1Newflyer

Unless its in jest, why would you question "no need to devalue anything". It was heavily socialized in the past, for all I know it still is, but the appetite for squeezing the public has not been satisfied. Its a company that loves this economic system : socialism-capitalism.

canadiancow

Devaluing happens because someone (Aimia/Aeroplan or AC) wants more money from the redemption transaction.

Buy cutting out the middle man (Aimia), the only one who could get more money is AC. But by cutting out Aimia, they will already get more money from each transaction.

Could they devalue it? Sure. Would it make them more money? Definitely. But from the bean counters' perspectives, they just got more money per transaction.

24left

Received 5:20am ET

YUL-Insider

1. July 2020 end-date no longer exists if the deal goes through. Pressure is off AC to build a new program. My prediction: "we will take a bit more time to get things right."
2. Contracts between Aimia and the banks expire in 2024. The contracts are now going to be renegotiated with AC. In a couple months? Good luck AC!
3. The banks put up the $450 million. AC didn't.
4. The banks are involved to keep value in their credit cards and therefore, in the Aeroplan program. AC won't be able to devalue Aeroplan without a buy-in from the banks. If they are losing credit card holders now, imagine what would happen if they allow the program to be worse.
5. Aeroplan and Air Canada reservation systems are one in the same. All Aeroplan tickets are on Air Canada ticket stock. All Aeroplan agents reserve into AC's reservation system. This will continue.
6. AMEX is gone at the end of the current contract in 2020. Why would TD, CIBC & Visa allow the partnership with Amex to continue beyond that?
7. Aeroplan has been making profits for Aimia every year since Aeroplan broke from AC. Why would AC want to change something that earns so much cash for Aimia?
8. AC bought Aeroplan because they were never going to make the 2020 deadline. If they had something, they would have said more than "we are building a new loyalty program". The banks knew this and purchasing Aeroplan was the only solution.
9. AC will not change the Aeroplan name. Why change a brand name that is so well known?
10. Aeroplan agents cannot touch an AC booking and AC agents cannot touch an Aeroplan booking. The unions are super strong.
11. Porter, Air Transat, Flair, One World are now out of the picture - unless the banks want them in and AC agrees. This is not going to happen.
12. YQ charges are charged because AC requires Aeroplan to do so. This will not be eliminated. AC does not charge YQ to Elites (AC NA flights) and Super Elites (on all AC flights) because AC decided to give this as a benefit to their top tiers.
13. Availability for Classic will diminish in the long run. Expect more Market Fare.
14. Aeroplan should have held off until AC was forced to announce something. It looks like Aeroplan had a plan all along. Announcements they have made were not decided upon overnight. Partnerships with the airlines were not negotiated in a couple days. I wonder what else was in the works? AC can now take the credit for all the work Aeroplan has been doing.
15. "Finalized in the Fall." Very curious why a set date was not communicated. Nothing is signed yet. This story is not over.

jc94

FlyerTalker70

Agreed and the fact that the banks put up the money means that they are the ones that'll be left holding the bag when AC eventually launches their new FF program and partners with other banks. Without looking at the contracts signed between all parties (but who does that in this post fact world?) I would be surprised if AC was on the hook with the banks after signing this deal. The banks bought Aeroplan so that they could ensure they had control over the devaluation process not the Skunk!

We'll see on this one. We've got some strange bed-fellows in this deal (i.e. rival banks) and supposing AC hasn't signed anything with them, they could always walk away from Aeroplan post-2024 which I predict will be when the new system will be ready. You see, there are some Canadian IT projects that deploy faster than the Phoenix payroll system!

That's a strong possibility. In fact the more I think of it the more I can see why AC decided to relaunch in 2020. By then AE's contract will be done, allowing them to extend their relationship with existing banks. What'll be interesting to see is whether Canadian AE cards will have a new *A partner (let's hope it's UA!)

