Tag Archives: Air Canada

Aeroplan Sale & Cell Phone Sales

A new update on Aeroplan for the five million of us Canadians who are in the program. It turns out that your points won’t likely depreciate in value, and you won’t need to have them all cashed out next year.

The re-purchase of Aeroplan was finalized yesterday. $450 million price and assuming the ($1.9 billion) points liability the (outstanding points IF they’re all claimed…and less than 70% will be, according to Consumer Report studies). But Air Canada received $622 million from TD and another $308 million for future points. CIBC also has a card that gives you Aeroplan miles, so they kicked in $200 million and another $92 million for future points. Right now, they’re still negotiating with Amex to continue with Aeroplan.

So Air Canada paid $450 million and received over $1.2 billion. As of the purchase date, they got the whole company AND made $772 yesterday. There’ll now be a lot of competition with PC Optimum and  Esso Extra points for your business. Those two are almost immediate gratification points. A month after I signed up for Esso Extra I had a free carwash already. Aeroplan miles are more dream rewards for the long term in hoping there’ll be enough points someday way down the road for a trip to Europe.

Right after last Wednesday’s segment, the Dow dropped 660 points and this time it wasn’t President Trump’s fault, but ours. It was started by Apple announcing that iPhone sales were way down. Yesterday, Samsung announced the same thing with a 22% drop in sales.

In the U.S., as we discussed last year, there are no more two or three-year locked-in plans with a so-called free phone. You need to pay for the phone and then get a month-to-month plan. It’s increased customer satisfaction with carriers a ton and reduces your cell bill by a lot. No more being locked in for two or three years and having the almost spit on you when it comes to customer service. However, if you need to buy your phone and can’t pretend it’s ‘free’ any longer, you’ll shop around more ,and will keep your old phone an extra year or two. That’s why Apple and Samsung stock has been way down, due to less sales volume. Apple was a trillion dollar company last fall – now they’re down 40% in stock values.

It’s also why Apple started discounting the price of their phones last month! If you can’t pretend it’s ‘free,’ a thousand dollar phone is quite the shock. You can also now get an Android for under $300 and apparently the Nokia 7-1 is really inexpensive and a great phone! That trend will continue with better phones at a much lower price, and the no-contract plans will come to Canada sometime soon – so don’t be stuck in a new two or three year contract. And avoid the big marketing starting soon on 5 G phones. It’s a much faster network – way faster than your home internet. But it’ll be three years before you’ll actually have the network to use it.

Update from first January segment to try some simply your life and get rid of 100 things:

I tried the Japanese method of decluttering where you hold something in your hands and if it doesn’t bring you joy, you throw it away. So far, I’ve thrown out all vegetables, my Amex bill, the scale and a mirror!

George Boelcke – Money Tools & Rules book – yourmoneybook.com

Loyalty is Dead: This Time it’s Aeroplan

We talked last year about loyalty programs. On average we’re in a dozen programs and active in about eight.

But, if you’ve noticed, almost all of them aren’t loyal to you. Their way of getting points, freebies, dollars, or whatever are harder to get, PLUS the redemptions keep getting further and further away from happening. It’s more of a game that you’re going to lose beyond a free toaster or something minor. Yet, we’re hooked and stay loyal, despite all the evidence that we’re not getting much of a reward for it – and often for overpaying when another company is often cheaper to deal with.

The newest is a twist where the company who wants your business isn’t even loyal to their loyalty company! If you remember back, it wasn’t that long ago that Air Canada was on the verge of bankruptcy. At that time, they sold their frequent flyer miles program for some big money.

Aimia is the company that owns and runs the Aeroplan frequent flyer loyalty program. They also manage those of Nordstrom, and other companies from Europe to the Middle East.

They have five million of us Canadians as members who hold over 200 billion miles. The company itself, buys 700 million dollars of tickets from Air Canada a year. But now Air Canada is dumping the company that bailed them out to start their own loyalty program again. Needless to say, the stock was down over 76% after the announcement.

Aeroplan is done as of 2020. So the five million of us will start to get greatly reduced rewards. After all, what’s Aimia’s reason for keeping us excited when Air Canada is yanking us away from the program. By the end of next year, there’s no point chasing points that you’re not likely to get any benefit from. On my to-do list is to cash them all out by next year. I normally get Esso gift cards as they can turn into real cash when I gas up. Most other things are pretty marked up in value, so be careful before you press the “redeem” button. If you’re close to an airline ticket, book it as soon as you can before the points needed goes up again and again. If you’re not close – I’d recommend you don’t start the chase.

Loyalty Is Dead

Almost exactly two years ago we talked about Delta Airlines in the U.S. changing their frequent flyer program from miles or flights to how much money you spend with them. In other words, if you’re a price sensitive flyer that wants the cheap-charlie flights, you’re no longer getting any perks. The entire program is focused on how much profit they make from people.

At that time, I shared this would spread over the next few years. That’s now already come to pass: Starbucks has changed their reward program away from how many times you visit them, to how much you buy on each purchase. So no more rewards for the simple coffee a dozen times, but only if you buy the five dollar fancy coffee.

Thrifty Car rental gave me one free day for every 10 I rented from them. That’s gone: Now any free reward only comes when you reach some huge total dollars spent with them levels. I rent based only on price – I’m never going to see another reward from them because I’m not booking last minute expensive vehicles or rates.

But the best (actually worst) has to be Air Canada. I fly over 35 flights a  year and that was the level at which you were a small somebody. A few years ago they changed away from how many miles you flew to how many flights. Then they took a number of perks away if you didn’t fly at least 50 flights. Then they reduced the total miles for each flight and this year, it’s how profitable you are to them.

