Air Canada’s Acquisition Of Aeroplan Is Complete

In May 2017 it was initially revealed that Air Canada would be dumping Aeroplan as their loyalty program. Over a decade ago Air Canada spun off their loyalty program to raise cash, and Aeroplan has run their program ever since.

The news was that in 2020 their contract ended and they didn’t intend to renew it. What has happened since then has been quite interesting, to put it mildly.

Last summer there were talks between Air Canada and Aeroplan, as the airline was interested in acquiring Aeroplan. That’s right, they wanted to buy the loyalty program that they decided to end their relationship with (which also caused the value of Aeroplan to plummet).

There ended up being some negotiating regarding the price, but in the end Air Canada and Aimia (Aeroplan’s parent company) reached an agreement in August 2018.

Air Canada’s acquisition of Aeroplan is now complete

Just under five months later, that deal has now officially closed, and Air Canada has completed the acquisition of Aeroplan.

Here’s what Air Canada’s President and CEO had to say about this:

“Air Canada is creating an industry-leading loyalty program that aims to provide unmatched flexibility, choice and convenience for customers when it debuts in 2020. With today’s purchase of Aeroplan, we are taking a major step forward on this transformational initiative by acquiring one of Canada’s most popular loyalty programs. For many Canadians, given Aeroplan’s privileged access to Air Canada, it is the next best currency to the Canadian dollar.

We are also now able to provide confirmation to Aeroplan members that their existing Aeroplan Miles will be honoured on a one-to-one basis in our new program. Finally, with today’s transaction, customers will have certainty that they can continue to earn and redeem Aeroplan Miles confident that their existing Air Canada Altitude status and privileges are secure.”

Here are the terms of the agreement and purchase price:

The aggregate purchase price for the acquisition consists of $450 million in cash plus $47 million in cash for pre-closing adjustments. The pre-closing adjustments relate to lower net liabilities assumed than projected. The purchase price is subject to post-closing adjustments and the acquisition also includes the assumption of the Aeroplan Miles liability. Air Canada received payments from TD and CIBC in the aggregate amount of $822 million. Visa also made a payment to Air Canada and assuming completion of the American Express agreement, AMEX will do likewise. In addition, TD and CIBC made payments to Aimia Canada Inc., now Air Canada’s subsidiary, in the aggregate amount of $400 million as prepayments to be applied towards future monthly payments in respect of Aeroplan Miles.

As expected, Air Canada has also confirmed that Aeroplan miles will transfer to Air Canada’s new loyalty program at a 1:1 ratio in 2020.

Here’s what Air Canada claims that members can look forward to with the new program:

  • The best reward value for Air Canada flights, plus, unparalleled access to travel on over 40 partner airlines, including the Star Alliance global network;
  • Canada’s best travel rewards credit cards, offered by TD, CIBC and American Express;
  • More ways to earn and redeem points for travel, upgrades, experiences, on-board product and everyday indulgences;
  • An improved experience when traveling with friends and family;
  • Everything Air Canada has to offer in one place, with a new digital experience.

However, as of now Air Canada still has revealed very little about the new program, even though the launch is just about a year away.

Is Air Canada’s acquisition of Aeroplan good for members?

I’ve explained in the past what Air Canada buying Aeroplan means for consumers. Whether this is good or bad news depends on what you think Aeroplan’s independent future would have looked like:

  • If you think Aeroplan could have succeeded independently and offered a compelling program, having a competitor for Air Canada would have been a good thing
  • If you think Aeroplan couldn’t have succeeded independently and offered a compelling program, having Air Canada acquire them would probably be the best, since your miles would be worth more

Personally I’ve been skeptical about what Aeroplan’s independent future would look like, since it’s tough for a loyalty program without an airline to deliver much value. Sure, they could have added some partnerships (as they’ve been trying to do all along), but chances are that there wouldn’t have been any outsized values with those redemptions.

I’ve been skeptical of Aeroplan’s independent future, and therefore I view this as a net positive, since it means members’ miles are safe. At the same time, Canada already doesn’t have many competitive loyalty programs, and now Air Canada will have even more of a monopoly in the travel space.

What do you make of Air Canada’s acquisition of Aeroplan?

Comments

  1. Sorry, in no way this will be a positive – except that balances wont be lost.

    When this program is unveiled, most valuable Aeroplan redemptions will be gone, YQ will be added to all partners, and there will be a transition to dynamic pricing (current “market” fares) for AC flights.

    Right now, there is a certain amount of seats that is reserved for low-level (“classic”) redemptions. Expect Delta-esque pricing.

  2. I agree with @Bob, balances won’t be lost and that’s the only good thing I can see. I recently burned most of my Aeroplan miles for reward flights this coming year because I figure the “new” program won’t provide any added benefit in terms of flight redemptions, and there’s a good chance the end result will be worse. The cynic in me predicts a rebranded program with a new name and guess what – more miles required for flights, all wrapped up in fancy corporate marketing doublespeak that obscures the truth. So until the new program takes flight, I’ll just keep on earnin’ ’em and burnin’ ’em.

  3. I’m in the midst of planning a huge long-haul J trip for my extended family using post-2020 Aeroplan. I am not looking forward to explaining how all that work to acquire enough miles was a waste of time.
    Crossing my fingers that Cathay has no big error fares that year because I think the whole trip will now be on Alaska Miles.

  4. I see it as negative overall after the take over, more monopoly and points would be devalued and more restriction on redemption etc…Hope i am wrong.

  5. All marketing that says “choice”, “convenience” or frankly any word but “VALUE” is the shiny thing in the left hand. What’s he doing in his right hand, behind his back? Devaluing your Aeropesos.

  6. “The news was that in 2020 their contract ended and they didn’t intend to renew it. What has happened since then has been quite interesting, to put it mildly.”

    Oh the 2020’s…
    So long ago…

  7. I’ll consider moving my personal spend from TD Aeroplan Visa to either WestJet Mastercard (I mean, c’mon…a free checked bag for me an 8 friends? Jackpot) or something like the RBC Avion where you simply redeem their points for a seat. I have a few friends that swear by it, but to me, it’s like redeeming Amex MR for a flight. Ugh.

  8. I can’t wait for AC to take Aeroplan back. After nothing but problems with the Aimia version of Aeroplan (extra charges, a website that always seemed to be on the fritz, availability that made some flights simply ridiculous, and an inability to get flights on airlines I want) glad to see them go. Will it be better? I hope so but it’s been pretty average so far.

  9. I started switching away from Aeroplan when all the sell/no sell uncertainty was in full swing. For me Aeroplan was already loosing its value for flight purchases. Flights from secondary airports are next to impossible to get without 2-3 connections that extend a 1 connection 6-8 hour trip to 15-20+ hours … and the flight will still cost you 50% of a purchased ticket.
    I have spent a lot of time/too much time searching route options on the Aeroplan website and more and more often end up purchasing a ticket on Westjet. Time is money and Aeroplan takes a lot of my time and generally does not deliver.
    The best value I have found for my Aeroplan points are USA to USA flights on United … fees are $12-$15 per segment compared to $200-$250 from a Canadian airport.

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