RangerNS

Everyone is predicting doom and gloom. Every announcement is that everything will be worse. AC & CCConglomorate are not spending $450mil to destroy the program. They can do that for free by not doing anything.

Imagine the possibilities!

8% becomes dynamic. Consider YYZ-MCO goes to R999. YHZ-YYZ becomes R1, 100% of the time. YHZ-YYZ-MCO is R3, 99% of the time. YHZ-YYZ-MCO on some given date is R7, so a family can fly, but even good flights. But any booking reduces availability for all the flights for that day.

Instant spend points for BoB items. Buy eUp credits with Aeropesos. Lounge access.

Able to use the web to make changes. For free. Or a nominal fee that doesn't have to pay for 30 minutes of a call center agents time.

WR Cage

From a pure math perspective,
(1) the original AC etal offer was $250 million cash plus assumption of $2 billion AE point liability. Total purchase price $2.25 Billion.
(2) the accepted deal is $450 million cash plus assumption of $1.9 Billion AE point liability. Total purchase price is settled at $2.35 Billion.

The deal only brings about an additional $100 million net value to Aimia.

The AC exec team being among the best negotiators and business operators, I'm confident AC got something for the additional cash outlay. It remains to be seen if the additional consideration comes from Aimia or from the other consortium partners.

spartac

Can someone clarify or correct my understanding of today's announcement:
1) AC (and Co) are only buying the Aeroplan's miles from Aimia, not the Aeroplan program itself
2) Aeroplan program (or whatever name AIMIA will chose) might still exist post acquisition, possibly with its newly announced partnerships with Porter and Transat?
3) AC could change the rules of redemption (read: devaluation) at any point after the acquisition, and not necessarily honour the agreement that things will remain the same until June 2020.

tcook052

What's come out today says:

The airline will partner with financial services companies Toronto-Dominion Bank, Canadian Imperial Bank of Commerce and Visa Canada to buy Aeroplan from its parent company Aimia Inc.

YUL

I suspect AC will want to treat its SE even better under the new plan. (After all, they are what, 80% of the "profits"?).

I don't anticipate a devaluation per se, but it will probably be much harder for non elites to find award seats (forget that 8% for non-elites).

So, for any non-elites, you better burn your points before this fall...

YEG USER

1. AC Consortium buying Aeroplan program. After close AIMIA will have nothing to do with Aeroplan.
2. Nobody knows for sure. AC has only indicated that Aeroplan members will be able to transfer miles into its new program. Aeroplan could be operated as a parallel program for all of the non-AC partnerships, only time will tell.
3. Contracts can typically be amended at any time with the consent of all parties. Once AC and AE are (essentially) owned by the same people, they can implement changes the moment the deal is closed. Things could change drastically once the deal is done, or they could stay the same for a long time. If AC can't get their new program up and running until 2022, they can keep things running with Aeroplan. Again, AC can pretty much do whatever it wants now, and we'll just have to wait and see (and speculate).

bobbob911

Just curious - assuming the worst case scenario that AC devalues aeroplan points prior to June 2020. If I already had a flight booked through Classic reward points is there any precedent or possibility for AC to cancel the bookings for those flights or requesting additional points to continue to keep them?

Stranger

Been wondering about the change from 2 billion AE points to 1.9. Change in what they are assuming? Change in accounting? Cosmetic? What else? I don't imagine in the interval so many miles got redeemed? AE assuming more liability?

I also find interesting the detail below in the press release: agreements from the bank on participation in future AC program. A givrn, or not quite?

Stranger

Of course not.

As to devaluing in the interval, I don't buy that either; it has already been devalued enough. In my book, the whole thing is about retaining value. Driven by the CCs afraid of losing their cash cow, hence intended in salvaging the program.

While for AC, benefit is also that they won't lose too many customers who no longer see value in accumulating miles during the transition period.

The real question to ask (which won't get an answer) being, what's the deal between AC and the banks. To a large extent that is what will define the future value of the new program.

mapleg

No. That will not happen.

spartac

Thanks for the clarification. I guess it's wait and see as no one knows for sure.
This being said everyone seems to suspect that things will NOT get better for non SE members, hence no reason (for non SE) to "Buy" Aeroplan miles until things clear up.

24left

The same reasons a lot of other people did, uncertainty....trust....


Despite what AX thinks and even with their Aeroplan card, I think the Canadian operation in particular has missed the mark on many recent deals and partnerships. Worse still is that unlike AX in the U.S. UK, and Australia, there are very few airline partners in Canada and AC/Aeroplan and BA were (last I looked) the only ones who had 1:1 transfers.

When I mentioned the poor quality of some things and AX in other countries, an agent once replied: we charge what the market will bear and if we don't have competition, we don't have to do anything.

Who doesn't love that way of thinking. Now, after losing the Costco deal a few years back, they really need to clean up their thinking.