If you’re not spending $4,000 or more before taxes and all the rip-off fees, you’ll never get a single perk. I purchase the no-refund lowest price tickets versus the so-called flexible tickets at $100 or $200 more for each flight. Business travelers buy those, because they’re not price sensitive. It’s a fair guess that half of all people on their frequent flyer program have now been cut off. Oh, and to get the decent rewards, you need to spend over $10,000 a year. Add the taxes and fees, it’s about $15,000 or more in flights before you’re a somebody.

Yes, loyalty is dead. The average Canadian belongs to eight different ones. Make sure you know what you’re getting if you do stay loyal. Chances are that you’re still loyal while you’re getting shafted. If so, become a free agent and shop around for the best deal, not the companies that promise something you’ll likely never get.

Keeping You Updated

Things change pretty quickly in the world of finance, credit, money and investing. Here are some updates to things we talked about in the last few  months. You can always find the stories at yourmoneybook.com and click on the radio stories button:

A few months ago we talked about the changes for airlines and your frequent flyer miles. Well, Air Canada just did another round of cutbacks to what you’ll earn and an increase to what you’ll need to redeem. Remember to think of your reward miles like bananas. Use them up as they don’t increase in value over time! Oh, and Westjet and Air Canada now charge baggage fees – surprise! Did you think they’d just ignore the $30 to $50 million in profits that you’re now going to hand over forever?

If it makes you feel any better, the deep discount carriers in Europe and the US now charge for carryon luggage. With Spirit Air, you can pre-buy it online at $35 for a carryon. If you want until you get to the airport, it goes up to $50 and if you do it at the gate, it’s $100 for a carryon!  Oh, and you’re paying $10 to print your boarding pass.

Yikes, it’s offical: Costco is dumping American Express in Canada. You’re Amex card is no longer welcome starting January 1st. They’re now partnering with Capital One. What’s in my wallet? Not Capital One! But, it’s a good guess that they changed over for a whole lot more money from Capital One…But why go from Amex whose clients spend four times more than Visa clients to a card that targets credit challenged people? Makes no sense, even if their kick-back is way higher.

I just read two reports that show independent book stores are growing in numbers and volume of sales. Great news as I love independents. I don’t deal with Chapters – you won’t find my books with them. I’m the author of 17 books. 14 are only on my web site and three are ONLY available at a few independents, including Mosaic on Bernard. When I talk about shopping local, I actually give up a ton of sales to do so. Actions speak louder than words.

For the last month, the stock markets have gone a little nuts. Down 300 points in a day, up 200 the next. We keep talking about the dangers of buying one or two stocks. If you’ve done that, if you gambled like that, you’re probably down a ton of money. If you’ve invested in good growth mutual funds, you’re already up again. I manage a seven figure account for a relative and all the bad news last month still had a 2% return for the month with Dundee Wealth.

And if you’re a gambler, gold and silver are below 2010 prices. Bitcoin, which is an online currency is down 75% for the year. If you bet only on energy stocks, you probably lost over 40% of your money. Those one-off buys are not investing. They’re gambling – and on these and many others, it’s a big loss right now. Investing is a five year or longer time period with a mix of good growth mutual funds with a long track record. Investing is also buying a fixed amount each month. Set it and forget it.

The World of Reward Points Is Changing

The average Canadian has five reward programs of one kind or another. It might be a 10th free haircut, frequent flyer miles, 10% off if you spend over a certain amount, or rewards on your credit card.

Whatever you’ve figured out about them will be all different in the next few years. In short, the programs will be converting from volume to profitability and the opposite for credit card rewards. Right now, you’re getting rewards on your visits or spending totals. Down the road it’ll be whether you buy something profitable. No more points (or very few) to buy something at a discount, but now big rewards when you buy something way overpriced or at full retail price.

In the airline business, Air Canada has done three quiet changes to their reward programs already. Cheap seat-sale tickets now get you 25% of the miles versus full price so-called Flex tickets. Delta Airlines is already the process of fully converting their frequent flyer program. If you collect miles you need to know this. It will become the norm with every other airline. You’ll no longer earn miles based on distance flown, but on the amount you spent. It’s turning frequent flyer programs upside down. So, a last minute ticket to Vancouver at a big price will get you more miles than a discount flight to Europe.

The programs will be based on your profitability with the airline. If you make them a ton of profit – you’ll get a ton of miles. The biggest losers will be those of us who are price sensitive and bargain shop for flights. In the next few months I’m cashing out all my miles for gift cards or cash – better safe than sorry. When this comes to other airlines, you’ll be way better off getting a points reward card that lets you accumulate points for gas and other purchases – you’ll end up getting a lot more rewards than from an airline!

In the credit card world, the change will be to quantity of transactions. American Express has now introduced a new credit card that will increase your reward points by 20% once you reach 20 transactions in a month. For Amex that makes sense because their average client spends four times as much per transaction, and has a much higher average income. It’s just maximizing their transaction fees.

There was a recent study that found over a third of all reward programs are never claimed. In the airline world, according to Consumer Report, over 75% of miles are never claimed. Stop chasing and start cashing out. You won’t be a prisoner to one company or another and will become a free agent that can get the best deal from any company. I’ve started cashing out my Aeroplan miles by getting $2,000 in Esso gift cards. Check what you can redeem for the least amount of points or miles. With Aeroplan, chasing a free ticket can be a fools game. Gift cards tend to be a good deal on redemptions. Amex gift cards cost 7500 points for a $50 card whereas the Esso gift cards cost me 6500 points each.