Last week we learned that Air Canada made an offer to acquire Aeroplan, which is their spun off loyalty program. For over a decade Aeroplan has been the frequent flyer program of Air Canada, though in 2020 their contract ends. The termination of the contract has led to a lot of uncertainty for the future of Aeroplan.
After the news broke I explained what Air Canada buying Aeroplan would mean for consumers, and also what Aeroplan’s independent future could look like, if Air Canada’s acquisition doesn’t happen.
Air Canada gave Aimia (the parent company of Aeroplan) a deadline of yesterday to accept their offer. Late last night it was reported that discussions between the two had broken off.
The original offer from Air Canada and their financial partners was for $250 million cash, plus about $2 billion in Aeroplan points liability.
Aimia published a press release last night saying that Air Canada raised their bid to $325 million, but Aimia wanted $450 million, “in order to reflect the value of the Aeroplan business to members and stakeholders.”
There was also an announcement yesterday that Aeroplan was in discussions with oneworld, which I can’t really figure out. Today it has been announced that Aeroplan and Porter Airlines will partner as of July 2020.
This means that Aeroplan members will be able to earn miles for Porter flights as of that time, and Porter will also become a redemption partner, with up to 60% of seat inventory available for purchase with Aeroplan miles at fixed-rate prices.
Porter has their own loyalty program, VIPorter, which will stick around beyond June 2020 to deliver benefits for frequent flyers, including priority boarding, complimentary seat selection, and more. However, as of July 2020 VIPorter points can be converted into Aeroplan miles, though no further details have been provided about the ratio for that.
Here’s what executives from both companies had to say;
“This is a unique opportunity for Porter to join a well-established travel loyalty program and, in the future, reach its vast member base to aggressively promote our airline,” said Michael Deluce, executive vice president and chief commercial officer of Porter Airlines. “Our current VIPorter members will benefit from Aeroplan’s enhanced range of loyalty services, with an ability to earn and redeem points with a growing network of airlines and other brands.”
“Today’s announcement with Porter is consistent with our strategy to further differentiate and strengthen our air offering come July 2020,” said Jeremy Rabe, Chief Executive Officer, Aimia. “We’ve committed to our five million members that they will be able to choose any seat on any airline, anywhere, any time with the new Aeroplan program. By adding Porter, Canada’s top-rated airline, as a preferred airline partner as of July 2020, we will deliver our members industry-leading value on many popular routes.”
On one hand it’s nice to see how hard Aeroplan is working to create an independent loyalty program beyond June 2020. That’s commendable.
They’re clearly trying to make the program as compelling as possible, and have been in discussions with all kinds of partners. A partnership with Porter is nice, though that’s hardly a replacement for Air Canada. Porter operates a small fleet of turboprops, while Air Canada is a global airline.
I remain skeptical about what an independent Aeroplan program would look like, and frankly am astounded that Air Canada raised their offer and that Aimia didn’t accept it.
I still can’t help but wonder if something will happen between Air Canada and Aimia…