I’m in the Air Canada lounge at Pearson Int’l Airport. I’m eating free snacks, drinking free pints of Guinness, and reading their magazines – which I will take with me (for free).
I’m munching on free olives, pickles, and celery sticks. So are my cohorts. There are more than a hundred of us enjoying the “free” hospitality.
I’m looking around right now. Two things jump out immediately. First, the TIF has finished and this place is packed with freaks (no offence) but I can tell right away that I am surrounded by the artistic crowd. Many of today’s Aeroplan “gold” are sporting tattoos, vintage suits, and are passed out because they partied all night long. Hey, I don’t blame them! Second, I count the staff… I do this almost everywhere I go (because overhead walks on two feet). There are 8 staff members cleaning up after us slobs plus three at the front desk.
Is servicing frequent fliers a money-sucking business? What’s the value of customer loyalty?
Here is my very non-scientific calculation of my 2009 Benefits with Air Canada (for example);
Cost:
Currently, I have “saved” more than 100,000 miles. But for the 2008 YTD activity, I have 40,113 miles or 33 flight segments. This compares to 50,890 / 34 segments for 2007. After a quick glance, my guess is that my average flight is 1,300 miles. I believe there is roughly a 1/1 ratio between dollars spent and points accumulated. I know that I’ve received some free points along the way (e.g. 2,500 for “on board compensation” read: poor in-flight service) but I’ve also paid a premium (e.g. $100 of ESSO gasoline purchases for 33 miles). So my guess is that I’ve spent $40,000 for the 40,000 points that I’ve accumulated.
The Benefit:
What do I get for my “Elite” status? Benefit vs Value.
Elite Status Card = $0 based upon the name alone. Maybe I’m stingy. So what.
2 x “Special” System Wide Upgrades = $200 based upon the fact that, generally, I can only use one of these per year – they are subject to “blah, blah, blah…” My $200 is based upon Food, Beverages, and Convenience.
2 x “Regular” System Wide Upgrades = $0 based upon the fact that I have NEVER, EVER, been able to use one of these since becoming a member in 2000.
4 x “North American” Upgrades = $0 based upon the fact that I have NEVER, EVER, been able to use one of these since becoming a member in 2000.
Air Canada Privileges = $500 for a variety of miscellaneous benefits ranging from personalized luggage tags to lounge access, to additional luggage allowances to priority stand-by, check-in, and boarding. Many fees have also been waived for me because I’m “ELITE” status… True or not, I’m giving this some value.
Star Alliance Gold = $100 for cross-over benefits with aeroplan partners… I smuggled guests into the LOT Polish Airlines with my aeroplan card. Everyone drank for free.
Other = $100 there are a few other minor perks but nothing that CASH can’t buy and I allocate $100 for these conveniences.
Total = $900 or 2.25% of my spending
Bottom Line? Would I give up my aeroplan benefits – as described above – to save $900? It is tempting… MAYBE if these were personal after-tax dollars… but they are not… so I will continue to bill my company and insist upon Air Canada flights.
Nice work Aeroplan for building a profitable loyalty business!
Tags: Aeroplan, Air Canada, Customer Loyalty, Loyalty
