MONTREAL—Aeroplan members have more certainty about the future of their points now that the loyalty program is set to be acquired by Air Canada, but analysts say consumers shouldn’t expect to be able to redeem them at airlines its current owner recently brought on board.
Aimia Inc. reached a tentative $ 450-million deal Tuesday to sell the rewards program to a consortium led by the country’s largest carrier, which, if closed, could end more than a year of confusion over Air Canada’s commitment to the program it founded and the value of existing points if it pulled out.
Aimia chief executive Jeremy Rabe sought to reassure Aeroplan members in an email Wednesday that stated the agreement will not affect their ability to redeem points for travel deals and products, which range from vacuums to Fitbits.
“If successfully completed, it would safeguard Aeroplan Members’ miles, provide you with continued convenience and value, permit you to earn and redeem with confidence and allow for a smooth transition to Air Canada’s new loyalty program launching in 2020,” Rabe wrote.
The message echoed Air Canada chief executive Calin Rovinescu’s promise of a “smooth transition.”
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The Montreal-based airline aims to go ahead with plans to launch its own in-house loyalty program in July 2020, which will recognize Aeroplan points, the Air Canada website states. Its partners in the consortium include TD Bank, CIBC and Visa, suggesting that those financial institutions will also continue to have a good relationship with the Aeroplan program.
Under the direction of Rabe, who started in May, Aimia had been working toward an “any seat, anywhere” strategy in which consumers could use points on multiple airlines. It had even proposed merging points with other airlines.
In the lead-up to Tuesday’s deal in principle — expected to close this fall — Aimia inked partnership agreements with three smaller Air Canada rivals — Air Transat, Flair Airlines and Porter Airlines, which were slated to kick in when Aimia’s partnership with Air Canada expires in 2020.
But the deal with Air Canada’s consortium appears to signal a change in focus back to seats offered on Air Canada and its Star Alliance partner airlines.
Consumer affairs expert Tony Chapman speculated that Aimia’s deals with the three airlines likely include a “break-up” clause, which the Aeroplan sale could trigger at a cost to Air Canada and, crucially, close the hatch on any points redemption at Air Transat, Flair or Porter.
“They were just pawns in the negotiation game,” Chapman said. “This got Air Canada to really come to the table because the last thing they want is five million users trading in their points at a rival airline.”
Bringing the loyalty program back in-house 13 years after it was spun off from Air Canada means members can expect more travel deals and redemption options, Chapman said.
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“If you want to be the first card out of the wallet, you’re going to arm that card with even more benefits. So a real win for the consumer.
“They were feeling very insecure when that partnership broke up…suddenly those points lost their currency. There was a panic,” Chapman said. “Now they’re going to go from insecure to secure.”
Members who burned through their miles on big trips or pricey purchases after learning in May 2017 that Air Canada aimed to bail out on its Aeroplan partnership with Aimia may find less consolation, Chapman added.
Rival loyalty programs such as Royal Bank of Canada Rewards, Scotiabank Scene, PC Optimum and Canadian Tire Corp. Triangle all give the consortium good incentive to buff up Aeroplan offers, said AltaCorp Capital analyst Chris Murray.
Whether points will have the same value and precisely how they can be redeemed remains unclear, though Air Canada says “it’s business as usual” until July 2020.
Currently, Aeroplan members can clock miles by flying with Star Alliance, which comprises 27 member airlines including Lufthansa and United Airlines, and pile up points by shopping on Amazon.com.
TD and CIBC would not confirm that their own loyalty programs will extend past July 2020, when Air Canada’s pre-existing partnership with the Montreal-based Aimia runs out.
In 2014, TD became the primary issuer of the Aeroplan Visa card as part of a 10-year deal with Aimia.
American Express, which isn’t part of the new agreement, will remain an Aeroplan partner until its contract expires in June 2020. Its future with the loyalty plan is under discussion, the company says.
The agreement in principle, which is supported by Aimia’s board and its largest shareholder, Mittleman Brothers, is subject to shareholder approval and other closing conditions.
The consortium will assume approximately $ 1.9 billion in liability associated with Aeroplan miles customers have accumulated.