Simon

youponder, you may want to read my message again, with the sarcasm I intended fully in place.

yyznomad

I have no idea of how Airmiles and WS operate. I guess what I'm trying to say is, whatever happens, there will be a frequent flyer program that caters to us FF's under AC's belt and that we won't suffer in the end. To me, it just doesn't make sense for an airline to alienate their best customers. It would be in their best interest to try to keep us reeled in.

robsawatsky

I think the airlines would rather not have loyalty programs at all, but since there here they are almost impossible to eliminate without suffering competitively unless they all drop them at the same time. The next best thing is to change them from liabilities into profit-centres. This is exactly what AC is doing with Aeroplan. By spinning off Aeroplan into a separate entity and by buying/selling - point/seats to each other, they minimize the whole future liability issue and open up the possibilities for selling points for profit to more 3rd parties.

Sure, this expansion will create more competition for available award seats, but I don't see AC setting up some parallel loyalty program other than benefits for E, SE, etc, that already exist and are only achieved with status miles that won't be available except by flying. I'm sure AC's marketing gurus have a story to tell that says it won't hurt AC's bottom-line, that's all that matters.

tcook052

Thought I'd tag this YOW article that came out yest. for the benefit of all here:

http://www.canada.com/ottawa/ottawac...5-ec0ff698a691

TORONTO - The first thing you notice about the new card for the Air Canada's Aeroplan reward program is that it is bright orange. The second thing you notice is that there is no longer an Air Canada logo emblazoned on the front. For that, you have to flip it over and look hard.

Toronto1970

From an accounting standpoint, what kind of assets is Aeroplan holding to back the liabilities (of outstanding Aeroplan miles). Is it some sort of promissory note from Air Canada, or did Air Canada put "real" assets into the spun-off entity?

pdjcrawford

Free?? He must be getting his rewards out of a different bucket than the rest of us...

Ken hAAmer

By "free" he means for money.

Perhaps he's confusing "free" with "fee".

robsawatsky

That is a good question. While it is rather easy to imagine that 3rd party suppliers of points are effectively providing cash for points, what about all the points earned in the past and the latest credit/charge-card deals? In particular, cash advanced to AC by CIBC and Amex that isn't going to Aeroplan to hold for future purchase of seats but to finance ongoing AC operations?

I would assume that to make this work, AC has to accept the liability for award seats based upon previous award of points by AC and by ongoing award of points by CIBC/Amex in exchange for the financing cash. It might be more of a contractual arrangement rather than a real debt instrument but one way or another the liability has to be accounted for on AC's books since it currently doesn't break out any subsidiaries separately.

tweezer1957

It has been obvious for months. FF's are a liability to AE. What I don't understand is how AC will reconcile this as they loose business.
I don't care about loosing my elite status as I can buy it from AE.

In my case I will save thousands by flying US Air.