vernonc

So was there other proposals from AC or other proposals from other banks/CC companies ? I am guessing other banks/CC.

yscleo

It was me. I made a proposal to buy aeropeso for 3 pesos, and told them I have several much smarter monkeys than their and can make ae run much better, without the nightly shutdowns. They were seriously considering.

Too bad one of ae's monkeys leaked the news to their monkey bodies in AC. AC got really nervous, because their own monkeys were still mostly asleep and they feared they cannot get their own system up in time. AC is also afraid of the ae database getting in my hands. So AC made a competing offer. I might up my offer to 4 pesos, and still win because I have smarter monkeys.

acysb87

Some ambiguity with AC. The crap shoot between Aeroplan and Air Canada for loyalty of members will be most interesting.
How is AC doing ,financially?

YXUFlyboy

Yeah it's revenue based for status (mostly but you still need qualifying segments or miles as opposed to a qualifying dollar spend alone). But for AP earn (not qualifying miles), it's based on fare class and how far you fly. Other airlines it's purely based on dollars spent for mileage (not qualifying miles) earn. AP doesn't do that yet but we might see it in 2020.

laidback71

https://www.theglobeandmail.com/busi...travel-demand/

jazzsax

"We're buying back the liability, so we can basically devalue it and make a killing. Your miles are safe, at whatever rate we feel is best for us. Kthx."

quantumofforce

​​​​​​...are you implying there are good Canadian banks?

Jumper Jack

There are.....

vernonc

Is the $2B liability real or on paper ? What I mean is AC expecting to transfer points at 1:1 or is there going to be some devaluation ? If its devalued then the liability will diminish quicker on redemption/conversion ?
Similarly while AE has stated that they will maintain the current points redemption chart (at least for what they confirmed), will there be a devaluation here too or their agreements with other carriers could cost less resulting in a faster clearing of some of this $2B at a much lower cost ?
I am not an accountant so please control your urge to shoot darts at me.

YZF_Elite

pitz

AC may very well be able to get away with carrying it at somewhere close to $0, as AP redemptions are almost never supposed to be redeemable for seats that would be saleable for revenue.

A 3rd party entity like Aimia, which obviously does not run an airline that is in the position to give value-less seats away, may have to carry such a liability at a much greater value.

One of the potential consequences here is that, under AC ownership, the "market fare" options (which were just cash redemptions for the cheapest Tango tickets available) and cash-like gift card redemptions, as horrible and useless as they often were, disappear. Replaced with, amongst other things, the ability to use points to do LMU's and preferred seats, lounge visits, priority boarding, etc. on a heavily targeted basis guided by data analysis.

I personally don't believe AC management for one moment in their claims that they will just transfer points to their 'new' Altitude program and shut AP down. They're attempting to acquire AP precisely so they don't have to bother doing that, although they'll probably end up doing a refresh of the brand nonetheless as it re-joins the AC family.

RangerNS

The stated liability is the list value. Which in any real sense means nothing.

Consider a restaurant. They sell a $25 gift card. There get $25 cash, but now have a $25 liability. They then later sell $25 of list price product, cost of goods sold, $7. Liability goes to $0. $18 profit.

Internally to AC those 8% of rewards seats cost nothing except half a can of coke each. $2b in liabilities can be paid out for nothing. But that captive market upselling on last weeks sandwiches and Johnny Walker and some checked baggage means cash in AC pockets.

And whatever good will is good for.

And the 13 DL380's and a baystack 350.

pitz

Sure. But if they have 20 years worth of data that indicates that an AP member has never bought a business class or a preferred seat, and they have an empty business, PY, or preferred cabin after all their usual and customary efforts to sell them, they're not, for example, foregoing any revenue by making an offer to upgrade to such with points. The customer would have almost *never* paid for that otherwise.

Even 10 years ago, running such queries on the sort of datasets AC/AP works with would have been impossible given the sort of constraints in computing. Today with the sort of computing power available, its completely plausible that 5 minutes prior to boarding, offers of such nature go out to customers' smartphones.

AP as a separate entity didn't allow that to happen as the negotiation involved and commercial arrangements would be too complicated to work out. A new program altogether would have lacked the rich retrospective data on which decision making could be based, and would've taken years to generate a good database. So AC basically had little other reasonable option here.

Even for email marketing, if you do, say, a YYZ-HKG search on AP and don't end up booking it, AC could hit you with follow-up emails during revenue seat sales for that route. Or purchase online targeted ads on various platforms. Much like Amazon does. Again, something that just wasn't possible with AP being a separate entity as AP definitely wouldn't want to promote the purchase of revenue tickets through AC directly.

firetruk11

Yes, credit unions!

Lol

Well it's all relative...

I deal with TD in one of our businesses and it is extremely difficult and RBC with another, which is "less" difficult. Dealt with CIBC in the past and left very underwhelmed.

I have Visa with both and they really don't have the same value to me as the corporate Amex. Especially with Aeroplan.

So this move will somewhat devalue Amex for me and I will have to look at the TD product further at that time.

(Phew... brought it back on topic)

Fiordland

I deal with RBC in one business and BMO in the other. What makes one of these banks good vrs bad is the account management and how well they hid all the nonsense on the back-end.

RBC with Avion is a great program. Quite happy with it. May be switching to a new program BMO just introduced. Neither one are as good as AMEX Platinum. I would never go with a program that is tied directly to Aeroplan. You gain more flexibility being with a credit card program that is independent of the airline program.

IF Aeroplan is not taken over by Air Canada and they evolve to something like the Avion program, what bank is going to create the liability on its book by partnering with them. Why would TD or CIBC not just create their own program and leave Aeroplan to die a slow painfully death.