The frequent flyer program Aeroplan was spun off from Air Canada 13 years ago. It’s a separate, independent business that’s part of Aimia, a loyalty company with several other interests as well (like a 49% stake in Aeromexico’s Club Premier).
Air Canada and Aimia couldn’t come to an arrangement to extend the airline’s 15 year deal with Aeroplan post-spinoff. Air Canada lost direct control over member communications. They couldn’t come to terms on economics to offer benefits to their best customers like waiving change fees on award tickets. And they saw an opportunity to derive ongoing profit from their marketing program with co-brand credit card partners, rather than incurring costs with Aeroplan.
So Air Canada announced last year that they were going to start their own program and no longer work with Aeroplan in 2020. However rather than start from scratch with a new program Air Canada, along with Aeroplan’s banking partners CIBC, TD, and Visa, came to an agreement to buy Aeroplan from Aimia.
That gives Air Canada its members to market to right away, and it would eliminate expected new major competition between the two from the marketplace before it even begins.
- CAD$450 million cash and assumption of estimated CAD$1.9 billion in outstanding liability of points.
- TD pays Air Canada CAD$622 million plus prepayment of $308 million in miles purchases.
- CIBC pays CAD$200 million to Air Canada plus prepayment of $92 million in miles purchases.
- Visa pays Air Canada as well
- Air Canada is “still in talks with American Express” about continued participation in their new loyalty program.
Aeroplan’s President is out after just 3 months in the role. Roughly 60% of Aimia employees are expected to continue with Air Canada.
Copyright: ronniechua / 123RF Stock Photo
Air Canada still plans to launch a new program in 2020, they’ll just move Aeroplan members and miles into it. They’ve said they would share what their new program will look like once their acquisition of Aeroplan closed. So we should learn new program details very soon. We know that Aeroplan members will still have an Air Canada relationship in two years, and will still have access to Star Alliance with their points. This gives Canadian members more of the certainty they’re looking for.
However it seems likely that the Air Canada program will be less lucrative than it otherwise would have been since it won’t have Aeroplan to compete with and it won’t have to aggressively attract members to scale up quickly.