Aeroplan Plans "Earn and Burn" Push

Aeroplan Plans "Earn and Burn" Push

Aeroplan wants to get more people hooked on a feeling — the “wealth effect” of collecting reward miles, according Brent Jang of The Globe and Mail (Canada).

This fall, Montreal-based Aeroplan will unveil a series of initiatives to spur members to earn miles.

Aeroplan will roll out its fall and winter campaign through its Web site, e-mails and monthly statements, urging consumers to earn miles and later redeem, or burn, those accumulated miles in exchange for Air Canada flights or other rewards.

The loyalty program, majority owned by Air Canada’s parent company ACE Aviation Holdings Inc., will be ramping up its campaign to entice members to “earn and burn,” Aeroplan chief executive officer Rupert Duchesne told Jang.

Simply put, you first have to earn before you can burn, and as more miles are awarded to members, Aeroplan becomes more vibrant and can look forward to a robust future, Duchesne said.
The company’s business model is based on ensuring a steady stream of revenue from its partners, which distribute Aeroplan miles to members.

“It’s very, very critical that we accelerate the rate of sale of miles” to Aeroplan partners such as Canadian Imperial Bank of Commerce, Imperial Oil Ltd.’s Esso gasoline chain, Bell Canada’s digital bundle plan and electronics retailer Future Shop Ltd., Duchesne said.

“If we don’t sell a mile to begin with, we don’t generate cash.”

Industry observers say that Aeroplan already has a devoted following of compulsive collectors of miles. But the trick will be to entice more members to earn their miles more often, even if it’s for the psychological gain — the wealth effect where members feel enriched by having a larger Aeroplan account.

“Some people just like to collect miles and look at their Aeroplan statement with a big pile of miles on it. It’s treated kind of like a bank statement,” income trust analyst Harry Levant told The Globe and Mail. “I guess you can go to sleep at night with the Aeroplan statement under your pillow and feel good about it.”

Aeroplan now has more than five million active members.

Business partners, led by CIBC Aerogold Visa, buy miles from Aeroplan and distribute them to consumers, who accumulate miles by purchasing goods and services.

“Getting consumers to earn more miles means Aeroplan gets more revenue on the books. It increases Aeroplan’s cash flow,” Levant told Jang.

Air Canada’s parent, Montreal-based ACE Aviation, owns 85.6 per cent of Aeroplan. ACE Aviation sold a 14.4-percent stake in Aeroplan for $287.5-million in an initial public offering in June.
Industry analysts say high jet fuel prices are driving up airline fares, which could dampen demand for air travel, making it even more important for Aeroplan to diversify its business relationships well beyond Air Canada.

“Our members have an emotional attachment to their miles,” Gillian Hewitt, Aeroplan’s manager of corporate reputation told The Globe and Mail. The key is to make members feel comfortable with the “earn-and-burn cycle. You have to earn in order to burn,” she said.

Aeroplan currently has 60 business partners representing more than 100 brands.

In past years, Aeroplan attracted 25,000 to 30,000 new members a month, but as it diversifies, the rewards program is getting increasingly popular, recently adding 70,000 members a month.

“What we’re looking to do in the fall is encourage members to earn more miles than they normally would,” Duchesne said. “The fall campaign will really be geared to further engaging our members to earn miles at newer partners such as Esso, Bell and Future Shop, and our traditional members such as CIBC Visa and American Express.”

Aeroplan’s allure would increase if it’s able to expand further, perhaps signing up grocery and drugstore chains as new partners.

“We have to engage consumers in the program and say, ‘Look, you don’t just earn miles at Esso, you can earn them at Future Shop, on Air Canada, on Budget Rent A Car or if you get flowers off the internet from’ We’ll be educating people on how many different places you can earn your Aeroplan miles,” Duchesne told The Globe and Mail.

“We have to give members as many choices as possible to earn and burn their miles.”

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