Air Canada purchases its old loyalty program to ease consumer uncertainty
A period of churn in Canadian airline loyalty is nearing an end as Air Canada moves ahead with a deal to take over its old loyalty program, Aeroplan, and keep its partner banks on board.
Under the $450 million acquisition, Air Canada will assume $1.9 billion in Aeroplan miles liability. The airline also has agreements in place to keep TD Bank, CIBC and Visa in the Aeroplan program. TD will pay up to $910 million and CIBC will pay up to $292 million as part of the deal. Visa is also expected to contribute.
Air Canada is in negotiations to retain American Express, which issues an Aeroplan card.
In addition to securing financial agreements with the issuing banks, Air Canada’s reacquisition of Aeroplan is designed to provide more clarity for consumers. Canadian air loyalty has been in disarray for months following Air Canada’s withdrawal from Aeroplan, which the airline created in 2002 and spun off in 2011.
Air Canada had intended to form its own loyalty scheme in 2020. The airline said it would continue making flights available for Aeroplan redemption after 2020, though members would to be able to use miles with Air Canada’s Star Alliance partners. Aeroplan’s partners, which include the banks and Amex, did not say if they would continue with Aeroplan when their individual relationships expire in 2024.
This uncertainty was already starting to hurt redemption earlier this year, and the new deal will secure participation from the partner banks.