Air Canada Will Buy Back Aeroplan!

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In 2002 Air Canada decided to spin off its mileage program, Aeroplan, into its own entity.

Air Canada started selling it off in 2005 and completely divested of it by 2008. Aimia currently runs the program and has the contract to do so until June 29, 2020.

Experts thought that Air Canada would start a new trend, with airlines realizing big up-front bucks by spinning off their mileage programs.

But the opposite happened. The main value proposition of mileage programs is when they are integrated. That way the airlines can collect the big bucks that banks are shelling out, while offering award tickets that won’t hurt their bottom line. Over time banks have been paying higher and higher fees for miles in order to support their lucrative credit card departments.

Last year Air Canada announced that they would ditch Aeroplan and start a new in-house mileage program in 2020.

However they didn’t really want to start again from scratch and it was likely just a negotiating ploy to be able to force Aimia to sell Aeroplan back to Air Canada at a discount.

Those negotiations have been ongoing this year and Aimia threatened to start their own charter flights and transfer programs to keep the program viable, though that was also just another negotiating tactic.

Today, Aimia finally agreed to sell Aeroplan back to Air Canada for $450 million in cash as well as the assumption of $1.9 billion of mileage liabilities. Air Canada will take it over starting 6/30/20 if the deal goes through.

Aeroplan has gone through a plethora of devaluations, even worse than the US programs. The best outcome of this announcement is that it will pretty much kill the voices that want other airlines to outsource their mileage programs.

In the end, this is a win for all companies and customers involved.

HT: mordechain, via DDF

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5 Comments On "Air Canada Will Buy Back Aeroplan!"

All opinions expressed below are user generated and the opinions aren’t provided, reviewed or endorsed by any advertiser or DansDeals.

Garfieldhao

Wow finally a good news on Aeroplan

Al

Do you think the lousy surcharges will stay after the acquisition?

CalgaryFleish

Dan – what is the best award option for someone in Canada?

Izzie

I like the TD First Class Travel CC and the Expedia for TD portal that comes along with it.

R

Aeroplan was devaluated?

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