Why Aeroplan’s higher redemption rates may actually be a better deal
When the new Aeroplan launches on Nov. 8, a brand-new partner award chart is going to kick in too.
Fortunately, there will still be an actual award chart, instead of a shift to dynamic pricing. But if you inspect the chart closely, you'll find that many partner business and first-class awards will require more points than before.
On the surface, a price jump would spell bad news. However, that's not necessarily the case.
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The elimination of surcharges
Though award charts are sticking around, carrier-imposed surcharges are not. That's right — Aeroplan is removing those pesky fees that can sometimes strip much of the value from an award ticket.
Previously, when booking an award flight through Aeroplan, some partners didn't have surcharges — and that's how I'd typically recommend booking awards with the program.
For some partners, like Lufthansa, the fees on premium-cabin awards — YQ/YR in industry parlance — could easily exceed $1,000 USD. In addition to Lufthansa, Aeroplan levied surcharges on Air Canada, Air China, ANA, Austrian Airlines, LOT and Thai.
But going forward, you won't see surcharges with the new Aeroplan. And for those carriers that used to have surcharges, especially those on the higher end (Air Canada, Austrian and Lufthansa), this elimination definitely helps offset the higher redemption rates.
Related: 19 things you need to know about redeeming with the new Aeroplan
Why higher redemption rates aren't necessarily bad news
With the new Aeroplan, there are no more surcharges. And sometimes, the additional points requirement is well worth it in exchange for reduced fees.
Let's take a look at an example. Consider flying Lufthansa first class one-way from Los Angeles to Frankfurt, connecting to Paris in business class.
Today, that award costs 70,000 miles and $1,160.66 CAD ($866.40 USD), of which $1,097.63 CAD ($819.36 USD) represent the fuel surcharges.
When the new pricing launches, the award will jump to 100,000 points, but the taxes will be about $820 USD less. You'll also save on the U.S. Passenger Facility Charge as part of the new program. Note that you'll be charged the new $39 CAD ($29 USD) partner booking fee though.
All in, expect to pay 100,000 points and ~$70 USD for the itinerary. Though the mileage rate increased by 30,000, you're also saving about $800 USD compared to today's pricing. Saving $800 USD for an additional 30,000 points is a great deal in my book. That's like getting a redemption rate of 2.6 cents per mile, well above the current TPG Aeroplan valuation of 1.5 cents per mile.
The same exercise applies to many other premium cabin bookings on Austrian and Lufthansa. The fuel surcharge savings far outweigh the additional points required.
Related: Reviewing Lufthansa first class on the Airbus A380
For some partners, removing surcharges is a devaluation
Though Aeroplan today charges sky-high surcharges for a few select partners, the majority of partner bookings aren't subject to such fees.
In that case, when comparing the new program to the old, your redemptions will be devalued.
For example, consider this Swiss itinerary from Chicago to Zurich in business class. Today, you're charged 55,000 miles and $7.51 CAD ($5.60 USD).
When the new pricing takes effect, you'll need 65,000 points and $5.60 USD, as well as the $29 USD partner booking fee. In addition to the 10,000-point bump, the taxes and fees increase by the value of the booking fee.
As such, this is unequivocally a devaluation for partner itineraries that weren't previously subject to carrier surcharges.
On the whole, the new program is better for flights to Europe
Nonetheless, I'd say that this new pricing this evens out for North American flyers headed to Europe.
Of the Star Alliance carriers flying from the U.S. to Europe, Lufthansa is one of the best about releasing premium-cabin award space (at least this was the case pre-pandemic). Finding award space on Swiss or United was often much harder.
As such, many people avoided booking with Aeroplan when their only option was Lufthansa (of course, the carrier's wholly average business class product could be a factor too).
Now, you'll have less of a reason to avoid Lufthansa flights. Plus, with the ability to add a stopover for just 5,000 points, I'd definitely consider booking my next trip to Europe with Aeroplan.
Lufthansa flights from Europe typically don't carry surcharges as high as those in the other direction. In that case, it's a route-by-route calculation of whether the old or new Aeroplan is better.
Related: Why Aeroplan’s generous stopover option adds even more value to Amex cards
How other Star Alliance programs handle surcharges
Aeroplan's two main Star Alliance loyalty program competitors are Avianca Lifemiles and United MileagePlus.
