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The Aeroplan and Air Canada saga has more drama than Soap Opera. Since the news of Air Canada breaking away from Aeroplan in 2020, Aeroplan has suffered heavy financial loss and a major decline in customer confidence. To Aeroplan’s credit though they have been working hard to distinguish themselves for the independent future. Not wanting to be yet another ‘Air Miles’ in the Canadian market, Aeroplan announced ambitious updates last month, including Charter flights and points transfer program. They also promised a variety of airline partner redemption opportunity to its membership. The announcement was followed by a hostile bid of $2.25 Billion ($250 Million Cash + 2 Billion Aeroplan points liability), by Air Canada (along with TD, CIBC and Visa). The July 25th bid had a August 2nd deadline, and provided Aeroplan members hope of moving their points into Air Canada’s new loyalty program. Alas, late last night, Aeroplan rejected the bid by Air Canada and today announced a new partnership with Porter Airlines.
Aeroplan rejects Air Canada bid
Reports suggest Air Canada and ‘consortium’ enhanced their initial offer to $350 Million in cash and engaged in extensive discussions, but to no avail. Aeroplan/Aimia pegged themselves at $450 Million. Aeroplan’s rejection of the bid came shortly after reports of their active negotiations with OneWorld alliance.
Although Air Canada’s offer was rejected, I suspect this is not the last of it. The latest developments could see them come back with an even better offer, they could meet Aeroplan at $450 Million in cash after all.
Aeroplan announces new partnership with Porter Airlines
Shortly after declining the bid from Air Canada, Aeroplan announced a new comprehensive partnership with Canada’s third largest airline, Porter. Starting July 2020, this partnership would allow Aeroplan members to earn points by flying Porter airlines and also offer Aeroplan redemption on Porter’s network – offering up to 60% of seat inventory for the purchase of flights with Aeroplan Miles at fixed-rate prices. Once the agreement is active, points from Porter’s loyalty program (VIPorter) will be converted to Aeroplan. VIPorter will continue to exist as an elite membership recognition within the Porter portfolio.
Although this announcement excites me for the future of Aeroplan, Porter has a limited ‘footprint’ with flights to 16 cities in Canada and 7 in US.
Porter currently partners with JetBlue, Qatar Airways, Icelandair, El Al and Azores airlines to offer more destinations. It remains to be seen if the new Aeroplan-Porter partnership would mean further engagements with any of the Porter’s airline partners. While Porter airlines is no replacement to Air Canada (sheer size and network), an extended partnership with JetBlue and Qatar would be mighty!
I am quite enjoying Aeroplan’s fight for existence and relevance, however, there is nothing stopping Air Canada and co. from coming back with a better deal. Personally, being based in eastern Canada makes me feel good about the Porter partnership but it leaves the vast Aeroplan membership in western Canada wanting. I like using Porter airlines to position myself into bigger hubs and this partnership offers many Canadians another avenue to collect and redeem their Aeroplan points, starting July 2020.
If Aeroplan doesn’t get a deal with OneWorld, I think it’s dead. Who’s going to pay $120+/year for a credit card to earn points on Porter?
I am slightly more optamistic, in that, I hope AC comes back with an improved offer and meets AP’s expectations. Also, porter is just one of many AP will need as partners to survive independently. Think Alaska and its partners..