the future of the programs, I wanted to offer some of my thoughts at this early juncture.

The mileage game we play is all about earning and redeeming, and in Canada, Aeroplan has always been the most lucrative game to play. This upcoming change, while obviously detrimental to the Aeroplan program itself, is not necessarily so for Canadian points collectors.

Currently, you earn Aeroplan miles when flying on Air Canada and Star Alliance flights. That’s going to change – after June 30, 2020, those miles will be going to Air Canada’s frequent flyer program instead. 

Of course, the primary way many of us earn Aeroplan miles is through credit card signup bonuses. In that regard, I have no doubt that Air Canada’s new frequent flyer program – our new primary program for redeeming flights – will have its own co-branded credit cards. If that’s the case, there will likely be a round of negotiations among the major Canadian banks for the new co-branded card portfolio, meaning that we could initially see some impressive signup bonuses.

­Similarly, I’m confident that American Express will allow members to transfer their Membership Rewards points to the new program if they want the MR program to remain competitive.

On the redeeming side, let’s start by looking the new, separate Aeroplan program that will continue to be operated by Aimia, its parent company. Air Canada has stated that it “intends to continue to offer Aimia redemption seats for Aeroplan members after June 2020, with pricing competitive with other third-party rewards programs.”

It’s obvious, however, that this pricing will be nowhere near as competitive as that of Air Canada’s new in-house program. Instead, if I had to speculate, I’d venture that Aeroplan members post-2020 would be restricted to accessing regular revenue fare inventory in a fashion similar to how Air Miles and RBC Rewards currently operate.

We don’t have much to go on in terms of how redeeming points in the new in-house program would work. My guess is that yes, there will be changes, whether to the award chart or to redemption rules (i.e., how many stopovers are allowed, MPM, backtracking, etc.)

I’m sure that if changes are made, some of the sweet spots we have right now would be neutralized, but a handful new ones would emerge as well. The new program would probably be slightly less competitive, given how devaluations are part of the game, but there would still be sweet spots that dedicated members can exploit. That’s how it’s always been in the loyalty and rewards landscape, so I don’t believe that it’s cause for panic.

In fact, one important thing to recognize is that Aeroplan’s current flight redemptions are all issued on Air Canada’s 014 ticket stock, meaning that Air Canada already has a say in the redemption rules under the current regime. That makes it a bit less likely that Air Canada would implement wholesale changes to the redemption rules, though I’ll admit that all of this is speculation at this point.

I certainly hope that the ability to add stopovers and the “mini-RTW” feature will remain, though I acknowledge that as the standout features of the current program, there is a chance that the rules governing them will be tightened.

I fully expect that Aeroplan’s dinosaur-era availability search engine and IT backend will be brought up to modern standards under the new Air Canada frequent flyer program. I also expect that we’ll have a much more seamless experience redeeming our points once Air Canada fully integrates its frequent flyer program into its own operations.

Lastly, I’m grateful that Aeroplan and Air Canada are making this announcement with three years to go until the changes are actually implemented. That gives us members plenty of time to absorb new information as we get it and to spend our hard-earned Aeroplan miles before they become useless.

If you have lots of Aeroplan miles in your account, you have three years to redeem them for flights! My advice is to go for the mini-RTW redemption – after 2020, you’ll likely never get a better value for your miles than that.

Conclusion

As per the Air Canada press release, we will likely get more information at the airline’s Investor Day on September 19, and there’ll probably be plenty of speculation floating around before that. I’ve offered up some of my preliminary thoughts, but in general, although this is a pretty huge change to the Canadian rewards landscape, I don’t think it’s necessarily cause for panic, and I certainly don’t believe that everything of value within Aeroplan is going to be eroded under Air Canada’s new frequent flyer program. In any case, we have three more years of a business-as-usual relationship between the two entities, so for now – and hopefully for always – earn and burn.