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Q3 2020 Valuation Updates: Aeroplan Flat, Amex MR (Shut) Down Ricky July 1, 2020

Q3 2020 Valuation Updates: Aeroplan Flat, Amex MR (Shut) Down

Every quarter, I’ll be updating our Points Valuations in an effort to keep them honest and up-to-date. A handful of movements have taken place in the loyalty space since our Quarter 2 valuation update, so let’s take a look at how things are shaping up for Quarter 3 2020. 

Before we begin: like last quarter, I should note that these valuations are independent of any external circumstances that might be impacting our ability to travel at the moment, but rather to give an idea of the relative usefulness each currency should we choose to travel. 

Aeroplan: A Mix of Good and Bad

It’s been an eventful quarter in Aeroplan’s neck of the woods, to say the least. The addition of Etihad Airways as a brand-new airline partner has introduced a new redemption option that’s arguably more valuable than anything we had before. 

While Aeroplan miles could previously be redeemed for high value through the Mini-RTW in business class, Lufthansa First Class, or ANA First Class, I’d say that the Etihad Airways A380 First Class Apartments are a notable cut above the rest in terms of the aspirational factor. 

Moreover, the recent 50% Miles Back promotion certainly generated significant excitement around Aeroplan as well, and the popular uptake of the promotion suggests that it may well set the tone for future Air Canada & Aeroplan promotions. After all, programs like Air France/KLM Flying Blue regularly put on “Promo Awards” in which certain types awards are available at a 30–50% discount for a limited time, so why shouldn’t we anticipate similar initiatives from Air Canada as they look to innovate the program?

At the same time, the actual user experience for Aeroplan members has been marked by uncertainty in recent months, in particular due to confusion surrounding the maximum permitted mileage (MPM) rules

While Aeroplan publicly insist that there has been no change in the MPM rules, Aeroplan agents very much appear to be a mixed bag in terms of which set of rules they choose to enforce, and it can often take quite a few attempts at hanging up and calling again before you find an agent who can help you book your complex itinerary. 

Even if there is no devaluation of Aeroplan miles on paper, a poor user experience in which agents are consistently inconsistent in applying the rules properly is still something that detracts from the value of members’ hard-earned miles. 

Therefore, I’d say that the good and the bad roughly cancel each other out, and I’m leaving our valuation of Aeroplan miles flat at 2.1 cents/mile for this quarter.

In the meantime, all eyes will be on Quarter 4 of 2020, when we should (barring further delays) have a lot more concrete information on the new Air Canada loyalty program on hand, which should allow us to establish an initial valuation for what will become one of Canada’s new major points currencies going forward. 

Amex MR & MR Select: Shutdowns Bring Uncertainty

American Express Membership Rewards points have long been regarded as the best transferrable currency in Canada due to their ease of earning and flexibility. Instead of being locked into a certain program and facing the risk of devaluations, holding MR points allows you to keep your options open and only transfer them to a frequent flyer partner when you’re ready to redeem.

In recent months, however, this advantage has been eroded by the threat of unilateral account shutdowns from American Express, a phenomenon that has continued since I first reported on them in late April

No one really knows what’s causing these shutdowns to occur, but the general consensus is that it’s a move by American Express to combat unprofitable behaviour, especially in the challenging economic environment that we find ourselves in. 

According to one data point of an individual whose account was shut down, a supervisor had informed them that the shutdowns were affecting about 75 cardholders. While the risk of individually experiencing a shutdown is therefore relatively low, the crazy thing is that the shutdowns almost always happen without warning and involve the instant forfeiture of any MR points in your account. 

The risk, however small, of your hard-earned points evaporating into thin air has prompted many American Express cardholders to pre-emptively transfer out their MR points to partner programs like Aeroplan, British Airways Avios, Cathay Pacific Asia Miles, or Marriott Bonvoy – or to redeem them against statement purchases at a value of 2cpp on the American Express Platinum Card under Double Rewards. While this removes the advantage of flexibility that the transferrable currency offers, it’s obviously better than losing your balance entirely. 

For now, then, there’s no real case to be made that the valuation of Amex MR points should take into account its advantage of versatility at all – and therefore, it shouldn’t be any higher than the maximum value among its transfer parters. 

I’m therefore lowering the valuation from 2.2 cents/point to 2.1 cents/point to match Aeroplan, the partner program with the highest value…

  • Previous Valuation: 2.2 cents/point (CAD)
  • Current Valuation: 2.1 cents/point (CAD) 

…and accordingly lowering the valuation of MR Select points by 0.1 cents/point as well (as Cobalt Cards and Business Edge Cards have also figured among the shut-down accounts). 

  • Previous Valuation: 1.4 cents/point (CAD)
  • Current Valuation: 1.3 cents/point (CAD) 

WestJet Rewards: Member Exclusive Fares on Pause

This change is pretty straightforward. 

For the past few years, the Member Exclusive fares within WestJet Rewards have represented the only way to get outsized value compared to the baseline redemption of 1 WestJet Dollar = $1 towards the base fare of a WestJet flight.

With Member Exclusive fares, though, you could redeem a fixed rate of 125 WestJet Dollars towards any WestJet flight within Canada or the US, which could earn you significantly higher value when the cash price of the flight was higher as well. 

On June 25, however, WestJet paused the Member Exclusive fares with the view of bringing back an evolved version of the program in the future (likely towards the end of the year). With this opportunity temporarily withdrawn, the only remaining way to redeem your WestJet Dollars is to apply them at the flat rate of 1:1 towards the cost of a WestJet flight – and so that’s exactly what we’ll set the value at until a higher-value redemption opportunity is introduced.

  • Previous Valuation: $1.05/WestJet Dollar (CAD)
  • Current Valuation: $1/WestJet Dollar (CAD) 

Conclusion

You can check out the full updated list of Points Valuations for our latest numbers. As always, remember that these valuations are my subjective opinion, and that they reflect the value that’s available to someone who’s willing to put in a bit of work towards understanding the merits of each program, rather than the value that an Average Joe might derive. 

Besides the ups and downs from American Express and Aeroplan, this quarter has seen relatively little movement among other points  programs, which are mostly in a state of waiting and seeing how the pandemic and the resultant lowering in economic activity play out. I’d expect to see some more changes by Quarter 4, especially as both Air Canada and WestJet plan to make major moves to shake up the Canadian loyalty landscape. 

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3 Comments
  1. Avatar
    Fred

    I agree Amex should be shutting down these accounts. It is the worst offenders that ruin things for the majority. The ones that do get shutdown are of course going to post crying about it and insisting they didn’t do anything wrong. The fact is Amex is not randomly shutting down good customers.

  2. Avatar
    Jules

    It’s pretty simple to avoid a shutdown by AMEX; stop with the shaddy activities like manufacture spending and moving MR points between Canadian and US accounts for arbitrage purposes. Unfortunately greed is a vice that certain individuals cannot control…

    1. Avatar
      Sam

      People who have been doing neither of that have been shutdown.

Ricky

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