I can't recall a floating/IPO of the loyalty program unit being done by any North American carrier beside AC -- not to say that there has never been another spin-off in the North American market.

Of course not all spin-offs are a product of M&A activity, even as many are. And of course not all floating of a unit involves full divestiture of all equity rights in the floated unit.

Many a company has spun-off or floated a unit when management knew the assets' long-term growth potential was either not all as lucrative as selling it off sooner than later or was a lot more lucrative uncoupled.

A floating of such an airline loyalty program unit may be a lot more achievable when there is a frothy stock market and involves a carrier operating in a air service market that is widely dominated by a near-monopoly, duopoly or a very concentrated oligopoly.

This statement confuses me. The price of an airline seat varies greatly from customer to customer. I'm not sure what is meant here by the "cash ticket price."

The cash ticket price being the price you pay for a ticket in USD if buying it from an airline or travel agent using only cash or bank card to pay for the ticket purchase.

Perhaps some of the confusion is over the use of "price" in two different ways. A lot of people use "price" to mean "cost" for example, when the same or other persons differentiate price from cost.

+1. They lost me, unless circumstances totally force me to take them (and probably credit to some other program). There were huge dips due to 9/11, SARS and the great recession in the aughts (just to think of three).

Now Spirit is going to add 9 more routes to the 5 or 6 it already has out of ATL, despite DL and WN having bigger operations. So leisure travelers will have WN with the free bags, NK with the charge-for-everything but much lower base fares, and DL for....what? Arguably NK and WN both have more-rewarding FF prgrams for low-rev people now, especially if u can tap into the credit-card-linked ones on NK. With DL a $200 ticket now gets 1,000-1,400 miles, so you'd need 18-25 for a 25K award that probably won't have availability anyway.

The spinoff has been a mixed bag, but one area where it was successful, was in the provisioning of 'saver' awards. AE insisted on a certain # of seats being allocated to award tickets for each route per cabin per month, which AC is contractually required to provide.

No it doesn't. Different customers who buy at the same moment tend to get the same price (f they're shopping for the same fare type, such as deepest discount coach). The same customer shopping on a completely date tends to get very different price, even thought that's the same customer.

So (for a given fare type) the variation is not from customer to customer, it's from when one person buys to when a different person buys. (That is for a particular route. Obviously, on a plane, a person flying a connection versus a person flying just that route nonstop will also have a very different fare, but that's because they're flying completely different routes, even if they overlap with one leg on the same plane.)

And since it's based on time of purchase, not person doing the purchase, it is possible compare price in cash and award price at any given moment.

With a revenue-related redemption like Southwest's, that relationship tracks from to moment. With a region-based and tier-based redemption like miles-based airlines, even at a given moment the relationship is complex and hard to pin down (since at any given moment, it varies from route to route).

If DL management was considering a spinoff-and they seem furthest down the road of giving up on FF/loyalty programs through their actions-this contractual obligation, especially if it was combined with some degree of transparency about availability, would be a huge obstacle in discussions.

A huge obstacle? Not when you want to get relatively rich(er) and do so rather quickly, and the contract is a way to make that happen.

The spin-offs aren't done out of a sense of altruism. They are done to enrich the self-dealing management teams and rather short-term "investors". Entering into such a contract that helps with a sort of "get rich quick" scheme is not a huge obstacle if there is a will.

Where there is a will in this regard, there may be a way without such contract being a huge obstacle.

1) Isn't an important assumption of this discussion that the present cartel is the only new normal scenario? I can't believe that there isn't a new Herb Kelleher or Freddie Laker or the guy who left JetBlue or even a crazy Sir Richard out there who's willing to break from the pack, with the margin afforded by the price of fuel, even on a fool's errand. Of course some such crazy person would need to assume that the lower fuel prices are the new normal. Anyway, this is to say that it's happened before.

2) Would the likeliest market (and safe harbor) for the spinoff scenario be scavenger credit card companies themselves? Most of the worries cited in this discussion appear to accrue to their advantage. "Mileage Plus, brought to you by Chase!" Perhaps even appearing to be virtually seamless to the interested marketplace: "...I thought it was already the case."

Sorry, and let me know, if this is off-piste, or does it suggest that the above discussion is more about the furniture on the Titanic?

No. You don't understand the reason previous FFP spinoffs have been done or proposed. In the US, they've been proposed by shareholders, who expected to get more value for their stock by the stock splitting between the airline and the spun-off FFP. If you don't understand the complexities of shareholder value (and perceived/forecast shareholder value), you can't understand why they wanted the FFP spun off. (Btw, these same shareholders at other times demanded that American spin off American Eagle, their regional jet division, for the same kinds of reasons. These large shareholders don't care about what an FFP is, they just look at the profits of an individual division of an airline and want it to become a separate company, that's all.)

There've been lots of FFPs spun off worldwide (even if perhaps only one in North America), and none of them have been spun off only to be sold to a completely different type of company (such as a bank).

And, btw, there are no credit card companies! What you seem to be thinking of as credit card companies are simply small divisions of huge banking conglomerates (in the UA case, it's not "Chase", it's JP Morgan Chase). You know, those "too big to fail" banks after they merged commercial banking and investment banking together. (And credit cards are just a fraction of the commercial banking side.)

(Ok, so some credit cards are issued by smaller banks which are not part of huge banking conglomerates. But UA's credit cards are issued by a subdivision of JP Morgan Chase, and AA's credit cards are issued by a subdivision of Citigroup, and both are among the biggest of the "too big to fail" banking conglomerates.)

Not even American Express? Discover?

Credit card companies is a reference to credit-card-issuing companies.

Amex is a bank holding company, which is what it became to seek out federal government assistance from TARP. It issues credit cards and is thus referred to as a credit card company.

As Discover also got TARP assistance, it should be clear that it was in the banking area too, at that time and thereafter -- whether or not it still issues its own credit cards.

American Express had travelers checks long before it had its first credit or charge card.

American Express Bluebird is not a credit card, it's an online checking/debit/billpay account.

It has online banking too:

https://www.discover.com/online-banking/

And Discover constantly sends me invites to use their Savings Account. Not to you???

They also do home loans.

(The Discover card started at Sears, though now Discover Financial Services is an independent company.)

Just because they don't have storefront banks everywhere like Chase and Citi does not mean they're not banks. They may have a larger percentage of their business be credit cards than other banks, but they're still essentially banks.

Anyway, the main point here is that these are companies for which credit cards are just a part of their business. One you realize they're banks, how likely is it that a bank would want to buy an airline's FFP program???

What entity purchased Air Canada's program? Did the airline retain a sizeable interest in the spinoff?

Did you read the Wikipedia page on Aeroplan?

http://en.wikipedia.org/wiki/Aeroplan

The Corporate History section there seems to explain all that.