Air Canada re-intoducing its own FF program

[RooFlyer]

Air Canada is going to re-introduce its own FF program, in 2020 when their arrangements with the operator of Aeroplan expire:

Earlier today, we announced a big change that we want you to know about.

We announced our decision to replace Aeroplan with a new frequent flyer program that will launch in June 2020 following the end of our commercial agreement with Aimia. As you may know, Aimia has owned and operated Aeroplan for almost a decade.

We are announcing this decision three years ahead to provide as much notice as possible to our customers, employees, and partners.

Anyone who has used Aeroplan, as I did for a number of years when I was flying Air Canada a lot, knew that it was a shocker. Aeroplan is essentially an omnibus points program, of which Air Canada was just one part. It got so bad that a few years ago, Air Canada introduced their own mini FF program, Altitude to better manage status and upgrades etc. (And the introduction of that was horribly botched).

it looks as though Aeroplan miles earned to the change-over date will NOT be able to be transferred across to the new program, which I think will cause some grief.

 

[Deleted member]

It will be interesting to see if they will look to join one of the major alliances. That may have some positive impact?

 

[travelislife]

It will be interesting to see if they will look to join one of the major alliances. That may have some positive impact?

What do you mean? They are already a part of star alliance aren't they!?

 

[TomVexille]

What do you mean? They are already a part of star alliance aren't they!?

And a founding member at that

 

[Oxy]

It will be interesting to see if they will look to join one of the major alliances. That may have some positive impact?

Do you mean if some how Aeroplan could link with Star Alliance?

 

[samh004]

I wouldn't be surprised if Aeroplan operators launch some sort of legal action to keep their stranglehold on the airline.

Nice to see the airline knows the issues and is putting in place a program at the appropriate time to break away and start afresh.

 

[RooFlyer]

What would be the basis of such action? The contract between the two ends in 2020, at which point there is no relationship, as far as I can tell.

To Aeroplan, Air Canada is just one of many points partners - which has been the problem for actual frequent flyers.

 

[RooFlyer]

Some good commentary from One Mile at a Time.

 

[kamchatsky]

Disaster for any Aeroplan holders. Essentially they need to burn their points ASAP. After June 2020, you cannot use Aeroplan points to redeem on Star Alliance awards.

 

[trippin_the_rift]

I wouldn't be surprised if Aeroplan operators launch some sort of legal action to keep their stranglehold on the airline.

Nice to see the airline knows the issues and is putting in place a program at the appropriate time to break away and start afresh.

The loyalty industry is relatively small. Aimia (owner of aeroplan) have loyalty platforms which they sell to other airlines, telcos, retailers etc. Any type of legal challenge and Aimia would destroy their own business as other clients will be looking to see how they handle this challenge.

Good on Air Canada. Taking control back in house is a smart idea. This my friends is why airlines will never sell off their loyalty program.

 

[dfcatch]

I tend to agree with Trippin....

https://www.linkedin.com/pulse/frequent-flyer-spin-offs-dead-david-feldman-gaicd

 

[drron]

Was interesting to see what happened to Aeroplan shares the day after this announcement-

 

[moa999]

Sort of limits the exit opportunities for the PE firm that bought the majority of Velocity I suspect. Probably makes VA the only buyer and they don't have the cash

 

[TomVexille]

Sort of limits the exit opportunities for the PE firm that bought the majority of Velocity I suspect. Probably makes VA the only buyer and they don't have the cash

It was only a 35% stake IIRC

 

[dfcatch]

It was only a 35% stake IIRC

The point is still valid.

Yes - the impact from the AC decision will be global.

 

[TomVexille]

The point is still valid.

Yes - the impact from the AC decision will be global.

Didn't say it wasn't, but 35% is different to a majority.

 

[drron]

But Aeroplan was a stand alone company with a contract to run the FF program until 2020.Those invested in the Velocity program,as I believe,own 35% of Velocity.They would have to be bought out to get rid of them.If Virgin tried to set up a completely new program there would definitely be legal action.

 

[moa999]

Yes. I stand corrected - minority 35% interest with Affinity Private Equity.

My point was that originally I suspect the 'exit' (and noting these firms tend to invest for 3-10yrs) would be a float of the program, or a sale (with Aeroplan probably a potential buyer)

A float is now more difficult thanks to what has happened to Aeroplan, Aeroplan is now less likely to be a buyer, VA doesn't exactly have the money to buy the stake back. What's left??

Be interesting to see how it all turns out.

Have we seen much benefit from the 'reach and relationships'
http://www.smh.com.au/business/avia...-program-many-times-over-20140831-10an73.html

 

[dfcatch]

Yes. I stand corrected - minority 35% interest with Affinity Private Equity.

My point was that originally I suspect the 'exit' (and noting these firms tend to invest for 3-10yrs) would be a float of the program, or a sale (with Aeroplan probably a potential buyer)

A float is now more difficult thanks to what has happened to Aeroplan, Aeroplan is now less likely to be a buyer, VA doesn't exactly have the money to buy the stake back. What's left??

Be interesting to see how it all turns out.

Have we seen much benefit from the 'reach and relationships'
http://www.smh.com.au/business/avia...-program-many-times-over-20140831-10an73.html

There is no doubt that Velocity's growth accelerated under the spinoff.

And it's been quite successful.

But there are still strategic misalignments that deliver suboptimal customer outcomes despite growth in program profits.

Think duplicate website, licensing issues for the VA brand on Global Wallet cards, and a lackluster interest in having the best possible Elite Program.

But VA wasn't in a position to invest in Velocity's growth without external finance, and traditional airline management were never going to pay it the attention it deserved without the spinoff.

However - for an airline that isn't in financial distress, and presumably can be smart enough to deny airline executives security clearance to the Loyalty Department Floor - spinoffs don't make the best sense.

I cover it in a lot of detail in the article linked above.

 

[RooFlyer]

Update from Air Canada overnight (my bolding):

Last year we announced plans to launch our own, new loyalty program in June 2020. This new program will replace our participation in the Aeroplan® Program, which is separately owned and operated by Aimia. Since then, we’ve spent the past year listening to more than 30,000 customers and employees across Canada and the United States. We heard that you want a better, more flexible loyalty program, and we will deliver that in 2020.

I’m reaching out to let you know about a proposal to acquire the Aeroplan Program from Aimia. This proposal is being jointly supported by Air Canada, TD Bank, CIBC and Visa Canada.

Straight to the point: we heard from many customers who were excited about our plans, and would prefer to transfer their Aeroplan Miles to the new Air Canada loyalty program. This is what this proposed deal allows us to do – if successful, all Aeroplan Miles would transfer into the new Air Canada loyalty program in 2020.

Aimia is an independent company and it’s ultimately their decision to accept or reject the proposal. However, no matter the outcome, we’re committed to listening to our customers and building the best travel rewards program for Canada.

Would be a good result for Air Canada/Altitude miles holders, but the mechanics of re-splitting the Air Canada program off from the Aeroplan general points program isn't detailed of course.