skybluesea

username

With all these pending deals, at what point is there no going back (for AC to buy AE)?

YVRYEGYVR

I don't know much about stocks/investing as I'm in healthcare and trust that stuff to other professionals, but if AC does not purchase and thus control all the pending AE miles waiting to be redeemed before 2020, would its stock suffer?
i.e. how much do AE redemptions account for AC flights and if that increases (as it very likely will) does that hurt the bottom line? Redemptions would mostly be in premium cabins where they make the most revenue.

FlyerTalker70

Unless Aeroplan has formally signed deals with these airlines post 2020, there will be time to turn the car around. Honestly, I suspect Aeroplan's strategy is slowly turn up the heat on AC by announcing additional domestic competitors to get them worried. So far the carriers they've chosen are nothing burgers in the grand scheme of things. I'm honestly waiting for the other shoe to drop (i.e. signing WS) at which point AC will be in full on panic mode since it'll be one reward program for AC and another for literally every other domestic airline. I wonder which ones Canadians and FFs will choose and how those airlines will use the Aeroplan FF data collected thus far?

Remember though that UA built a fortress between the ORD -> YYZ routes . I suspect booking in J on UA metal with Aeroplan will result in using fewer points and no scam charges!

Safe Travels,

James

YEG USER

I suspect that AC is actually somewhat relieved that Aeroplan is forming these new partnerships. Here is my theory...

When AC first announced its plan to form its own FFP, I was of the belief that this was a ploy to eventually bring "Aeroplan" back into its own fold for relatively cheap. I hadn't considered the scenario of this proposed deal whereby AC would offer to buy Aeroplan and convert Aeroplan member's miles to the new FFP, but after further thought, I don't see why AC would want Aeroplan "as is" (I don't see why AC would want to have partnerships for things such as Home Hardware, etc.). I think the new AC program will likely only have Credit Card partners, and other travel (rental car, hotel, etc.) partners closer to AC's "core" business. Even the whole "customer database" thing doesn't make sense to me, as AFAIK AC has all of the information for flight bookings for AC/*A as they are the ones who pass the information on to Aeroplan for mileage crediting, etc. I will concede that there can be a concern with competitors gaining access to AC information, but for various reasons I don't think it is a huge concern for AC.

I think AC's main risk in the starting of its own FFP is alienating Altitude and other Aeroplan members (those who fly, but not enough to attain status) who have large balances and can no longer redeem on AC/*A, as well as people not wanting to fly AC in 2019/2020 for fear of orphaning their miles. I think this is the main reason why AC was willing to absorb "$2 billion" worth of liabilities in taking over Aeroplan (even though the cost to AC wouldn't be anywhere near $2B), and of course, getting Aeroplan for "cheap" is likely easier than starting over from scratch. I suspect the cash portion was coming from the CC companies as they have their own vested interests.

If Aeroplan can forge a decent set of partnerships for its time post-AC, I think AC can stand to benefit. Even though Aeroplan miles may be not as useful post 2020, they can't be considered "worthless" (especially if flights can be redeemed for close to the current reward chart, although I suspect stopovers and interline itineraries likely won't be possible). If Aeroplan can transform itself into a viable program, AC is likely to face less backlash in the lead-up to the split and post-split, which benefits AC.

At this point, I don't think AC purchasing Aeroplan is the most likely outcome. I think the Aeroplan program will look much more like Air Miles, and suspect that AC will have a relationship with Aeroplan similar to the current relationship with Airmiles. To avoid issues with people avoiding AC in 2019/2020 for fear of orphaning miles, etc. I think AC will likely enter into a new agreement with Aeroplan, whereby AC will become a "redemption only" partner for a few years and in exchange Aeroplan will get AC to agree to access a certain amount of inventory at current (or similar) mileage levels for AC/*A. This would also provide a continued revenue stream for AC.

There is another wrinkle though, and that is the fact that the current agreement lapses mid-year, and this can cause issues with Altitude, etc. If AC/Aeroplan do enter into a new agreement, I think it is possible that the parties will agree to either extend the current agreement to Dec 31, 2020 or terminate early as of Dec 31, 2019.

Of course, the AC group could always just up the offer and buy Aeroplan. In the long run, I think if AC doesn't buy Aeroplan and starts its own FFP, that AIMIA will regret not having taken the increased offer. Even if Aeroplan can be a viable program, I don't see Aeroplan being as valuable to AIMIA once there is competition from AC's FFP.

