What Can Air Miles do with all those Expiring Miles?

In December 2011, Air Miles announced going forward its reward miles will only be valid for 5 years. As a result, after December 31, 2016, Air Miles older than five years begin to expire on a quarterly basis. Air Miles spokesperson have repeatedly noted some collectors are “still not using the miles they collected decades ago” and “believe five years is very reasonable to expect someone to use miles and get a reward that betters the way they live their lives every day.”

The expiry information has been provided on the Frequently Asked Questions section of the Air Miles website. However, the CBC has concluded Air Miles may not have distributed any public follow-up announcements since 2011 or any warning messages to its customers.

Regardless, word has gotten out to enough Air Miles members to apparently generate problems for Air Miles and consumers. Media outlets have recently commented on frustrations experienced by Air Miles members trying to redeem their older Air Miles for fear of losing them. Phone wait times have reportedly been 2 hours or more. Air Miles notes many rewards options are redeemable online. However, items such as vacation package deals must be booked by phone. Thus consumers wanting to spend their hard-earned Air Miles on that dream vacation or a trip to see family have little choice but to stay on hold or attempt requesting a callback by Air Miles staff.

 

Redemption Spike Could Have Been Foreseen

Air Miles could have anticipated this spike in redemption demand based on a previous experience by Aeroplan. In the late 2000’s, Aeroplan instituted a policy where loyalty points more than 7 years old were to begin expiring on January 1, 2014. In 2013, an annual North American seat reward availability survey noted the availability of flights through Aeroplan took a dramatic dive in 2013 when compared to previous years. A reasonable person could conclude the reduced availability of Aeroplan reward flights were a response to the approaching point expiry deadline.

About 6 months before points initially expired Aeroplan canceled the expiration policy. However, it appears Air Miles is not willing to follow suit. This leaves Air Miles in a quandary. A program designed to keep customers happy and have them spend on products and services is now irritating some of their members by:

  • Taking some of their loyalty currency away
  • Making the redemption process a less than pleasant experience

PIAC contends the redemption process is critical for both consumers and loyalty program providers – a positive redemption of loyalty points may lead customers to become brand advocates for the program. A negative redemption process leaves consumers alienated, which is the risk Air Miles increasing faces as its points expiration policy inches closer to reality.

 

How Can Air Miles Respond?

A simple yet effective response would be for Air Miles to simply employ more staff at their call centre to address the excess demand. Air Miles could follow the lead of Aeroplan by cancelling the expiry policy before it takes effect December 31, 2016. However, assuming Air Miles remains committed to having their miles expire, here are a couple of suggestions to remove some of the public relations sting out of the collective frustration experienced by their Canadian customers. Air Miles stands to gain by having millions of Air Miles expire each year going forward. Each expiring Air Mile represents an outstanding liability removed from its books. In response, Air Miles could take a percentage of expiring Air Miles and donate them to any number of the thousands of registered charities operating in Canada. Alternatively, Air Miles could establish an “Air Miles Charity Bank” where organizations could submit short applications for Air Miles to further their charitable activities, fueled by expired Air Miles.

These suggestions allow Air Miles to create new beginnings out of a story that so far has only grown a bumper crop of consumer frustration.

 

Jonathan Bishop has been a Research Analyst with the Public Interest Advocacy Centre (PIAC) since 2012. 

PIAC explored the operation of customer loyalty programs in Canada in 2013, noting consumers have little recourse when loyalty program providers unilaterally decide to devalue their loyalty currency, or change other terms and conditions of loyalty programs. PIAC advocated for industry-wide guidelines relating to loyalty currency devaluation, transfers and bequeathal. Moreover, the report entitled, “Customer Loyalty Programs: Are Rules Needed?”, called for the creation of a complaints body for consumers on issues that arise relating to the operation of loyalty programs, as well as guidelines for the notice given to changes in loyalty program terms and conditions.

 

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