A problem with brand loyalty programs is that points can be devalued unilaterally.

Aeroplan recently announced that for its so-called Tango fares that they will be worth a quarter of the normal value.

• Effective for travel as of September 15, 2007, earn 25% Aeroplan Miles for distance flown on scheduled flights operated by Air Canada and Air Canada Jazz within Canada and between Canada and the Continental U.S.A. (including Hawaii) with Tango fares (R, G, P, E, N, T, K booking classes) and X booking class.

You won’t get there any faster though.

This isn’t as bad as other instances in other plans where accumulated points are devalued by things like changing reward thresholds.

In these programs as you accumulate points the company has to count it as a liability and put away money to account for it. That money will eventually cover the cost of your reward. They get, hopefully for them, increased business and the time value of their reward offset fund.

Devaluing loyalty points is attractive in the short term because it instantly reduces liability and frees up cash from the fund. It could also be attractive in the long term because the change might not affect the members’ perceptions of the loyalty program to the same degree.