Aeroplan to require flights on Air Canada to Attain Elite Status

Aeroplan (the company that provides the frequent flyer program for Air Canada) announced yesterday that in order to earn status with them, you must fly a minimum of 10,000 Status flight miles or 5 status flight segments.  Some bloggers are questioning why Air Canada would institute such a requirement on their generous program, but I can see two reasons for this.  

First, there are many people who use Air Canada status to gain lounge access, since it only requires 35,000 miles to earn.  Thus someone who is a heavy flyer in the US will earn enough miles (or segments) to qualify at the highest level and then divert the earning for just enough flights to earn status on Air Canada to get free access to lounges while in the US.  This costs Aeroplan money, as they have to pay the other airlines for providing lounge access, even though they do not really get any money from these passengers.  If you look at their partner page, you will find that their partners are for the most part Canadian, and so these members who never fly Air Canada are also not taking advantage of the other partner earning, which is where they really make their money on the program.

The second possible reason is taxes.  Canada is fairly protectionist, in addition to having a high tax structure.  Thus, it is very easy for them to have to pay higher taxes on the income of miles from other countries, and since there is a large number of members that do not do any travel on Air Canada, they were earning even less on the flight miles than they are of regular members.

What is interesting in all of this is that Air Canada Top Tier members (that's how they brand their elite program) are largely in favor of the change, as it has no impact on those that fly Air Canada.

(Thanks to Lucky and Gary

Comments

#1
CP@YOW December 5, 2010 at 03:43 am

I'm not an international tax expert, but I am a Canadian public accountant who deals with corporate tax almost daily, and I can't see how tax could be a reason for this. Why look for a hidden agenda? To me, it just makes more sense as a good business decision on AC's part to limit Aeroplan elite members to be people who actually fly at least a little on AC.

By the way, Canada actually has low corporate taxes compared to other G7 countries. See: http://www.fin.gc.ca/n10/10-002-eng.asp

#2
Nick December 5, 2010 at 04:39 pm

Thanks CP@YOW. My only experience has been as a somewhat regular traveler this year in Canada, with regular visits to Toronto. Though I will say the real question is if this was a push by AC or by Aeroplan itself.