Air Canada: New Loyalty Program Basics Below is a conversation from the Air Canada bullboard.
Feel free to add to the conversation.
Enjoy!
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RE:Loyalty Program Basics
justbull4u wrote:
Here are some reasons:
Air Canada can probably buy Aeroplan now (August 2018) for approx. $1 billion.
The longer Air Canada waits, the more expensive it will become for Air Canada to consider the option of buying Aeroplan.
Aimia is conducting business as usual and is rolling out Aeroplan 2.0 on an ongoing basis. New partnerships are being negotiated with competitor airlines to Air Canada.
If Air Canada waits until June 2019 to decide whether to buy Aeroplan (or Aimia for that matter), the cost will be significantly higher, both in terms of purchase price, and the cost to unravel any new partnerships that Aeroplan may have negotiated, and that Air Canada would prefer to undo.
From Aimia/Aeroplan's perspective, the longer Air Canada waits to decide, the higher the sales price it will achieve from Air Canada.
Aimia/Aeroplan also know that a new loyalty program from Air Canada is highly unlikely for a variety of reasons, such as Air Canada discovering that the market for loyalty programs is crowded, difficulty in finding good partners that are not already committed to Aeroplan, lawsuits from Aimia/Aeroplan etc. etc. etc.
Most importantly, if Air Canada were to launch its own new loyalty program, it would represent the very definition of business stupidity.
There's more...but for now...this is enough to chew on.
Hope that this does not further "pollute" the already polluted Air Canada bullboard.
Enjoy!
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OnTheBalance wrote:
This slide has been a consistent part of AC presentations to investors in 2018:
Launch of Own Loyalty Program
Expect to unlock significant value through the launch of loyalty program
– Net present value of $2.0 billion to $2.5 billion* (on a pre-tax basis) over a 15-year period
– RFP for credit card partner underway – RFP for technology platform partner underway
– Program design in process after extensive research
* Assumes the current regulatory environment and a discount rate in line with Air Canada’s Weighted Average Cost of Capital (WACC)
Also the presentations on January 11 and January 24 (2018) provide a schedule in the form of a summarized Gantt chart (see slide 21 in either presentation). Clearly shows that the communication of initial AC loyalty program details is scheduled for June 2019.
https://www.aircanada.com/content/dam/aircanada/portal/documents/PDF/speeches-presentations/en/CIBC-Whistler-Jan242018.pdf
So why all the rush from outsiders to get news on loyalty program from AC consortium this early? :)
As an AC shareholder, I want AC to stay focused on unlocking the NPV of $2.0 billion to $2.5 billion (over a 15 year period, pre-tax). There is no rush to do any deal with Aimia. Just follow the schedule on slide 21. Obviously the RFP for credit card partner has resulted in both TD and CIBC being selected or being on the short list. Maybe it's only Aimia shareholders that are in a rush for a deal with AC consortium. Note to Aimia holders, I haven't posted on your board as it is not possible to have any rational discussions there, so please don't pollute this board either unless you have some rational information to share that is meaningful to AC shareholders.
Besides being an AC shareholder, most of us also are AC customers and have Aeroplan points. Since most of my points come from flying on AC/Star Alliance for frequent business flights, and expenses flowed through my TD VIsa card, all of the spend habit data resides with TD (previously with CIBC) and with AC. All my redemptions are for AC/Star Alliance long haul flights (mostly for personal pleasure). I am not really looking for another network. What proportion of other frrequent flyer AC clients feel this way? My main interest is to have high redemption value. The last time I looked at any businesses, cutting out middlemen improves cost structures and adds more value to end clients. So even if some deal is struck with Aimia it would have to be a vastly different deal so that AC can unlock value for its own shareholders.
And in the meantime, using up a large inventory of aeroplan points by booking many long haul personal trips starting this fall through to end of 2019.