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Is it time to bail on Aeroplan ?


Jaydee

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“ A few weeks ago, a friend of mine who’s a longtime member of the Aeroplan loyalty program received a rather misleading email. It breathlessly announced “the beginning of a new Aeroplan,” and it linked to a promotional website promising “the power to reach your travel plans faster” while providing “unmatched flexibility and convenience” and “an altogether transformed user experience.”

What the website didn’t mention, however, was that under the new plan, the value of your accumulated points will almost certainly be cut. It was like getting a letter from your bank touting a wonderful new banking program that fails to mention that it also depletes your account balance.

The email made it sound like Aeroplan is improving the plan, but the truth is the loyalty program is beyond desperate, having being cast aside by its creator and key partner, Air Canada. In June 2020, Canada’s largest airline will terminate a deal that allows Aeroplan to scoop up seats at a big discount, and it will launch its own competing program—one that will almost certainly offer a better deal on Air Canada flights.

 

As a result, Aeroplan owner Aimia is in trouble. When Air Canada re-fused to renew the 15-year deal, it essentially stripped the company of its most valuable asset. Aimia will be forced to pivot to a different business model, more like RBC’s Avion plan or CIBC’s Aventura. Yes, you will have more choice—you’ll likely be able to book flights on most major Canadian airlines, plus there will be other options for accumulating and spending points—but without that discount, I think you’ll be in for a surprise when you try to book seats on Air Canada.

If I were an Aeroplan member, I’d unload my points now, especially if I were intending to spend them on flights with Air Canada. Using up your points before the switch will ensure you get a fair value for them, and it will give you the freedom to jump ship if Air Canada’s new program offers a better deal. At some stage, Aeroplan may be forced to devalue what a point is worth, in order to reduce its future liabilities.

 

Aimia’s shareholders have already voted with their feet. The company’s stock, which hit a high of about $24 a share back in 2007, is now trading around $2, and its executive ranks are in turmoil. Longtime CEO Rupert Duchesne abruptly retired in May 2017, and his replacement, David Johnston, hoofed it out the door after only 11 months on the job. 

It’s hard to get your head around how Aimia ended up in such a mess. Why would Air Canada sell off its incredibly profitable loyalty program in the first place, only to abandon it and launch a competing program? If you suspect there might be an interesting story there, you’re right—and you can find it in Report on Businessmagazine’s June issue cover story, posted here.

It might not surprise you that the winner in this affair is Air Canada boss Calin Rovinescu. Not only did he help orchestrate the initial spin-off of the loyalty program, but as the airline’s CEO, he was also responsible for the decision to pull out of it. Read the feature. In the end, I assure you, he comes off as a genius.”

 

 

https://www.theglobeandmail.com/business/rob-magazine/article-is-it-time-to-bail-on-aeroplan/

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It's not mentioned anywhere in the article but I would assume there was a desire from the Air Canada end to re-negotiate the terms and Aimia decided to call their bluff - except AC was't bluffing.

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I'm not sure Air Canada had much if any interest in continuing with Aeroplan in anything resembling it's current form.

I think they would rather sell points than buy them all the while replacing a mileage based program with a revenue based one that will be of little or no value to most travelers except as a credit card reward. 

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With a $2.00 stock, might Air Canada make a play and buy it back ???

Would save a whole lot of work for a turn key so to speak operation, they know plenty about.

Thoughts ???

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