While most loyalty programs are kept in-house, Air Canada spun off the Aeroplan program in 2008. That meant a one-time windfall but also starved it of recurring revenue. Loyalty programs are big businesses for airlines. The process of buying and selling miles, not just to consumers but to the banks and other partners that work with the airline, can generate millions of dollars.
Aeroplan continues to purchase seats from Air Canada when customers make redemptions, though I would guess it’s not quite as lucrative as it used to be when Air Canada cut out the middle man. So it’s not surprising that, once its contract is up in June 2020, Air Canada plans to launch a new loyalty program. That brings the money back to them and leaves Aeroplan, well …stuck. (HT to Wandering Aramean)
According to Benjamin Smith, President of Passenger Airlines:
Similar to all of Air Canada’s North American peers, by managing our own loyalty program, we will be able to take better care of our customers by making decisions in real time that address specific needs.
Now part of a company called Aimia, the program’s stock fell over 60% after the news was announced. Who wants to be part of a loyalty program that loses its biggest partner? True, some have done well on their own, but they are often exceptions and have big financial backing. Think of Ultimate Rewards and Membership Rewards here in the U.S. Aeroplan’s own contracts with Canadian banks TD and CBIC run through 2024, creating an interesting dynamic. How supportive will those banks be if they think Aeroplan is on its last legs? Or will they rally to the cause and try to give the program new meaning and independence?
For the time being there is nothing to worry about when it comes to earning and redeeming Aeroplan miles. 2020 is still several years off, and there are no signs the award chart or transfer partners will change. I personally have several thousand miles stashed with Aeroplan and enjoy using them for some Star Alliance awards where United’s prices are unreasonably high. (Avianca LifeMiles is another option.) In addition, Air Canada says that it will continue to make its flights available to Aeroplan members even after the new program is live, and Altitude elite status will not be impacted by the change.