Thanks to a recent case study shared by another fellow blogger, I continue to question the “rewards” associated with one of Canada’s most beloved travel rewards programs: Aeroplan.
What is it? Aeroplan 101
With 150+ retail, financial and travel partners, Aeroplan is one of Canada’s main loyalty programs.
How do you earn Aeroplan Miles?
- Fly on eligible Air Canada, Air Canada Express, Air Canada rouge or other Star Alliance member airline flights.
- Purchase various travel products and services online.
- Shop at participating program retailers.
- Register for bonus promotions online when they occur.
- Use a bunch of credit cards associated with the program.
How do you use Aeroplan Miles?
- You can book a flight reward with Air Canada, Air Canada Express, Air Canada rouge or other Star Alliance airline partner.
- Purchase various travel products and services, entertainment experiences, gift cards, and other merchandise.
You can learn more about using Aeroplan Rewards here.
While this loyal program offers some decent benefits, there are some significant drawbacks to this program based on my own experiences:
- Matching the flight schedule with the desired travel schedule – finding the flight you want to fit your travel schedule has always been a bit of a nightmare for me using this program. Optimal times one-way, “red eye” flights on the return trip. Multiple stops for what could be a direct flight. Extremely lengthy layovers. These are just a few examples of schedules gone wrong.
- I’m always shocked at the number of Miles required for travel – for example in looking for flights recently to Europe the points requirement is 60,000 for one (1) economy seat (or 120,000 Miles per couple). In comparison, you can redeem 6,000 Miles for some $50 gift cards. That equates to, give or take, a travel rewards value of $500 for every 60,000 Miles redeemed and in this example, $1,000 per couple travelling to Europe. In looking at flights from Canada to UK round-trip, here is what it might cost to book a flight:
As you can see, using this particular flight 1) we’d be on some sort of milk-run (3 stops, over a day of travel), 2) we’d burn the 120,000 Miles ($1,000) and 3) spend over $2,000 in taxes, fees and surcharges. This is hardly a deal when, without much effort, I found flights with less stops, less travel time, for about $2,000 AND I could retain those valuable 120,000 “rewards” Miles.
- There is no such thing as “free” travel – advertisements for travel reward programs like Aeroplan, all tout “free airfare” yet there is really no such thing as a free airline ticket. As you have already seen in my example above there are taxes, fees and surcharges factored in for Aeroplan Miles. Don’t forget travel insurance especially if not covered by your credit card.
- Consumers are subsidizing travel rewards credit card users – it’s true… Yes, these loyalty programs have perks. However, merchants, as with any other costs associated with delivering a product or service, pass credit card fees on to their customers in the form of higher prices. This does not generate much fairness: customers who use payment methods associated with fewer benefits (such as cash, debit) end up subsidizing the costs of consumers that use premium or travel rewards credit cards, for the same cost of a product or service.
- To own a premium travel rewards credit card, I would need to pay a yearly annual fee to do so, to borrow money, that I don’t have in the first place – Most of us use credit cards to pay for goods and services we want but don’t have the cash at the time (or want to pay cash at the time of the transaction) to do so. This is fine, so long as we borrow money, short-term, interest-free and pay the balance every month. Even if you never carry a balance on your credit card, you are likely paying an annual fee to use your travel rewards credit card. Far worse, there are people that carry a credit card balance on their travel rewards credit card(s). These folks are paying money to use a travel rewards credit card, to make purchases, they can’t afford to pay off. This doesn’t make much sense to me.
I could go on but I won’t. I use my Aeroplan card to earn Aeroplan Miles (and I will continue to do so) but I don’t intend to own an Aeroplan travel rewards credit card in my wallet. I far prefer using a cash back credit card that has no annual fees. Cash back is tangible, I know the purchasing power of it and there are no restrictions. I intend, as I have done in the past, to redeem my Aeroplan Miles for short-haul flights or other rewards purchases. There are fewer restrictions, which mean more options that translate into fewer headaches. This sounds better to me.
Mark
My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I've surpassed my goal and now investing beyond the 7-figure portfolio to start semi-retirement with. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.
I went to California (2011), Hawaii (2013) and Indonesia (2014, business class), 2 people, thanks to Aeroplan points. Each time I paid around $300-500 total in taxes/fees.
Not all Aeroplan rédemptions are equal, as said by others above, it’s a game… (and Europe is a bad gamble with Aeroplan).
I would have never got such value using only cashback cards.
The tip: signup bonus for new credit cards.
Thanks for the comments cashinstinct. If you’ve found a way to play the Aeroplan game, good on you!
Yes, there are bonuses for some Aeroplan Miles travel rewards cards but unfortunately you still have to pay the annual fee.
The annual fee is often free for the first year. I never paid any fee either to Amex Canada, CIBC or TD for the Aeroplan cards I had. You need to be ready to keep a card only for a year.
Banks always give bonus to new clients, so you need to switch card often to get the best value.
I agree it’s a game, and I recognize not everyone will like playing it. I don’t recommend this to most people… there are issues and it’s good that they are described publicly online.