Admiral Ackbar

AMEX has been pretty quiet throughout all of this. Keeping everything in MR right now until the dust settles but will be interesting to see how they come out of this on the other side.

Interesting times indeed.

Stranger

However AE has databases that include all your credit card purchases.. Inother words, they know how better than you do yourself.

Whether AC values that, who knows.

I don't quite think so. AC might be concerned about the loss of high end customers; however for many of these other issues such as status, MM, etc. may be more important than rewards, and as long as they don't have huge balances, they may fell they'll be able to use the miles.

As to the middle of the pack, it's getting thinner by the day.

Further, if AC starts noticing that they are getting hurt, there are things they can do to reassure/buy people in on a quick notice.

So I suspect it is the credit cards that are suffering and actually were in te driver's seat.

Possible.

Latter being a big if still. Agreed that Aimia will eventually regret not having taken the offer.

RangerNS

I resemble that remark. Status and lifetime are my interests. While I have successfully done well enough with AE (and Marriott) points, I treat them like a pure bonus. I don't expect there to be seats (or rooms) when I travel for fun, on very tight schedules mostly outside my control.

And I have, relatively speaking, points to burn.

Stranger

I use the miles for my wife. These days, one year, rewards, following years, paid travel for her. I stand at around 170 k miles, she has around 60 k. Not a problem burning them. At least mine.

Real problem is for people who accumulated miles for a long time, which was never a good idea anyway. But then most of them may well be accumulating mostly on CCs.

AC could easily adopt some special approach for FFs. Such as, promise a bonus equivalent to Q miles in the last 12 months before the divorce.

username

If these potential partners know they could be the "rebound guy" or just to make AC jealous, why do they play along? They must hope something will happen, right?

Also, for those who think AC can't make a system to do this timely, there are companies out there who sell loyalty systems to airlines. So, that might not be as big a problem.

I think for the long run, it is better if there are 2 strong programmes in Canada.

RangerNS

Chaotic evil alone is a reason to play along. A few hours of MBA time to mess with AC pales in comparison to purchasing aircraft or setting up a new destination.
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I agree that the IT of a FF program is dropping in a license key. There are other concerns, though.

2 programs or 3? The AE named partners have not offered up guaranteed % seats. Some, sure. They all have unsellable stock. But if it is mostly market redemption as it has to be to get the ASAF promise, it's only slightly better than air miles. (And worse than cash)

imverge

No availability on UA metal.

lcohen999

you and me both

Shareholder

AC's prime concern must be how its elites will be retained and pacified knowing many stand to lose hundreds of thousands of RDMs that had been banked to use on STAR partners (and likely on premium awards). I agree with the above statement, and have posted such a supposition myself in this and other threads. I see that if the Aeroplan purchase does not go through by the end of this year, AC will announce some form of matching banking miles in Altitude 2.0. And perhaps kick start elites with RDMs roughly equivalent to the EQMs associated with their respective tiers: i.e. 25K Elites get 25K Altitude 2.0 miles, 35K Elites get 35K, 50Ks 50K, 75Ks 75K and SEs 100K RDMs. One hint that this is AC's thinking is found in a response to blogger John Ollila of Loyalty Lobby today. He asked why anyone flying AC should continue to put their flights into Aeroplan/Altitude. Notice the last part of the last sentence:

"There are a number of reasons for customers to consider. As we have said, customers can continue to earn and redeem Aeroplan miles on Air Canada until the expiry of our agreement in June 2020, so nothing changes for almost two years. Redemptions will be accepted on Air Canada up to June 29, 2020 and for redemptions on Star as much as a year later, to June 2021. As well, flying on Air Canada qualifies customers for Altitude Elite status benefits and qualification, and the more flight activity pre-2020, the more eligibility for bonuses and other enrollment offers post-2020 in the new program."

newfbc

Hmm.. maybe Aeroplan, acting as a points program/travel agent of course, can strike a partnership with United or another Star Alliance carrier to allow you to transfer your Aeroplan points into that program and make bookings on Star Alliance carriers (including Air Canada)?

That would be an interesting situation.

If you can transfer your Marriott, Amex, etc. points to United.. why not your Aeroplan points?

Ron.