Also, I am not sure they missed the boat on this AC/Aeroplan deal, I just don't think they had the same concerns/objectives/customer base etc as CIBC and TD. Who knows.

A major point, IMHO

​​​​​​​
As it should be, but...?

FlyerTalker70

I don't know whether to laugh or cry on this one. The positives here are pretty obvious, the Aeroplan points will now be worth something on AC and more importantly * (even if there is some devaluation). I'd find it hard living in the UK to redeem those points on Transat or the Skunk (Porter). This news will also mean kettles and FoTSGs will be less inclined to burn their points pre-2020 meaning we'll have more opportunities to burn them before then. Obviously if you're an AC loyalist (and I'm certainly not one of them), the fact that AC will have an infrastructure ready to use in 2020 when they launch Altitude, their new FFP rather than the gong show that likely would have happened is another plus. The downsides I see with the deal are points devaluation within Aeroplan and possibly worst still devaluation on other programs (i.e. STALK fare earning 75% PQM on UA's MilagePlus down the road). Of course this is speculation which I hope isn't true but if so will mean less BIS on AC metal. Another big loser here is AE as they may lose Aerotude as a transfer partner down the road since now competing banks own it (i.e. TD/CIBC). As an AE Gold cardholder, it was nice to be able to earn 2x Aeroplan points on Gas,Grocery,Drugstore and Travel purchases (TD's cards only earn up to 1.5 points per $). Also, now that TD/CIBC have cornered the market for Aerotude cards there might be less competitive sign up offers - we'll have to wait and see on those.

A big unknown that we had regardless of how the deal went still remains: what does the new program look like for redemptions:

1. Will we still have a fixed-points travel program?
2. Will there be scam charges in the new program?
3. Will we have the free stopovers feature which made Aeroplan one of the better programs for redemption?
4. Will availability on * partners be the same?

Some speculation here, but I suspect we're going to hear some big news from *A come 2020 which in part explains why AC decided to make the move when they did (i.e. a move away from fixed miles redemptions across the network and possibly a higher tier, *A Platinum that provides benefits to the SuperElites).

In any event, this whole experience proves one thing: you can negotiate and squeeze those extra bucks out of an airline and financial companies trying to extort you. Their threat of partnering with the skunk and Transat must have shaken AC enough (i.e. selling valuable FF details to those partners) to force AC back to the table. AC wined and hollered but at the end of the day they had no option but to accept what was fare. I suspect if a deal with WS materialized, we would have seen the value of the acquisition surge to something far north of $500M which makes me wonder what Aeroplan tried to do to get WS to come to the table and why WS wouldn't bite, at the very least to see the acquisition deal rise in value just to spite AC. No doubt AC's COO leaving to join the Air France-KLM group also put additional FUD in the minds of AC executives on the successful rollout of a new FFP and IT system to support it which now they don't need to worry about since they've now got the Aeroplan IT to fall back on.

As for the banks, the benefits of having Aeroplan during the transition are obvious: they can now tell their customers that the points they've earned so diligently with manufactured spend on their cards will now be worth some post-2020 and they'll continue to earn points with * in the period between 2020 and when their contract expires with Aeroplan. At the end of the day that additional $100M wasn't much of an ask given they're negotiating with companies that have some of the biggest wallets in Canada. For heavens sake $100M is probably equivalent to the annual catering budget at TD! One thing that's confusing to me is how Visa is even at the table. Isn't Visa just a brand (unlike AE which is a bank)? Will this mean that only Visa cards will have the option to earn Aerotude points? One big unknown on this deal will be the Competition Bureau - I suspect there might be some objections to the largest banks in Canada cornering the market of a popular loyalty program.

Safe Travels,

James

24left

Just to be clear, I assume you meant the raccoon, or were you expressing your opinion of PD?

VISA is the company/card that CIBC and TD partnered with for the Aeroplan-branded cards. (Someone else can explain this better than I can).

FlyerTalker70

Given what happened to my sister this past weekend, they'll always be known as the skunk to me - cancelling a PAX flight at 11:30 PM when their reservation/support line is closed then offering to rebook them 2 days later is not an acceptable option. The cherry on the cake is that while it's simple to cancel online and receive credit that can be used for a future Porter flight, you have to call them up and be on hold for hours to get a proper refund. Getting sprayed by the skunk is not something I'd wish on even my worst enemy!


My understanding (which might be incorrect) on Visa is that they're a brand name. They don't actually issue any cards or do anything other than maintain the brand and possibly run the global card processing network bearing its name. Contrast that with AE which issues credit cards, runs a payment processing network and is a bank to boot. From what I can ascertain there were two card brands issuing Aeroplan cards, Visa and AE (the latter offering their Aeroplan Plus cards). Now that Visa/TD/CIBC own the Aeroplan program it's unlikely that AE will stay onboard with Aeroplan past 2020. I honestly wouldn't mind that if it meant I could have another * partner (preferably UA) at the 1:1 ratio. Only time will tell here!

Safe Travels,

James