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Q4 2020 Valuation Updates: New Aeroplan… Slightly Down Ricky October 1, 2020

Q4 2020 Valuation Updates: New Aeroplan… Slightly Down

Another quarter, another update to our Points Valuations. Changes in the loyalty space since our Quarter 3 valuation update have been limited in number but massive in impact, so let’s take a look at how things are shaping up for Quarter 4 2020. 

Since the challenges surrounding our ability to travel are still ever-present this quarter, I should remind you that these points valuations are meant to independent of the external circumstances, but rather to give an idea of the relative usefulness each currency when it’s safe and advisable to travel again.

New Aeroplan: Award Chart Devaluation Leaves Its Mark

November 8, 2020 will mark the end of the current Aeroplan as we know it and the launch of Air Canada’s new Aeroplan program. As far as the redemption value of Aeroplan miles Aeroplan points are concerned, the most significant movements are in the changes to the new Aeroplan’s flight redemption structure.

After having dissected the new flight rewards in painstaking detail, I think we can all agree on the fact that there are lots and lots of changes from the current Aeroplan, some of which are negative and some of which are positive.

  • On one hand, the reward pricing for the vast majority of international flights will be increasing, along with a few other negative changes such as the $39 partner booking fee, higher change and cancellation fees, and the removal of stopovers within Canada and the US.
  • On the other hand, fuel surcharges are being eliminated entirely, there will be more flexible routing rules (such as the ability to add a stopover on a one-way redemption for 5,000 points), members will have an easier time redeeming points through new features such as preferred pricing (from elite status or co-branded credit cards) and Family Sharing, and the program’s underlying technology will be significantly improved.
  • There are even some new features that carry contrasting trade-offs within themselves: for example, dynamic pricing on Air Canada improves the value of Aeroplan by providing access to every last seat on Air Canada flights, but also reduces the value of Aeroplan by removing predictability from the program’s pricing.

Clearly, whether or not the new program is a net positive or a net negative for you will depend on your travel patterns and preferences, as well as the extent to which you are willing to adapt those patterns and preferences to fit the new program. You can refer to this post for a discussion of who I view to be the winners and losers from Aeroplan’s November 8 transition.

However, if I had to pinpoint an average net impact to the value of the program across all Canadian travellers (which is the point of this exercise), then the broad-based devaluation to the reward chart is difficult to overlook.

Prices are rising 20–30%, and sometimes even more, on a majority of international redemptions. Our beloved Aeroplan Mini-RTW redemption is going from the range of 150,000–160,000 Aeroplan miles to 180,000–200,000 Aeroplan points. It’ll take more effort to earn enough points for the same redemption after November 8, compared to before.

Despite the innovative features of the new program, this simple truth lies at the core of the valuation exercise. I’m therefore lowering the valuation from 2.1 cents/mile to 2.0 cents/point for November 8.

I think that’s a reasonable baseline for the new program to start with, and I do expect that the new Aeroplan’s remaining unannounced features can lead the valuation higher again in the long run.

  • Previous Valuation: 2.1 cents/point (CAD)
  • Current Valuation: 2.0 cents/point (CAD) ▼

Alaska Mileage Plan: Challenges with Certain Partner Redemptions

In reviewing our list, Alaska Mileage Plan’s valuation of 2.4 cents/point (CAD) feels a little too high, considering the recent air of uncertainty surrounding the program and some of its best redemptions.

One of the most popular goals for Alaska collectors is to redeem 70,000–75,000 miles for a flight on Japan Airlines First Class between North America and Asia, one of the world’s best premium flight experiences (including arguably the best food and drink in the air) and one of my personal favourites.

However, as reported by The Points Guy, a technical issue involving Japan Airlines’s underlying fare code for its First Class award tickets has affected Alaska’s ability to access any JAL First Class award space after March 31, 2021. For this reason, it’s very challenging to plan any kind of trip around this sweet spot at the moment, and there’s no telling when the issue will be resolved on Japan Airlines’s end.

There’s also the greater uncertainty lingering over Alaska Mileage Plan as a whole, with the airline scheduled to join Oneworld very soon (although the timeline of “late 2020” has now been pushed back to early 2021).

We still have minimal information as to what changes might come to Mileage Plan, but the general consensus among members is that many of the outstanding sweet spots (such as Japan Airlines or Cathay Pacific First Class for 70,000 miles) may be facing a limited lifespan, as may a portion of Alaska’s diverse set of airline partners.

Like many of you, I’m trying to burn up my Alaska miles for some high-value redemptions in 2021, and I think the overall uncertainty surrounding the Alaska program (both specific and general) brings the valuation down a peg.

  • Previous Valuation: 2.4 cents/point (CAD)
  • Current Valuation: 2.3 cents/point (CAD) ▼

Amex MR & MR Select: Bonvoy Transfer Bonus Bodes Well

Last quarter, I had lowered the valuation of Amex MR and MR Select points due to the reports of American Express unilaterally shutting down some members’ accounts and removing MR points.

This called into question whether there was any value in the supposed flexibility that MR points offer. Yes, there’s meant to be inherent value in being able to transfer to a number of frequent flyer and hotel loyalty programs, but if your points can get taken away at a moment’s notice, how much is that flexibility really worth?

The good news is that we’ve heard fewer reports of unilateral shutdowns happening this quarter compared to last quarter. However, I’d like to give it another quarter or so before being able to say that the phenomenon has passed us by for the time being.

In the meantime, I do think there’s a reason to give the valuation of Amex MR Select points a boost: we’ve recently seen the first-ever 25% transfer bonus from Amex MR to Marriott Bonvoy in September, which is particularly well-suited to the MR Select points you earn on the Cobalt and Business Edge cards (since regular MR points can deliver better value when transferred to airline partners).

It’s always encouraging to see a brand-new transfer bonus, as it bodes well for the prospect of a similar transfer bonus returning in the future, which would very much increase the appeal of Amex MR Select points in the long run.

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

Conclusion

There haven’t been too many major movements in terms of Points Valuations this quarter, but the details of the new Aeroplan program have made a big splash all on their own.

Given the increase in award cost across the board, I think it’s fair that the much-transformed Aeroplan program begins its new life at a lower starting point of 2.0 cents/point (CAD) with more room to grow in the future.

Looking ahead at 2021, we’ll be anticipating the details of likely changes to two award programs in particular – Alaska Mileage Plan as they prepare to join Oneworld and WestJet Rewards as they roll out an “evolved” version of their Member Exclusive fares to compete with Air Canada’s new Aeroplan – and I have a feeling that won’t be all that’s new over the upcoming quarter, either.

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2 Comments
  1. Avatar
    Joe

    I have been on several flights in the last two months as I am not letting Covid change how I live unless it kills me and then I will wast a lot of Aeroplan Miles soon to points. You cant call yourself a frequent flyer, if your not flying…frequently. I think I will keep my AMEX GOLD and the free TD Infinite AP Card. The AMEX GOLD I feel still provides the flexibility to choose programs while still allowing 1:1 to AP.

  2. Avatar
    Bileth

    Who is even travelling right now?

Ricky

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