Getting 1 Aeroplan per $1 spent at some retailers is a joke and it will take forever to get a flight with that… I don’t even bother having my Aeroplan card in my wallet for these rare occasions.
That’s the thing, I don’t want to be switching cards every year.
I will continue to collect my Miles but not using a credit card.
I have Aeroplan but only used it to get merchandises. I don’t think it makes sense to pay the extra fees for flights. For flights it’s better off to use the reward points on travel reward credit cards IMO.
I don’t like paying any extra fees for “points” I should be able to use! Thanks for your comment Tawcan.
I discovered what a ripoff Aeroplan was, even for business class, a couple of years ago when I booked a flight from Edmonton to Toulouse with 2 stops and long layovers. The fees and taxes were $967! I let my Aerogold card expire and got a Capital One Aspire mastercard instead. I know you’re not a fan of fee credit cards, but I feel I get pretty good value for $120 per year (for 2 cards). You get 2 reward miles for every $1 spent. I recently “erased” the cost of a $1,700 flight to Tel Aviv for 170,000 points. So the “reward” is 100 points per dollar of redemption, but the great thing is you can find your own flights, wherever you want to go, whenever you want to travel. The redemption process takes about a minute and the cost of the flight disappears from your statement. Needless to say, we use the card for almost all of our purchases and pay the full outstanding balance each month. Thanks for your interesting blog.
The CapitalOne Aspire mastercard is a good one to own Alan, for the reasons you mentioned. You’re right, not a big fan of paying fees for credit cards myself but if you’re going to do that, you own one of the best. Thanks for the kind words about the site. Hope you continue to check out more articles.
I don’t have Aeroplan, though my coworker swears by it. She loves it. I have an Amex card which gives me points that I could convert into Aeroplan, though I don’t see the point. It’s crazy how much these companies jack up the price of flights when you are using points.
“I don’t see the point. It’s crazy how much these companies jack up the price of flights when you are using points.”
Exactly, or they can’t even offer the flight in a decent timetable in the first place.
Aeroplan used to be good for me a few years ago when I was travelling 100,000+ miles a year. Aeroplan Status gave me a good choice of flights without resorting to the premium award points needed most times nowadays – try using points to get a direct business class seat to Europe!
Nowadays with all of the taxes they demand, a rewards flight is no reward at all.
Then you get the service levels on our national airline. Thats another story but it lowers the value f aeroplane even further..
Securing 100,000+ miles a year is quite a bit of travel…
“Try using points to get a direct business class seat to Europe!” – I was hoping for that at some point but it’s not going to happen from what I’ve seen, that would be a great “reward”..
Thanks for the comment!
I got out of my VISA Aeroplan card years ago and switched to Aventura.
Two years ago I tried to use my Aeroplan points to fly to Copenhagen. It was OK to go but I would have to lay over a day on the way back and incur extra hotel and meal expenses.
As I had the flight numbers for the days I wanted I phoned Aventure and they said… NO PROBLEM. For the flights I wanted without the lay over. On AC both ways.
Aeroplan is fairly useless as they have a limited number of seats on each flight. So booking late is not a good option. Within N.A. it is better.
The only reason I accululate points on AP is that it is “free” and I tend to fly AC most of the time..
For the Visa Aventura card it is $120 per year but if you send a lot then it is worth it. I am on the road in sales so I can pretty well get a Nrth AMer flight every year… for $120.
Plus if I rent a car the vehicle insurance is included.
Reward cards are good for high spenders. If you do not spend well over $1K per month it would be hard to justify. Go with the cash back card then.
“Aeroplan is fairly useless as they have a limited number of seats on each flight. So booking late is not a good option. Within N.A. it is better.”
I’m with you.
We hope to use our Aeroplan Miles for a flight within N.A. over the next year or so. Not using these flights for any international travel.
The only reason I accumulate them is there are “free” with partner merchants. Otherwise, I wouldn’t bother at all.
Having rental car insurance on your CC is a good thing Ricardo, we have the same. A nice perk when you need it 🙂
Thanks for the detailed comment!
Used the insurance once in Halifax.
Got a call two weeks after I had turned in the car saying there was bumper damage worth $1,200.
It is highly unlikely that anyone will take a flight back to the airport to contest the claim. Phoned Visa they took care of it at no cost to me.
So, like I said, if you are spending more than “normal” amounts of money they rewards cards can be worht it. Especailly as the majority of my expenses are business related and I get re-imbursed for them
Yeah, I think the threshold is about $1,000 or so per month – so we largely agree there. If you are always spending more than that, per month, then some rewards cards might be worth the annual fee but I know for us, cash back and a no-fee credit card works best.
Doesn’t change the fact I don’t find the travel rewards from Aeroplan that rewarding but I guess if you’re not willing to go ‘all in’ for this program you shouldn’t complain like I do 🙂
Interesting, thanks for sharing. How does Aeroplan stack up against Air Miles? Air Miles has really tanked recently and I no longer use it as my main rewards program (going for cash back instead) but curious if Aeroplan has gone downhill as well
I haven’t done a detailed comparison of the two but both programs have “issues” IMO. I’m just happy for my cash back credit card, the cash back is real and I know the exact value of it.
