MONTREAL — Air Canada is revamping its Aeroplan loyalty program in an effort boost membership amid a global travel industry devastated by the COVID-19 pandemic.
The relaunch on Nov. 8 will allow all members to book seats on any Air Canada flight using Aeroplan points, a change from the current model where seat inventory is limited.
It will eliminate the fuel surcharge — which can cost less than $25 or into the high hundreds — and other additional charges on flights purchased with points.
Members will also be able to share points with family members, combining them to put toward a trip.
The airline hopes the relaunch, planned after it reacquired the rewards program from Aimia in 2019, will add another two million members before 2024 to the five million-plus who already hold Aeroplan cards.
The new program, sculpted based partly on feedback from 36,000 consumers, “is more important than ever as airlines compete to earn and retain customer loyalty in a rapidly changing environment,” CEO Calin Rovinescu said in a statement Tuesday.
Passenger revenues at the Montreal-based airline dropped by 95 per cent year over year in its second quarter, while the airline burned through $19 million of cash per day amid border closures and a collapse in demand stemming from the coronavirus.
The Aeroplan transition will maintain members’ account numbers, with Aeroplan miles honoured on a one-to-one basis, Air Canada said.
The new system will base the number of points earned for a given flight on airfare rather than distance, which currently provides the baseline. That means the points gap between a flight to Asia and a flight across the country will likely narrow, since the difference in distance is often greater than the difference in price.
The new, more flexible pricing model also means more popular routes and times will cost more points than under the current fixed system, while off-peak times and less popular routes will be cheaper, said National Bank analyst Cameron Doerksen.
“We see this as margin-enhancing for Air Canada as it will be able to effectively charge market prices for rewards seats for more popular flights. In addition, it will allow the airline to enhance load factors on less popular flights,” Doerksen said in a research note.
Frequent travellers on one of Aeroplan’s five “elite status” rungs can share benefits such as lounge access and priority boarding with friends and family, even if they are not flying together. Elite members’ credit card purchases will also contribute to their loyalty point tally.
The added incentive to use Aeroplan credit cards comes as a welcome change for Air Canada credit card partners Toronto-Dominion Bank, Canadian Imperial Bank of Commerce, Visa and American Express.
Air Canada has said credit card penetration for so-called elite flyers is only 38 per cent versus about 50 per cent for most U.S. airlines.
TD and CIBC paid a total of $1.2 billion to help offset the hefty points liability, acquisition price and other working capital and pension assumptions for Air Canada.
This report by The Canadian Press was first published Aug. 11, 2020.
Companies in this story: (TSX:AC, TSX:TD, TSX:CM)
Christopher Reynolds, The Canadian Press