What began as a bit of a hobby eventually made him a hoarder, and ultimately he racked up , Aeroplan miles. Last May, his master plan began to unravel. Instead, it would launch its own in-house rewards program. So Brooks rushed for the exit. Shareholders began to panic in much the same way, questioning whether the loyalty program could survive the breakup.
Without Air Canada, what was Aeroplan? Now TD was stuck with a points program that could soon be a shell of its former self. As a secondary card partner, CIBC was in a similar, albeit less severe, situation.
If members rush to cash in all their miles, the company might not be able to make them whole. Loyalty programs are a lot like insurers, which earn premiums up front and then pay out policies years later. It also bought some businesses abroad. Many feel a full recovery is highly unlikely.
But just about everyone on Bay Street has a theory about what brought Aimia down. Some say management was too cocky; others blame the airline, which hived off the beloved points program 13 years ago, only to abandon it and launch a new, rival program on its own. Looking back now, Aimia hit turbulence well before the Air Canada announcement in May Duchesne had run Aimia formerly known as Groupe Aeroplan for 17 years.
Come May, things started to look different. On the same day Aimia reported its quarterly earnings, the company revealed Duchesne would be retiring immediately. He was said to have chronic mercury poisoning, a rare condition that can be linked to eating contaminated fish and can, according to the World Health Organization, affect the nervous system.
This was earth-shattering news. As Air Canada emerged from the ashes of bankruptcy protection in it had been driven there in part due to Sept. Since Aeroplan had few capital investments—its business model was mostly just moving around cash—it was an ideal option. At its core, Aeroplan is a pretty simple operation.
They proved to be wildly popular. Today, many Canadians admit that the prospect of earning rewards keeps them tied to their plastic. A study released in July by a marketing specialist at the University of Toronto and an economist at the Federal Reserve Bank of Kansas City found that people would, in fact, rack up less credit-card debt if card companies were barred from offering rewards based on the value of purchases.
Still, even with those rewards gone, most people would continue to use their cards. Frequent flyer programs are now much more than simple loyalty programs.
The companies that own them can make a lot money. Let's use Aeroplan as an example. It's what's called a coalition program like Air Miles , because it has many participating companies.
Aeroplan has more than 70 commercial partners in the financial, retail and travel sectors. It has four million active members and one of its main partners is, of course, Air Canada. By the end of , Groupe Aeroplan reported that more than two million rewards had been issued to members, including more than 1.
Also, in its annual report in , the company calculated that in the past 25 years, Aeroplan members had accumulated approximately billion miles. Interestingly, Groupe Aeroplan has observed that more reward miles are accumulated in the last six months of any given year, while more miles are redeemed in the first half of any given year.
Updates to redemptions. Within North America:. Currently — , miles. New program — , points. Currently — 75, miles. Currently — 60, miles. New program — 80, points. No cash surcharges. Pay with points and cash. Family sharing. The bottom line. Related Video Up Next.
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