Because they're an airline...they're in the business of converting profits into liabilities

But they may make the 2024 deadline for TD and other partners. At which point we'll see how the cards fall. I suspect AC wants to regain full control over their loyalty program with them striking exclusive time-limited deals with a select number of credit card partners to extract the most amount of profit and control out of the partnership. There's a reason why AA, UA, DL and the other major legacies haven't sold off their FFP. AC has clearly demonstrated the consequences of making such a short-sighted decision.
Because they don't own the brand anymore, it's owned by a consortium of banks! Better to have control over a brand you own! Also, the Aeroplan brand likely has lost some of its lustre over the years be it the scam charges or more recently the uncertainty in the program. I suspect if you were to poll Canadians in 2019 or 2020 who owns the Aeroplan program post 2020 they'll say Aimia, not AC. Changing that perception with Canadians will be a huge challenge given AC walking away from Aeroplan was a huge story last year and one that has been perpetuating over the last several months with Aeroplan getting CBCd on several occasions.

That's dumb but understandable. It's dumb because the customer experience goes down the s**ter when you have to deal with multiple agents to complete a booking in full whereas with UA with one call I can make my booking, select my seats, request an upgrade, etc.

Agreed - I place that around the same odds as a Canadian Airlines Executive Platinum card getting accepted at the Admirals lounge @ YYZ!

Well when you explain it that way then these scam charges make a lot of sense! They want to protect the AC seats for their super-elites so they charge silly fees to prevent the non-loyal flyers from sucking up their inventory while still allowing those in the know to book elsewhere (i.e. on UA metal). And quite frankly as a UA Elite, I don't mind at all using my Aeropesos for a UA ticket where I can use my UA specific benefits like CPUs, E+ seating, 3 checked bags, etc.
Probably! This is already one of the topics being discussed right now within *A (i.e. moving from fixed points to a market based redemption system across the network). If there's one gripe I have about the existing Market Fare system it's that it is not open to non-AC flights (i.e. UA), which to me as a UA loyalist is a huge let down. It's hard to say whether fixed or market based is a better approach for us. OTOH it means less predictable pricing on award tickets possibly leading to a devaluation. OTOH having increased availability and the possibility of some fares requiring fewer points than under a fixed regime is refreshing. On net, I'd say a market based approach could be a slight positive, we'll likely have to do more homework to find those great deals but if you look far enough ahead, and/or are in the right place at the right time a great deal can happen.

I agree! Aimia probably could've squeezed the banks for a few more bucks here or there. One of the key pieces of leverage they didn't have was WS. If they managed to get WS to the table we would've seen AC stepping in a lot more and the deal's value increasingly significantly in value. Why WS decided to stay away from all of this is beyond me. I can understand that they want to protect the reputation of their existing loyalty program, which they claim is ranked one of the best reward programs. OTOH, the idea of coming to the table on Aeroplan to force their rival's hand in raising their bid offer substantially should've been tempting to the execs over at WS. This'll be more of a coup than that one time a WS pilot bought pizza for stranded AC pax!

That's completely normal. These types of deals take time to close and they can't tell you exactly when that happens likely because there is some regulatory uncertainty (i.e. Competition Bureau) in addition to the negotiation uncertainty.

24left

I think you already made your point about your unhappiness with Porter.


It is so easy to have all this hindsight.

I didn't know Bob Milton and Co. I don't recall most of us being asked whether selling off Aeroplan at that time to raise money was a good idea. It was done and I'm sure some will say there were benefits to having done so and others will say it made the mess we live with today.

Looking back from today's armchair, it's easy to call the decision short-sighted.

IMHO.

FlyerTalker70

I guess that's what I'm referring to when I say OTP. I could care less if my flight leaves the gate 10 minutes late. What I do care about is not being left stranded in some far flung place because WS only goes there once a week! I can't count the number of times my relatives or myself have been left stranded because the Skunk or WS decided to cancel a flight on us at the last minute. Sure, I can understand if you live out West where WS has a big presence then it'll make a lot of sense but for INTL itineraries or flights along the east coast of North America, AC is your best choice, at least of the domestic carriers. Sadly, the domestics seem to have relatively poor coverage in certain parts of the world (i.e. Caribbean and Hawaii) thus requiring me to book my flights through UA or worse case scenario AA. In fact one of the reasons why I (begrudgingly) decided to fly AC over even UA to the UK, was due to the sheer number of flights they had between LHR and YYZ. If things go sideways I'll never have to wait more than a couple hours to get on the next AC flight, especially given my *Gold status.

