Tail Wagging the Dog Saga (or are Frequent Flyer Programs the Dog Now?)

Where does an airline go for cash when it’s short? Its frequent flyer program, even when that program is a separately traded entity. Aeroplan is pre-paying Air Canada for award tickets:

Air Canada (ACa.TO: Quote, Profile, Research, Stock Buzz) said on Monday that Groupe Aeroplan Inc (AER.TO: Quote, Profile, Research, Stock Buzz), the operator the airline’s frequent flyer plan, has agreed to speed payment for reward tickets issued under the plan, raising C$70 million ($56.6 million) for the cash-strapped carrier.

Air Canada, the country’s biggest airline, said in a statement the payment is for reward tickets issued by Aeroplan through May 29, 2009. The airline also said Air Canada and Aeroplan have also agreed to unspecified “commercial terms that are beneficial to both parties.”

Air Canada said the deal was a part of a move to improve short and long-term liquidity by “both traditional and nontraditional means”.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. The Detroit suburbs are filled with lots of little cities, townships and villages. Each of them seems to have a full array of government overhead which must be paid for. The politicians know that even Michigan’s sheeplike taxpayers have a limit on their tolerance for tax increases, so they order their police departments to go out and raise revenue by writing tickets.

    People seem to be more accepting of cities’ raising money this way, since the people from whom money is extracted have broken the law and “made the roads less safe”.

    The various cities’ police departments seem reminiscent of third-world countries’ police departments in some ways. Be watchful if you drive here.

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