Air Canada’s Aeroplan adventures show that loyalty is still appreciated; new programme now has benefit of being designed to better support the airline’s Covid transformation

17 August, 2020

The story of Air Canada and its Aeroplan loyalty programme is a long one that dates back to 1984 when it first launched the loyalty business as an incentive for its frequent flyers. Now, more than 35 years later it is again 'launching' the transformed programme and highlighting that loyalty still has an important part to play in the airline sector.

Marketers love terms like 'reimagined', 'inspiring', 'pioneering' and 'gamechanging', but for Air Canada it is not a simple update to the programme, rather a complete relaunch. This is due to the fact that after Aeroplan was spun off as a wholly owned subsidiary of Air Canada back in 2002, it was actually sold to Aimia some years later.

It was in May-2017 that Air Canada said it would launch its own, new loyalty programme and almost exactly two years ago since it revealed intention to buy its old programme back in a deal worth USD450 million, almost double the original sale price of USD250 million some ten years earlier. This was agreed in Nov-2018 and concluded in Jan-2019 with the promise of an "industry-leading loyalty programme" that aims to provide "unmatched flexibility, choice and convenience" for customers.

The traveller landscape may have changed and corporate traveller preferences are also expected to be different in the 'new normal'. But what will that mean for brand loyalty? There had been growing voices suggesting that the days of customer loyalty are long behind us as experiences have overtaken it in the minds of a new generation of traveller. It appears though that they may simply have transitioned and just as consumers are changing, so are loyalty programmes as they evolve to a customer demographic and market environment.

There may have been a clear seismic shift in interest in loyalty programmes over the past decade, but suggestions of their death have been rather premature. Demise, perhaps? But even then, they still play a vital role for retailers. From their humble beginnings as tactical marketing programmes, in the airline sector these loyalty programmes have evolved into business and economic powerhouses of industry.

This has been illustrated by US airlines such as United Airlines mortgaging its frequent-flyer programme to secure a USD5 billion loan from three banks to build a cash cushion to see it through the coronavirus pandemic, or JetBlue Airways selling loyalty points to Barclays for USD150 million. Hilton Worldwide and Marriott International followed this latter method to raise USD1 billion and USD920 million, respectively.

The world is very different place today than it was just six month ago and Air Canada has remained committed to fulfilling its loyalty drive. Its president and CEO Calin Rovinescu sees it as a "long term investment" that is "not going to be influenced at all by what we're seeing in terms of short term corporate travel demand" even though he acknowledges that business travel's return remains "a moving target".

The programme has proved a good tool to boost revenues when flying levels are so low. "Even in the height of the pandemic, we had some of our loyal Aeroplan members purchasing points on a discounted basis for future travel and so on and so forth," explains Mr Rovinescu.

Air Canada has now confirmed its long-awaited Aeroplan mk 2.0 will debut in the latter stages of this year. The transformed loyalty programme will launch on 08-Nov-2020 with a promise of offering "more customers more personalised, flexible and easier-to-use features, delivering a truly rewarding loyalty experience". Full details of the new scheme is available here: Air Canada's Aeroplan.

"Air Canada promised an outstanding new Aeroplan that would be among the best travel loyalty programmes in the world, and we are fulfilling that promise," says Mr Rovinescu. Bringing a new programme to market has certainly meant it has been able to adapt to changing traveller needs and the current environment

The new Aeroplan programme "has been extremely well thought through," explains Mr Rovinescu, and acts as a "key driver" of the airline's ongoing transformation. This is more important than ever as airlines compete to earn and retain customer loyalty in a rapidly changing environment.

Air Canada describes the new Aeroplan as a "truly responsive and flexible loyalty programme delivering a more rewarding experience so that members can travel more and travel better". It has been developed from feedback from more than 36,000 consumers; has been benchmarked against loyalty and frequent flyer programmes across the globe, and is being delivered with a completely rebuilt digital infrastructure.

The Nov-2020 transition will see Aeroplan miles become Aeroplan points on a one-to-one basis and the introduction of improved value for flight rewards, including a promise that members can redeem points to purchase any Air Canada seat that is available for sale with no restrictions with a predictable pricing offer based on actual prices in the market.

The transformed Aeroplan will continue to offer six membership levels - entry-level Aeroplan Debut, along with five Elite Status levels: Aeroplan 25K, 35K, 50K, 75K, and Super Elite. Many of the Elite Status benefits remain, along with some improvements beginning in 2021, including priority rewards and a status pass that provides shared benefits with friends and family members.

The new Aeroplan is very different from the current programme, but like all changes not everything will be well-received by members. There are lots of positives, but some downsides. While the removal of fees for airline surcharges on all flight rewards with Air Canada is a plus, the addition of a charge for bookings on partner flights is not, although an understandable part of the carrier's loyalty quest. There are also higher redemption rates for most flight options although the added benefits could outweigh the 'cost' in many cases.

Points International, which provides loyalty e-commerce and technology solutions to major brands to power innovative services that drive increased loyalty programme revenue and member engagement, says the volatile travel and hospitality market means marketing campaigns have "become a crucial point of focus for both customers and loyalty operators".

This is especially important as loyalty customers have proven to be comfortable buying ahead for future travel needs, as Air Canada itself has seen. Many questioned the decision of Canada's flag carrier to buy-back its old loyalty programme. It now appears to have been an inspired decision that has allowed a fresh approach to loyalty to now be offered at a time that loyalty is needed more than ever before.