At the end of the day, an airline (and alliance for that matter) is only as good as the frequency of their network.

Safe Travels,

James

FlyerTalker70

I'll cool it with that point. But I must say that it always surprises me when I see kettles getting upset when their flight once daily flight on PD gets cancelled and they demand compensation, and this and that. At some point travellers have to smarten up and realize that there is a cost associated with flying with any airline (certainly PD not the only one) which offers sporadic service. There's a reason why that ticket is cheap and comes with free snacks!


Perhaps I'm misunderstanding something about the whole AC bankruptcy in the early 2000s (i.e. why they want bankrupt, the extent of their bankruptcy, etc.). One thing I cannot understand, which other more savvy ready can advise me of, is when other airlines like as UA, AA declared bankruptcy in the past, how were they able to keep their FFP? Perhaps AC didn't realize the value of the asset they held at the time, but I would imagine that AA and others would have been in a similar position back when they were running in trouble in the 80s/90s.

Safe Travels,

James

YYT82

skybluesea

@YYT82

Exactly, the idea that AC should have held on to AP regardless of the need for immediate cash reminds me of watching the Amazing Race and when contestants finish last on a leg so go home but with an Express Pass in their pocket because they failed to understand how much jeopardy they were in. At the time as AP pretty much solely relied on AC for all their revenue, had AC gone further into the abyss, well, AP may have been worth nothing at all on the other side of the re-structuring.

I have this type of argument all the time with folks who should know better when they proclaim what yesterday's actions should be by today's results - unless your sitting at the Boardroom table, with senior mgmt advising how to avoid collapse, and the limited choices available, only then do you really see the heat under the seats of Board members - and for some of us, going through the Canadian Airlines collapse so long ago, no good choices were available not just for CDN, but for all their supply chain partners too, especially at YVR where they were +65% of the business, and we were nearing completion of the new terminal and runway when CDN started to go pear shaped.

RangerNS

Broad strokes that they had different particulars of their companies, they had different managers coming up with different solutions, and Canadian and US tax & accounting law are very different in the details.

yscleo

All these points about AC shouldn't have sold of ae in hindsights, reminds me of how Cnd $ was back then. Should've used lots of US$ to buy Cnd$, and see Cnd$ rise above US$. Oh wait, but Cnd$ is back way down again.

TD/CIBC put up the money to ensure their ae CC business. ae will have a better life to 2020 and who knows how much further beyond. Looks like AC is no longer under pressure to have their new Altitude program ready by 2020 and 2024 is a new date. The banks would've want to have clauses to secure their CC business with AC's new Altitude program if AC will still launch it. The question is did AC agree to any such conditions. Or come 2024, TD/CIBC/Visa will need to re-negotiate again to make sure they are partners with AC Altitude.

Stranger

AC has been paying for Aimia to make profits through all these years...

You just mentioned that really the banks did, which seems right. Ac went along and assumed the miles liability for the sake of continuity and in order not to lose bookings. My bet is, the new program will continue using the name "Altitude." Which the entire "loyalty" business already uses. At this point Aeroplan is more or less a dirty word. Except for people getting miles through CCs.

See above.

???

AE had nothing better to announce than the pathetic stuff about Porter and Air Transat. Current deal was the best they could hope for all along. They were already an empty shell. The one thing they had in their favor was the ongoing contract with the banks. Which in hindsight were foolish to get into agreements running beyond the deal between AE and AC.

pitz

Not true. Aimia as an entity didn't even break-even on the capital invested up-front by its owners. Which paid >$2B, and are only getting $450M in return and some cash distributions.

This is a misconception. Aeroplan effectively operated as an independent travel agency. AC doesn't touch the bookings of independent travel agencies. Independent travel agencies don't touch AC bookings. Aeroplan as an independent entity was just subject to the same protocol. Nothing to do with unions.

Disagree here. Market fares actually displace cash revenue fares. Classic fares are for "unsellable" tickets.

The idea that Aimia was "negotiating" with an airline alliance was laughable.

That's pretty standard, as they might require shareholder approval for a transaction of such significance, and there would be, amongst other things, adjustments to the deal based on a number of factors. Even finer details such as transitioning of employees or severance if necessary would need to be worked out.