In what can only be described as a huge victory for Canada’s 11 million Air Miles collectors, the company has announced that it’s cancelling its point expiration policy that was set to take effect at the end of the month.
“We have made the decision to cancel the expiry policy for all collectors effective immediately,” said Bryan Pearson, President and CEO of LoyaltyOne, the company that runs Air Miles.
Consumer Activism Saved The Day
After facing widespread discontent from Air Miles members that made national headlines, the issue attracted the attention of consumer advocates, class action lawyers and government regulators.
“There is uncertainty with provincial governments proposing or considering legislation across Canada so we have decided to cancel the expiry policy so that all Collectors, regardless of location, can be confident that their balances will be protected.”
Air Miles collectors were faced with the dire prospect of having all of their points that were 5 years or older automatically expire, regardless of how often, or recently, members used the program or not.
It seems like the threat of having the industry regulated without meaningful industry participation, was the driving force behind Air Miles’ decision to drop the expiry policy. On October 27th, the Protecting Rewards Points Act, introduced by Ontario MPP Arthur Potts, passed its second reading. The Act threatened to credit back to consumers “any rewards points that expired on or after October 1, 2016.”
We found the expiry policy to be patently unfair. It penalized members who saved large amounts over long periods of time to earn their “dream” reward. Could you imagine if you had an Air Miles collector card and Air Miles credit card and engineered your spend over years to take earn as many points as you could, only to find out they were going to be forcibly expired, whether or not you got to your target number of points, whether or not your dream reward or trip was available at that time? We’re glad the threat is over, however the future may not be all rosy.
Air Miles Plans Uncertain
According to the Globe and Mail, Air Miles is set to lose $200 million of its 2016 revenues due to its decision to cancel the expiry policy. Of course the other way to look at it, is that Air Miles was looking to earn $200 million by arbitrarily expiring points its members had earned with the expectation they would be able to use them at some point in the future.
In a financial disclosure Air Miles parent company, Loyalty One filed Thursday, it said “going forward, LoyaltyOne will adjust the value proposition to collectors to offset the lost economics… and to maintain, as closely as possible, the economics of the AIR MILES reward program prior to cancellation of the expiry policy.”
In other words, Air Miles intends to recoup its $200 million through some other means than the now defunct expiry policy. We certainly hope Air Miles doesn’t reduce earn rates or increase the cost of redemption. With so much competition in the marketplace from cash back credit cards to travel credit cards, customers have more alternative than ever.
It would be perfectly acceptable for Air Miles to impose some type of expiry policy, as many other programs do, such as Aeroplan and Scene. Those programs basically say if you either collect or redeem at least 1 point a year, your points are safe. In other words, you stay loyal with us, we’ll stay loyal with you. This has the effect of both stimulating usage, while also purging your least loyal customers. Not perfect, but pretty fair.
If Air Miles simply reduces the value of it points, it could face a death by a thousand paper cuts, as members flee for alternatives, and partners do the same.
Ultimately, the market has spoken. Air Miles has a phenomenal franchise in Canada with two thirds of all households having a membership. The good news is, members love their Air Miles. The not so good news is, management seems more focused on managing its balance sheet than its core business – loyalty. It needs to show a little to get a little.