airbus320

FFs are twenty years old. They have grown and matured. They were a great marketing tool and we were quickly addicted to the lure of the many great benefits.

The airline industry in general hit turbulence with higher costs and the management of frequent programs with their generous benefits became more and more a financial burden to a busines whose bottom line was more and more impacted. Yet no one in North America dared to make drastic cuts to their FF program. Competion is cut throat and every advantage counts

And so seven or eight years, the good old days for Aeroplan began to slowly change. Cuts, cuts and more cuts.....

And now the exalted ranks of Super Elites have been hit with a heavy hammer. Instant KK, the most prominent and appreciated SE benefit, has been severely downgraded. The most sacred of benefits has been eroded and modified.

And all this preamble brings me to today's topic of conversation:

Is this the beginning of the end of Aeroplan as a frequent flyer program?

Is AC again leading the charge of change? They have indeed been innovative in new initiatiates: simplified fares, passes; all leading edge innovations. Is the frequent flyer program next? Perhaps not in one move but.....

Other programs will certainly watch with interest the fallout during the year.

The jackpot question: will others dare follow AC even if it's only baby steps to begin with....

Clipper801

No, just airlines have not made necessary modifications to their FF programmes in keeping with the changing business environment.

For example, qualification to higher tier based solely on distance or segments flown is, IMHO no longer a practical business model. It no longer effectively recognises those who contribute the most to the bottom line and that’s what matters. Some people attained high status through MR on cheap economy tickets. I never understand why C, Y, M all get the same Status Miles as one flying on a Q fare (on most routes). It creates situations where some P’s and E’s actually contribute more, on a gross basis, to the revenue of AC than some SE’s. Admittedly, some SE’s attained their status through travelling on high fare but is not a criterion for attaining such high status though.

alex0683de

I agree with Clipper801. What we're seeing now in programs around the world is the logical response for the amount of mileage inflation that has been going on. With some credit cards offering the equivalent of a free ticket in miles just for signing up, there are just too many miles in the system.

As for status - as a mostly low-fares flyer, I don't really like the fact that I get less miles for the tickets I can afford to book, but I can understand the reasoning behind it.

If you want elite perks to stay what they are, you have to make sure that elites continue to be an "elite" group. The only way to do that is to make reaching elite status harder. You could either raise qualification threshholds, possibly driving away high-fare customers who don't fly enough to make the new levels, or you can reduce the amount of miles flyers get for low fares.

From a business standpoint, the latter makes far more sense, and I am certain that this is the way things will continue to go in the coming years. I could also see more airlines adopting a model similar to SQ's PPS program.

It may suck for self-funded status chasers, but it's a necessary evil to keep the programs (and the airlines) healthy in the long run.

Stranger

Perhaps. But little of this got anything to do with the IKK demise. Kind of the opposite, punishing the high end while leaving the low end unchanged.

That this follows from the overall transformation of Aeroplan from an FF program into a frequent buyer program, I agree. It's just that when compared with the Aeroplan ticket costing model (which is now non-marginal - just a parallel ticket sales mechanism), the perception becomes that IKK is "expensive." Well, sure, if you compare with these huge miles required through regular Aeroplan. And within the disfunctional AC bureaucracy, it's probably how IKK tickets ended up being accounted for in some paperpusher's budget. For whom it was the kiss of death, so he had to fight against it to make himself look reasonably good. Somehow, higher up was not smart enough to see reality through all that smoke, i would guess. So they bought into the nonsense. (Not so hard, since there really is no objective reality, but different models or perceptions, all of which are debatable.)

This said, Aeroplan has only been AC's FF program in name, at least in the last couple of years. With the real FF program being under AC control.

Clipper801

It would have been better to keep the IKK but making SE qualification more difficult to attain for those usually flying on cheap fare in 2007 to prune the SE (and E and P) membership. T+ goes back to only 50% of Status Miles and the same for discount international economy fare.

Stranger

For instance. Or change the way Q-miles are allocated, and relate them to fare booked into. Or simply restrict IKK to family members. Or, or, or. Tons of other possibilities.

None of which in their great wisdom AC went for, probably mostly did not even consider. Makes you wonder how they are managed. (But then, look at the IT disaster and how well the IT incompetents manage to survive.)

Clipper801

An extreme example to illustrate my point.

For those who fly 7 times Canada/Asia on discount economy fare would have spent roughly $10K to achieve SE. By reducing from 100% to 50% Status Miles on discount tickets, the same person would have to spend $20K to achieve SE to continue to enjoy the IKK and other SE benefits. Rather than cutting the benefit, increase the price of the benefit. For those who normally travel on higher fare such as J, C, Y, M and U, they are unaffected because the qualification threshold remains at 100K.

Frankly, for those who only spent $10K to attain SE should not be entitled to benefits being offered.

newbusmod

I think this is a very good topic.

These programs were created as loyalty-reward programs. And now I will re-affirm my previous statements of Aeroplan being a quasi-reward quack-house.

Have we finished with the letter writing?

The Lev

I think the death knell of Instant KK was the fact that SE's could earn millinos of miles by not flying (e.g. corporate credit cards) and use those miles to book tickets. It is symptomatic of the fact that AC is trying to run a FF loyalty program within the confines of the new AE shopping loyalty program.

I think rather than the sledhammer approach they could have achieved their aims better by limiting IKK to miles acquired by flying (maybe even flying on AC metal only ) and/or by limiting it to a small group of pre-listed friends or family.

There is another big reduction in benefits that seems to have gone virtually un-noticed - the move from 15 to 20K miles for upgrade certs will likely mean a reduction of close to 40% in the number of certs earned by E and P who make up over 90% of the "premium" members. Anybody who just gets to E will only get one set of certs in the year rather than 2 previously.

DWM_AC

To illustrate the other side of the example - have made it to SE this year for the first time ever, and just added up the flight costs from my expense reports - over $45000 (taxes,fees in) to just get over 100K. Travel was T/T+ within eastern N/A, T+/L to West Coast, and restricted/discount J to Europe. A normal year would be 50K and a spend of $20,000+, and therefore only E status despite high spend. Rewarding for miles travelled, not $ spent, and then layering a complex upgrade program on top is really a strange way to run a business. If AC wants to effectively run both a loyalty program for FFers and also run a points/rewards business they should refocus the FF component on $spent, not miles travelled. Without this happening the FF program benefits will only continue to erode.

alex0683de

I absolutely agree with you on this point, and can point to an example of a program that does reasonably well in managing this at the moment:

Lufthansa Miles & More offers a very differentiated tier-structure of mileage levels. It's a little complicated to explain, so if you want to know more, check out this link:

http://www.meilenrechner.de/php/meil...p?language=eng

Aeroplan should really consider moving to something along these lines.

why fly

Just because AP/AC is cutting does not mean other programs are..... Most other programs have done minor changes,....... AC with little competition so it has done major hacking...... and its not over...

acysb87

I do many segments annually,and believe I give AC a lot of revenue.I would have to look way back in my posts,but some here will know I have been a strong advocate of the revenue model for years.

Simon

This is quite true - so far.

So as not to be too much like our former caffeinated friend, care to share a bit more than just "it's not over" ?

Simon

acysb87

"proabaly" less Q miles on T+ fares in Canada and less Qmileage on select fares on international destinations.