Aeroplan is coming home and Air Canada has a LOT of big ideas on what that will mean for the future of its loyalty program. The program won’t relaunch for members until late 2020, but significant changes are already underway to lay the groundwork for the new program. Mark Nasr, AC’s Vice President, Loyalty & eCommerce, recently spoke with PaxEx.Aero to review some of the changes that members can expect to see.

A hybrid approach

Perhaps most notable, particularly as the push towards revenue-based programs gains momentum, is that the new Aeroplan will not be entirely revenue-based. The majority of air travel redemptions occur for economy class seats within North America, Hawaii and the Caribbean. Those markets will see a revenue-based redemption scheme in play. But for the long haul markets and especially for partner airline redemptions a more traditional award chart is the plan. Nasr explains this split through (relatively) simple accounting needs, “The economics that underpin premium cabin redemptions, partner redemptions, are very different from short-haul economy-class travel.”

Nasr sees a completely revenue-based model is a recipe to miss out on certain key facets of loyalty. By taking the hybrid approach Aeroplan can extend the concept of aspirational rewards beyond even what more traditional chart-based programs offer. This delivers on the psychology of the loyalty programs, bringing more members in even if they never redeem for the luxury experiences. Nasr is also clear that within the revenue-based segment of the program there will be some flexibility and caps on award pricing. Setting the price point too high means no one will ever redeem anyways, so the caps are a small compromise, giving back to the members.

Adjusting the award pricing “only addresses half the problem” from Nasr’s perspective. The other half comes from significant changes in the way the carrier approaches how customers engage with the program.

New tech, new tools

The next generation of Aeroplan will be built on an entirely new technology stack. That’s a huge risk for the company as it transitions. But the bulk of the changeover is expected to happen well before the new program launches at the end of 2020. Steps towards the new program are happening today, with a new version of the carrier’s mobile app expected to go live shortly. Most of the new benefits will be hidden at that point, but within the new app sits an underlying framework that will ultimately deliver on the program’s promise. First up with the transition is a cutover to the Amadeus Altea PSS platform. Following that shift the loyalty-related bits will begin to light up in the interface.

Getting this right is not just about the technology. The rules within the program and the tools available to members and staff alike must deliver on the value promise. Nasr envisions a program rich in value proposition but still easy to use. That’s a tough balance to strike and many have failed. Fortunately Aeroplan has those examples to learn from, though still no guarantees it is successful.

Pent up demand

Another significant challenge for a loyalty program run by a third party is the complexity of managing partnerships. This applies to external relationships but also to airline-related possibilities. The airline is a third party to itself, leading to all sorts of cost, contractual and communications challenges in getting new promotions and products off the drawing board and into the market. Ultimately this created a huge pent up demand within the airline for access to more of the Aeroplan program. Nasr explains, “So many departments want access to the loyalty program to do things because they haven’t been able to for years. Even though the transaction was financed and brought about by the banks the core design is driven by core airline behavior.” Ultimately the goal is to deliver “much deeper relationships with partners covering not just accrual and redemption but elite status as well.”

With the reference to the banks financing the deal and deeper ties with partners it is not hard to see an Aeroplan co-branded credit card coming to market with elite status earning potential as well. Such cards perform well in the US market, though Delta and United recently scaled back some of the value of their products in that context.

Beyond the banks, however, Nasr see many other departments within the carrier angling to access the renewed Aeroplan. Whether that’s for corporate sales contracts or new route promotions or other opportunities, expect to see a lot of experimentation on this front in the first couple years as the program comes alive.

More from the 2019 World Aviation Festival