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.
After months of fighting, the TD and CIBC have agreed to split up the hugely profitable Aeroplan credit cards. But let’s back up a minute, first.
The top credit card in Canada is the CIBC Aeroplan card which accumulates miles for travel or other rewards. Aeroplan used to be owned by Air Canada. But when they fell on hard times, they sold Aeroplan to Aimia, a loyalty management company in 2008.
Until now, the CIBC card was the only one with Aeroplan. Then came the American Express card through Scotia. It lets you use points on Air Canada or other airlines. And THAT flexibility is what customers want – kind of like the Royal Avion card. As a result, the CIBC was considering getting away from Aeroplan entirely to start a new card that lets you accumulate miles but redeem them on travel everywhere and with everybody.
Well, last month they agreed to split their portfolio with the TD. Half will stay with CIBC and the other half will get transferred over to a new TD Aeroplan card. If you have one of the cards and are also a CIBC customer it’s likely they’ll keep you. If you don’t have a CIBC banking relationship, get ready for the TD to buy your account.
TD used to be a nobody in the credit card business. In the last three years they’ve gone from the back of the pack to the leader by dollar volume. It’s a win-win for them as they already have another travel card. Plus, they’ve estimated their half of the Aeroplan accounts will make them $160 million net profits starting in 2015. And you thought they had these cards for your benefit…nice try.
For the CIBC it’s a big risk to give up millions of customers. They’ve already announced they’ll spend $50 million in the next year marketing a new travel card. Get ready for a ton of junk mail and a lot of ads. So they’re giving up half of a hugely profitable pot to hope to get all you cardholders back with a more flexible card.
But do you need either one of these cards? Consider this: A cashback card gets you 1.5% cash rebate. A travel card is a big annual fee and a hope that you’ll redeem. Aeroplan keeps the so-called breakage for non-redeemed miles at 17-21%. And, according to Consumer Report, around 75% of airline miles are never redeemed in the first place. It may be a lot of charging and chasing for very little getting…