Aeroplan is one of the worst reward programs. I collected it for years and two years I wanted to go to Europe and it was either use 120K aeroplan miles + $600 in “taxes” or pay $1200 for the ticket. After collecting miles for years, THAT was the “deal” I was getting. I decided to use the miles and end that program.
Now I exclusively use cash back rewards card.
I used Delta rewards in the past – and that was a very good plan. I was able to fly Ottawa to San Francisco for 25K miles + $50 in taxes.
R2R
I hear ya. Spend 120K Aeroplan Miles + $600 (or more) in taxes, fees and surcharges or get the same flight for the same price and keep your Miles. There is no real “deal”. I’m just happy I don’t pay some crazy annual fee for these “deals” 🙂
Thanks for your comment.
Aeroplan is a game and if you play by the rules it is extremely lucrative. Aeroplan credit cards are much more valuable than cash back credit cards, but you have to be willing to play the game.
I think you know I’ve written a complete guide on this subject plus gone into extensive detail analysing the various credit cards.
One of the best values for travel without a lot of hassle is long haul coast to coast flights in North America. Taxes and fees are always relatively reasonable in North America (around $150 per ticket).
The Europe example you gave, is essentially one of the worst possible redemptions for Aeroplan. Taxes and fees to Europe are essentially the highest of anywhere and conventionally purchased tickets there (unless you are on the west coast) are among the cheapest for overseas travel.
I flew my wife and I to Los Angeles from New Brunswick, for example, for less than $100 in taxes/fees each for 50,000 miles. Those tickets were easily $800 purchased conventionally, so $700 saved per person.
It is a frustrating game to play, but definitely worth it if you invest a little time learning it. If you want, I can share the links to my various guides and pages (you would probably have to approve that comment manually).
This where I see some value Stephen, travel with NA. For upwards of $300 for the taxes, fees and surcharges, you can travel coast-coast in Canada for about 25,000 points. This is a decent deal IMO.
The international and overseas flights are nuts 🙂
I figure every 6,000 Miles is worth about, give or take $50. So, getting a flight say from Ottawa to Vancouver for about $200 + $300 fees, taxes and surcharges is a good deal.
Thanks for your comment.
I could never understand paying to use a credit card and why people would do that. It’s no wonder they can afford the perks they give the customers because for the most part the customers are paying for it with annual fee. It’s like a revolving pool of money the credit card company uses to fund it all.
I’m simply not a fan of paying more money to spend more money that I don’t have. I like cash back credit cards and have used them for years.
Given I have a sizeable travel budget for work and the option of using a personal card, an Aeroplan CC has been lucrative for me. Not a typical situation to be sure – I wouldn’t have a plan credit card otherwise.
I saved Aeroplan points for years, but have stopped accumulating via credit card now that I know what a terrible deal it is for international travel.
One workaround exists, though: book on a non-Air Canada flight using your points (this can be done on the aeroplan site if you are lucky, or by request over the phone). I flew to Europe on a United flight and paid a fraction of the fee.
For Canadians living on the West Coast, a far superior program is the Alaska Air program. Fees for flights are small, your miles go a long way, and every year (with the associated credit card) you get a free companion ticket (pay for a ticket and your companion is free). They fly out of Vancouver and Victoria.
My friend Steve Zussino who wrote the Travel Hacking for Canadians (http://www.canadiantravelhacking.com/) also said as much in his book. Steve offered a number a great tips to save more Aeroplan Miles and use them wisely, but I think in this example I used, for my overseas flight, I would need to be extremely flexible with my travel plans to get any sort of good deal.
I’ve heard good things about Alaska Air program, probably much better than Aeroplan, no?
I have an Alaska plan and what I like is that it is a two year time limit before you lose anything for non use of the plan, unlike Aeroplan which has a one year limit. (just got the email today that my daughter needs to use her Aeroplan soon).
I have just accrued points from taking flights, but will soon have enough for an Alaska ticket. They also fly out of Kelowna, so I have flown them a number of times to Mexico and also with their partner to China.
My hubby tried to use Aeroplan points to fly to the UK last May. It would have cost the points and more money, than it cost just using money. So about the same experience as you had, Mark. I think I am going to cash in all the points for gift cards.
Thanks for sharing Barbara.
I’m learning that use of Aeroplan is good for short-haul flights or flights around North America in general. We’ll use them for that. As far as really treating ourselves to an overseas flight or long-haul international flight I’ve learned the program isn’t really designed for that.
My son is away at University and I thought maybe he could book his flight back to U after Christmas using his Aeroplan points (he already has one way to home booked).
To fly to Syracuse, NY, from BC one-way is 12,500 points, which I thought is pretty good. But taxes added on are $125, not so good. The big kicker is that the only flights offered take 24 hours of travel time!!! Totally unreasonable.
This is what drives me nuts with the program. the flight timetable for short-haul, let alone long-haul flights can be insane 🙁 Thanks for sharing Barbara.