Lifemiles doesn't add surcharges to partner tickets. There's just a flat $25 award booking fee for all itineraries. The program doesn't charge any close-in fees either. Note that Lifemiles has historically only had access to a subset of Star Alliance award availability.
MileagePlus also doesn't impose surcharges on partner tickets, nor does it have an award booking fee. However, United has adopted close-in pricing, which typically equates to a few thousand extra miles for flights booked within three weeks of departure.
Bottom line
It's easy to think of the new, higher Aeroplan redemption rates as a clear-cut devaluation. The truth, however, is that it's more nuanced.
Because Aeroplan is also eliminating carrier surcharges across the board, partner flights that previously had heavy fees will now be cheaper than before.
Of course, the opposite is true for Aeroplan bookings that didn't previously carry fuel surcharges. But at least some redemptions are actually a better deal than before.
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There’s a lot to love about the Amex Gold. It’s a fan favorite thanks to its fantastic bonus-earning rates at restaurants worldwide and at U.S. supermarkets. If you’re hitting the skies soon, you’ll also earn bonus Membership Rewards points on travel. Paired with up to $120 in Uber Cash annually (for U.S. Uber rides or Uber Eats orders, card must be added to Uber app and you can redeem with any Amex card), up to $120 in annual dining statement credits to be used with eligible partners, an up to $84 Dunkin’ credit each year at U.S. Dunkin Donuts and an up to $100 Resy credit annually, there’s no reason that foodies shouldn’t add the Amex Gold to their wallet. These benefits alone are worth more than $400, which offsets the $325 annual fee on the Amex Gold card. Enrollment is required for select benefits. (Partner offer)Pros
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- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
- Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
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Rewards Rate
| 4X | Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 4X | Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 3X | Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com. |
| 2X | Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com. |
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You may be eligible for as high as 100,000 Membership Rewards® Points after spending $6,000 in eligible purchases on your new Card in your first 6 months of Membership. Welcome offers vary and you may not be eligible for an offer.As High As 100,000 points. Find Out Your Offer.Annual Fee
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Why We Chose It
There’s a lot to love about the Amex Gold. It’s a fan favorite thanks to its fantastic bonus-earning rates at restaurants worldwide and at U.S. supermarkets. If you’re hitting the skies soon, you’ll also earn bonus Membership Rewards points on travel. Paired with up to $120 in Uber Cash annually (for U.S. Uber rides or Uber Eats orders, card must be added to Uber app and you can redeem with any Amex card), up to $120 in annual dining statement credits to be used with eligible partners, an up to $84 Dunkin’ credit each year at U.S. Dunkin Donuts and an up to $100 Resy credit annually, there’s no reason that foodies shouldn’t add the Amex Gold to their wallet. These benefits alone are worth more than $400, which offsets the $325 annual fee on the Amex Gold card. Enrollment is required for select benefits. (Partner offer)Pros
- 4 points per dollar spent on dining at restaurants worldwide and U.S. supermarkets (on the first $50,000 in purchases per calendar year; then 1 point per dollar spent thereafter and $25,000 in purchases per calendar year; then 1 point per dollar spent thereafter, respectively)
- 3 points per dollar spent on flights booked directly with the airline or with amextravel.com
- Packed with credits foodies will enjoy
- Solid welcome bonus
Cons
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $6,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
- Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- $120 Uber Cash on Gold: Add your Gold Card to your Uber account and get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an American Express Card for your transaction. That’s up to $120 Uber Cash annually. Plus, after using your Uber Cash, use your Card to earn 4X Membership Rewards® points for Uber Eats purchases made with restaurants or U.S. supermarkets. Point caps and terms apply.
- $84 Dunkin' Credit: With the $84 Dunkin' Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment is required to receive this benefit.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That's up to $50 in statement credits semi-annually. Enrollment required.
- $120 Dining Credit: Satisfy your cravings, sweet or savory, with the $120 Dining Credit. Earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, and Five Guys. Enrollment required.
- Explore over 1,000 upscale hotels worldwide with The Hotel Collection and receive a $100 credit towards eligible charges* with every booking of two nights or more through AmexTravel.com. *Eligible charges vary by property.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.