Porter Air signs on to join Aeroplan in 2020, oneworld in the wings

Aeroplan will still have a Canadian airline partner when Air Canada‘s participation in the program ends in 2020. Toronto-based Porter Air will convert its VIPorter loyalty program into the Aeroplan scheme at that time. Porter will also become a redemption partner, offering up to 60% of seat inventory for the purchase of flights with Aeroplan Miles at fixed-rate prices. The arrangement includes an extensive cooperative marketing program targeting existing Aeroplan members, with an emphasis on members who travel on Porter routes.

Aimia, the loyalty-program management company behind Aeroplan, also formally rejected the offer from Air Canada and its bank partners to buy out the Aeroplan operation. That deal, valued at more than CAD$2 billion, would have seen the existing Aeroplan points and customer base revert to Air Canada’s new in-house program when it launches in 2020. Instead, Aeroplan and Aimia continue to seek airline and other partners to help strengthen the value proposition of the loyalty scheme, even with the impending loss of Air Canada and its Star Alliance partners.

Just who will those airline partners be? Porter is one, we now know, but that only covers a tiny number of flights and destinations. Yes, they are some of the most heavily traveled for Aeroplan members, but those alone cannot deliver the lift Aeroplan needs to keep its millions of members happy. The company teased the idea of running its own charter flights to certain North America and Caribbean sun & fun destinations. That would help fill out the needed coverage and capacity but still leaves much of the globe without service. With two million flight awards issued by Aeroplan last year more lift will be needed.

We’ve committed to our five million members that they will be able to choose any seat on any airline, anywhere, any time with the new Aeroplan program. – Aimia CEO Jeremy Rabe

Offering seats on any flight anywhere in the world is challenging, but more from a logistics and points valuation perspective. A loyalty program can simply assign a dollar value to the points and buy the seats on the open market. That typically leaves consumers feeling less than satisfied or the program less than profitable, not a happy set of circumstances. Perhaps tying in to another of the major global alliances could help ease that challenge.

Aimia confirmed on Thursday that it is in discussion with oneworld for a potential partnership arrangement but declined to offer any further details on those conversations. The alliance serves as a coordinating body amongst its members rather than as a direct operator of any of the underlying loyalty programs. Gaining access to award inventory without a specific member airline would be a revolutionary approach and one that could serve both parties well. Oneworld lacks a presence in Canada and grabbing some of that market for its member airlines would be a nice win, especially if the points redemption rates are suitably negotiated.

Read More: Air Canada, banks offer to buy Aeroplan

Such redemption deals are typically negotiated bilaterally between a program and the partner airline. It is unclear that the alliance would change that arrangement wholesale. But even just gaining access to the internal member inventory systems would be a major win for Aeroplan, easing integration with the many new partners it could have.

Investors seem reasonably happy with Aimia’s move to keep Aeroplan independent and the oneworld talks; the stock price is up nicely in trading Friday.